By Jessica Cheam, The Straits Times, 17 Jan 2012
DO NOT unfairly blame permanent residents (PRs) for pushing up the prices of HDB resale flats, National Development Minister Khaw Boon Wan urged Singaporeans yesterday.
He revealed that the buyers jacking up cash premiums for such homes were actually local private-property owners.
He was responding to a question in Parliament from Mr Zaqy Mohamad (Chua Chu Kang GRC), who asked if the Housing Board would consider limiting the sale of resale three-room and smaller flats to only lower-income Singaporeans.
Mr Zaqy told the House there was a common perception that the large proportion of PRs in the market had created competition, and that they had an influence on the cash premiums paid to the seller above a flat's valuation, known as cash-over-valuation (COV).
He said the COV for resale three-room flats was higher than those of four- and five-room resale units and that had priced some buyers out.
The HDB's latest data for the third quarter of last year showed that the median COV for three-room flats across the island ranged from $27,900 to $34,000.
The median COV was higher for four- and five-room flats - from $33,000 to $66,000 across the island.
Mr Khaw acknowledged the perception Mr Zaqy had referred to but said he often looked at the breakdown of prices in the resale market and the data was 'quite distinct'.
'Typically, the PRs pay the lower COVs... among the groups, the higher COVs are often by private-property owners, or former private-property owners... especially the en bloc owners or residents, probably with a lot of cash and still need a roof... They are the ones who bid up the COV,' he said.
'So let us not unfairly blame a particular group for causing higher prices in the resale market,' he added.
Mr Khaw said Singapore had to be fair to PRs too: 'They come here, they make a contribution to the economy and they need to live too. So offering them... the opportunity to buy a resale flat to stay... is a fair proposition.'
HDB resale flat prices have reached record highs in recent years, fuelling unhappiness among buyers unable to afford the asking amounts.
Mr Khaw noted that, in the last two or three years, prices had shot up due to an imbalance of supply and demand.
'All my efforts in the last seven months are to precisely attack this problem, and I think there are some initial results, so please be patient, the market will stabilise in due course,' he said.
Since taking over in May, Mr Khaw has directed the HDB to offer more new flats and in locations across the island, including mature estates. Recently, the board also raised the monthly income ceiling for new flats from $8,000 to $10,000 so more first-time buyers can get new flats.
Analysts said such moves had helped to ease some demand in the resale market.
Mr Khaw noted that the HDB imposed an income ceiling for new two- and three-room flats but not for resale units.
'Doing so will deprive flat owners of the full market value of their flats. We think this is not advisable,' he said.
He added that the HDB would try to exercise compassion where it could on the resale levy, paid by a second-time home buyer to the HDB to ensure a fair distribution of housing subsidies.
MPs Intan Azura Mokhtar (Ang Mo Kio GRC), Cedric Foo (Pioneer) and Zainudin Nordin (Bishan-Toa Payoh GRC) had noted that some families found it tough to pay this levy and asked if the HDB would consider waiving or reducing it for lower-income families buying their second subsidised HDB flat.
Mr Khaw said he was familiar with the concern and the HDB would 'assist where we can but, inevitably, cases differ from each other, so we really need to look at each individual case on its own merit'.
As for letting such families pay the levy - usually required in cash upfront - by monthly instalments or through the Central Provident Fund (CPF), he added that, in some cases, the HDB had included the levy in the price for the second subsidised flat so buyers could use both CPF as well as their housing loan to pay for it.
Who Bids High?
We monitor HDB resale prices, and publish them for information of potential buyers and sellers. Transparency helps make the market run better.
The data collection and analysis also enable us to track the extent of COVs paid by different buyer groups.
This subject cropped up in Parliament two days ago. For completeness, I am sharing the data below:
*PPOs = Private property owners
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