Saturday 11 May 2013

Executive condo scheme divides participants

Some want it scrapped but others defend it; income ceiling also debated
By Charissa Yong, The Straits Times, 10 May 2013

THE future of executive condominiums (ECs) took centre stage at an Our Singapore Conversation (OSC) session on Wednesday.

Around half of the 55 participants, who were mostly current or future Housing Board home owners, called for the scheme to be scrapped entirely. An equal number defended it.

But Senior Parliamentary Secretary for National Development Mohamad Maliki Osman said any housing policy change will have to take into account the fact that many Singaporeans are already home owners.

"We can't view property void of the reality of hundreds of thousands of Singaporeans owning their own homes," he said.

"How we manage the property market will have an impact on current home owners too, and we should not forget that."

ECs have been in the news recently after National Development Minister Khaw Boon Wan raised the issue that EC owners, who receive government subsidies, make a bigger profit in the resale market than the average flat owner.

One participant at the session said this was unfair. Another added that ECs widened the rich-poor divide by "helping the rich get richer".

The EC scheme, which was launched in 1996, targets home buyers who cannot afford private property.

Households whose incomes are below $10,000 can buy a Build-To-Order (BTO) flat. For ECs, the income ceiling is $12,000.

Property expert Chris Koh, a participant at Wednesday's session, said an unintended consequence of ECs had been to push private property prices upwards.

"People started using ECs as benchmarks. So they would say, if an EC can sell at $800 psf, therefore my condo can sell at $1,000 psf," said Mr Koh, director of Chris International.

He proposed keeping the EC scheme but removing the grant of up to $30,000 given to first-time buyers, or imposing levies on those upgrading from an HDB flat.

An equal number of participants, several of them EC owners, defended the scheme as a way to meet the aspirations of the "sandwiched class".

EC owner Chiang Poh Yin, 28, said not all buyers are out to make a quick buck.

Her household income had been below $10,000 when she opted for an EC as the wait to move into one was shorter compared with that for a BTO flat, for which she applied five times but failed.

Other participants thought ECs were a good step towards owning a private condo, for those upgrading from their first home.

Participants were also evenly divided on the income ceiling that determines whether families are eligible to purchase HDB flats.

While several wanted it raised so as to keep pace with rising wages, others wanted to remove it entirely to give more Singaporeans a chance to live in HDB flats.

Dr Maliki said the dialogue showed people have diverse viewpoints over the housing policy: "We're dealing with a policy situation to house 80 per cent of Singaporeans with different aspirations that have evolved over time."

Developers show strong interest in EC plot
By Sumita Sreedharan, TODAY, 10 May 2013

Despite the uncertainty hanging over the Executive Condominium scheme, the first EC plot to be tendered after the cooling measures in January attracted strong demand from developers.

The tender exercise for the site at Woodlands Avenue 5/ Avenue 6 closed yesterday, almost three weeks after National Development Minister Khaw Boon Wan signalled that the scheme would be tweaked. It drew seven bids, the highest at S$216 million — 13 per cent higher than the nearby Twin Fountains site that was sold in October last year.

Property analysts attributed the “healthy” interest to the site’s location — for instance, Woodlands will be part of the new commercial hub, the North Coast Innovation Corridor — and developers’ continued confidence in the EC market despite indications that changes to the scheme could be on the cards.

Mr Chris Koh, Director of Chris International, said: “Developers know that there is a demand for ECs from educated buyers who know that this is a ticket to own a private property, and add to that the subsidies available and the fact that HDB upgraders do not have to pay a levy to move to an EC, it makes the product even more desirable.”

The strong demand from developers comes as participants at an Our Singapore Conversation (OSC) session on Wednesday called on the Government to impose more controls on developers under the EC scheme and the Design, Build and Sell Scheme (DBSS). While they want the schemes to continue, they feel that the Government should have greater control of the pricing and the quality.

The session, which focused on housing, was attended by 55 participants, as well as Senior Parliamentary Secretary (National Development) Mohamad Maliki Osman and Pasir Ris-Punggol GRC Member of Parliament Penny Low, who sits on the Government Parliamentary Committee for National Development.

While the participants generally welcomed the “premium” public housing alternatives, they questioned the role of these units in the public housing landscape and whether they would push up public housing prices as a whole.

Mr Tan Boon Howe, 33, said: “If HDB is able to price ECs and DBSS units, the developers will not be able to profit as much and we would see the prices come down.” He added that public housing should address basic needs and buyers who wanted more could always opt for private housing.

Some, including Ms Chiang Poh Yin, 28, also felt that EC owners should not be labelled as profiteers. Many, including herself, were driven to the EC market because of a lack of supply of BTO units, she argued.

Analysts whom TODAY spoke to pointed out that should the Housing & Development Board (HDB) be given a greater say in EC and DBSS developments, there could be finger pointing among the various parties if owners are not satisfied with their units after moving in.

Mr Colin Tan, Head of Research and Consultancy at Chesterton Suntec International, said: “It is something HDB can do but the confusion comes in after completion, who will be liable if buyers have issues with the unit?”

Mr Nicholas Mak, Executive Director of Research and Consultancy at SLP International, added that if the authorities set the pricing, “developers may feel it’s not worth their while to come in to bid for the projects due to the low margins... You could see just contractors coming in”.

Also, a side-effect could result in EC or DBSS units looking all the same. “Architects will be told to come up with the most cost efficient design and once one comes up with the cheapest way forward, it may become a cookie-cutter mould for the rest,” he said.

At the OSC session, participants were split on whether the income ceiling for Build-to-Order flats should be raised or possibly even removed.

Some participants felt that all Singaporeans should be entitled to live in a HDB unit while others felt the income ceiling should remain, at least until the current supply crunch was resolved.

In response, Dr Maliki said that by removing the income ceiling for BTO units, it would, in effect, mean that the Government should provide the first home for all Singaporeans. Such a policy would result in “more complexities” for housing polices as different groups of buyers have different needs and aspirations, he noted. He reiterated that future housing policies would have to consider the interests of all home owners, not just new ones.

“How we manage the property market will have an impact on current home owners... we should not forget that because when we talk about prices of new flats, at some point the behaviours of buyers will move in a certain direction and there will be impact on the resale market,” he said.

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