Wednesday, 14 November 2012

Balance flat price spike

Balance flats: Market values different, so price comparisons not meaningful

MR MAX Leong pointed out that the price difference between the March and September Sale of Balance Flats (SBF) exercises was 6 per cent, after accounting for storey height differences ("Balance flat price spikes 6 per cent in six months"; last Wednesday).

The calculation was made based on Block 1C Cantonment Road, #38-33 (March 2012 SBF exercise, selling price $602,700) and Block 1C Cantonment Road, #39-31 (September 2012 SBF exercise, selling price $651,200).

While #38-33 was a balance unit in original condition, #39-31 was a repurchased unit that came with renovation and fixtures/fittings.

Hence, their market values are different, and any direct price comparisons without taking into consideration differences in flat attributes would not be meaningful.

Ignatius Lourdesamy
Director, Marketing & Development
Housing & Development Board
ST Forum, 13 Nov 2012

Balance flat price spikes 6 per cent in six months

ALTHOUGH the Government is trying to rein in the escalating prices of property, both private and public, the Housing Board (HDB) has a part to play as well.

As the largest developer of public housing, the prices it sets for new public housing serve as a benchmark for the public housing market and the private property market as well.

A case in point is the HDB's recent sale of balance flats exercises in March and September this year.

A 95 sq m unit on the 38th floor of the Pinnacle@Duxton, which was available during the March sale, was priced at $602,700.

A similar-sized unit 18 floors lower, on the 20th floor, was priced at $570,500.

A 94 sq m flat on the 49th floor, the highest floor, was offered at $618,200.

The price difference per level works out to about $1,800.

In the September sale, a 95 sq m unit on the 39th floor was priced at $651,200.

Even after factoring in the most optimistic difference per level of $10,000, instead of $1,800, the price of a 38th-floor unit, if available in the September sale, would still cost 6 per cent more than in March.

The price difference between the March and September sales would then be about 6 per cent.

Doubtless, the HDB is the custodian of public funds and must answer to the Government and the taxpayers on the use of its funds and its returns.

But, isn't the price increase from Pinnacle@Duxton flats dating back to their release in 2004 until the sale in March enough to recover the development costs?

A spike of 6 per cent within a span of six months works against the public interest in this case, in view of escalating property prices.

So, instead of jumping on the bandwagon of price spikes, the HDB should look into moderating the price growth of the public housing that it sells, which indirectly determines the overall property prices.

Max Leong
ST Forum, 7 Nov 2012

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