Friday 23 August 2013

Studio apartments and BTO flats

Not appropriate to compare prices: HDB

WE REFER to the letters by Mr Henry Lim ("Why do studio units for seniors cost so much more than BTO flats for singles?"; Aug 11), Mr Patrick Soh ("Studio apartments for seniors too costly"; Forum Online, last Thursday) and Mr Yeow Hwee Ming ("Policies shouldn't distort market"; last Saturday).

Build-To-Order (BTO) flats cater mainly to first-time home buyers.

To meet the diverse housing needs of home buyers, new HDB flats are available in a range of sizes, located in various towns and come with different designs and attributes. In addition, very significant housing grants and price discounts are offered to help lower-income families afford their first flats.

Studio apartments are built specifically to offer a monetisation option for some senior citizens who find their existing homes bigger than they need.

Studio apartments allow them, including those who have bought subsidised flats before or are living in private properties, to sell and hence, convert some of the value of their existing properties into cash for retirement needs.

They can achieve the same by buying two- or three-room flats in the resale market. Many may, however, find the pricing of studio apartments more attractive and do not mind the restrictions imposed on such units.

While studio apartments have a lease of 30 years, the price is not directly proportional to the length of the lease, as professional valuation principles take into account the time-value of money and other factors.

It is thus not appropriate to directly compare the prices of studio apartments with those of two-room BTO flats, especially if they are located in different towns with very different attributes. For example, earlier this year, Mr Soh had chosen to book a 45 sq m studio apartment, which is in a mature estate and on a high floor.

Home buyers should consider their options carefully and select a flat that best suits their budget and requirements.

Ignatius Lourdesamy
Director (Marketing & Development)
Housing & Development Board
ST Forum, 22 Aug 2013

Why do studio units for seniors cost so much more than BTO flats for singles?

There has been high demand for the newly launched Build-To-Order two-room Housing Board flats for singles.

Buyers are entitled to various housing grants, which can lower the price of such flats to about $50,000. For singles who apply jointly, the net price is even lower, at about $16,000.

Hence, the flat may be viewed as a good long-term investment for eventual resale or rental.

In contrast, the price of a similar studio apartment for seniors aged above 55 is about $90,000.

The studio apartment comes with wardrobes, kitchen cabinets and flooring, but it is still difficult to comprehend why there is such a big price difference. Studio apartments are also on a 30-year lease, and owners are not allowed to rent out or resell the units.

Some seniors are unemployed and may have financial difficulty in purchasing a studio apartment. The price of such units should be reviewed.

Can the HDB also enlighten us on the price differential between a new two-room flat and a studio apartment?

Henry Lim
ST Forum, 11 Aug 2013

Studio apartments for seniors too costly

I AM a 60-year-old single Singaporean. I bought a 47 sq m studio apartment in March, which cost me $168,000 on a 30-year lease ("Why do studio units for seniors cost so much more than BTO flats for singles?" by Mr Henry Lim; Sunday).

The apartment cannot be resold on the open market or sub-let, and payment by instalment is not allowed.

Now, the HDB is offering new two-room flats to singles aged 35 and older, and has priced them much cheaper than the studio apartments for seniors. These new flats come with 99-year leases and can be resold after the minimum occupation period. Buyers are also eligible for generous grants and can pay by instalments.

Is this fair to the senior citizens who bought studio apartments?

After paying in full for my apartment, I have little left for health care and emergency needs.

Can the HDB explain its latest policy on two-room flats?

Patrick Soh
ST Forum, 15 Aug 2013

Policies shouldn't distort market

I COULD not agree more with Mr Henry Lim ("Why do studio units for seniors cost so much more than BTO flats for singles?"; Sunday).

The maths is simple.

A studio apartment in Queenstown costs more than $160,000, and this has to be paid in one lump sum upfront. It has only a 30-year lease and no capital gains upside as it can be sold back only to the HDB.

To compare this to a two-room Build-To-Order (BTO) flat, compound the $160,000 over 30 years and multiply by three times the lease period; the studio apartment would work out to more than $750,000.

How can this pricing be justified by any standard?

Also, government policies should not create outliers that distort the market.

A two-room BTO flat should not be allowed to cost only $16,000 after grants. There should be a minimum of, say, $40,000.

Similarly, we should not have hawker stall rentals at $20 per month as a result of a policy change in April last year. There has to be a minimum of, say, $100 per month.

Otherwise this will make a mockery of hawker stall rentals.

Going forward, I hope the implementation of government policies can be more inclusive, equitable and fair.

Yeow Hwee Ming
ST Forum, 17 Aug 2013


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