Bumper profits for early BTO flats

Some in Sengkang, Punggol have tripled in value on resale market
By Janice Heng and Yeo Sam Jo, The Straits Times, 7 Jul 2015

Build-To-Order (BTO) flats in Sengkang and Punggol may have been unpopular when they were first launched, with complaints over the location and the lack of amenities.

But home buyers who signed up for the flats some 10 years ago are now having the last laugh, with the value of their homes nearly tripling.

The Straits Times looked at data provided by SRX Property of flats launched in and after 2002 when the BTO system began.

Of these, the highest number of transactions were of Sengkang four-roomers with the leases starting in 2009. They cost up to $205,000 when they were first launched around 2005.

Their average resale price over the past three years was $566,880 - about 2.8 times the highest price home owners paid to HDB.

Over the past year, even though the market has cooled, such Sengkang four-roomers still regularly fetch above $500,000 on the resale market. Even the lowest recorded sale was $410,000, twice the highest original launch price.

The second-most-common transactions were of Punggol four-roomers with leases beginning in 2007.

Their average resale price was $484,577 overall, though this dipped to $449,208 since last year.

But this is still more than 21/2 times the highest launch price in 2003, when HDB offered these for $138,000 to $178,000.

It typically takes up to four years for a flat to be built and its lease to begin. Owners have to occupy the flats for five years after receiving their keys, before they can put them on the resale market.

Analysts noted that the overall market over the past 10 years has improved, with the resale price index rising by about 90 per cent.

But BTO units have rightly beat the market, said R'ST Research director Mr Ong Kah Seng: "These are subsidised flats so it is a given that the prices will appreciate significantly between occupation and when they can be resold."

Another factor is that those once under-developed towns have blossomed, he added. "Accessibility has been widely improved... and there are more amenities, so the owners who resold them really reap very major profits."

Even less popular flats did well. Only 17 Sengkang three-roomers with leases beginning in 2007 have been resold. These fetched $388,224 on average, with the cheapest going for $315,000.

When launched in 2004, they cost just $89,000 to $110,000.

The BTO flats also did better than resale flats in mature estates. From 2003 till last year, average resale prices rose 93 per cent for four-roomers in Toa Payoh and 76 per cent for those in Tampines.

Marketing manager Frieda Chan and her husband sold their four-room Sengkang flat, which they bought for $193,000, for more than $500,000 last month.

"We didn't expect to sell it so quickly," said Ms Chan, 34, who found a buyer within a week.

The couple, who have two daughters, bought a jumbo resale flat in Ang Mo Kio.

They paid about $800,000 for it, and Ms Chan's in-laws will be moving in with them.

"I think it's worth it," said Ms Chan. "We wanted a bigger space and it will be closer to my older daughter's primary school and our work places."

Less starry resale outlook for newer BTO units
By Janice Heng, The Straits Times, 7 Jul 2015

With the slump in the resale property market, it might be unexpected for Build-To-Order (BTO) flats to fetch more than twice their original price.

But a closer look shows little cause for surprise - and little cause to expect that the success will be fully replicated, for a few reasons.

One is that early owners of BTO homes benefited from especially low launch prices.

Their gains may not be realised by those who bought their flats later, for much more money.

The first BTO launches, in the early 2000s, came amid a weak resale market. They were priced low to entice buyers who might have seen the projects as far-flung and in underdeveloped areas, said R'ST Research director Ong Kah Seng.

The last time BTO prices were a talking point was during the 2011 General Election, when unhappiness over their perceived unaffordability made them a hot topic. So the real test will be when units launched in the late 2000s, which were priced much higher than the first few batches, eventually hit the market.

From the start of the BTO scheme in 2002 till 2011, resale prices nearly doubled. And BTO prices, which used to be linked to the resale market, were also pulled up.

In the Housing Board's 2006-2007 financial year, for instance, new Punggol four-roomers in BTO launches cost $173,000 to $254,000. Two years later, in 2008-2009, this rose to between $223,000 and $327,000.

When these newer flats start being resold in a year or two, the market by that time is expected to be much weaker than it was for earlier BTO projects that went on the resale market.

"A surge in resale prices over the next few years is not likely," noted OrangeTee research manager Wong Xian Yang.

In the first quarter of this year, for instance, the median resale price of a four-room HDB flat in Punggol was $430,000. This is not expected to rise much in the near future.

SLP International Property Consultants head of research Nicholas Mak said later BTO projects in far-flung areas such as Punggol, with selling prices of around $250,000, could still at least double in value.

But that is unlikely for later BTO projects in sought-after estates.

He highlighted a 2012 BTO project in Bendemeer Road with four-room flats sold for $467,000 to $595,000. At such prices, they would have to fetch more than a million dollars on the resale market to double their value.

Early BTO projects benefited from both low launch prices and a buoyant resale market.

With the Government now keen to contain resale prices, the stellar resale performance of early BTO projects should not be taken as a benchmark for the future.

Couple reject lucrative offers for flat
By Yeo Sam Jo, The Straits Times, 7 Jul 2015

Step into Mr Brian Chee and Ms Catherine Low's four-room flat in Punggol, and one is greeted by a steady breeze and stunning views of Serangoon Reservoir, Pulau Ubin and even Malaysia.

Little wonder then that the couple have no intention of selling their 18th-floor flat, even though property agents have come to them with lucrative offers.

Last year, an agent promised them $600,000 for their unit - more than three times the $170,000 they paid for the flat.

But they were quick to refuse.

"We were not tempted at all," said Mr Chee, a 41-year-old stay-at-home father. "We like the greenery and environment, and it's very quiet and peaceful here."

The couple moved into their top-floor unit in Block 167A, Punggol East in 2007. They applied for the Build-To-Order flat in 2003.

Mr Chee, a former interior designer, left his job four years ago to take care of their son, eight, and daughter, five.

Being close to nature has another perk, added Mr Chee. The family of four are often able to go cycling together at the nearby Punggol Waterway.

While some of their neighbours made tidy profits from selling their homes, Ms Low is cautious about following their example.

The 38-year-old accountant said: "If we sell, it definitely won't be cheap to get another flat in a good location. What if we need another loan?"

She added: "The children go to school in Punggol and so, would have to adapt to a new environment if we move."

But Mr Chee said he has toyed with the idea of selling before.

He said: "If there's a three-generation flat in a good location, I would consider buying and moving in with my parents.

"My parents are getting old and it'll be good to take care of them. They can help look after the children too."