Tuesday, 11 October 2016

Shorter wait for BTO flats on the horizon; Plan to mitigate 'lottery effect' of downtown flats: Lawrence Wong

Waiting time will be down to 2-3 years from 3-4 years now but not for all flats: Minister
By Yeo Sam Jo, The Straits Times, 10 Oct 2016

Young couples will soon be able to move into their new homes quicker, as the Government is looking to shorten the wait for public housing.

When implemented, the move will see the waiting period for Build-To-Order (BTO) flats dip to two to three years, from the current three to four years, said National Development Minister Lawrence Wong last week.

He was speaking to The Straits Times and Lianhe Zaobao in his first sit-down interview since taking over the portfolio a year ago.

Referring to young couples who are buying flats for the first time, Mr Wong said: "We would like to see how we can help them settle down and get their flat faster."

He noted that some couples who urgently need their own flat currently opt for provisional housing or balance flats not sold in previous launches. Such balance flats are closer to completion, but are subject to balloting as well. "The demand for moving in is always there, that's why balance flats are always more popular... People want to move in as soon as possible," he said.

The shorter wait will be achieved by bringing forward construction and building ahead of BTO launches. But this will not apply across the entire housing stock, Mr Wong said. "It's not possible because you just can't construct all the flats within such a short period."

Doing so would risk building too much ahead of demand and ending up with a redundant housing inventory, he added.

To be meaningful, the waiting time has to be shortened by one to two years, Mr Wong said.

"There will be a range of BTO flats with different waiting times... so people can pick and choose," he said, adding that this spells more options for more home buyers.

Special education teacher Pearlyn Tay, 25, who is getting married in December, said a shorter wait will help young couples who want their own place after getting married.

"Logistically, it's very difficult for couples to wait four years... So many people are applying for BTO flats first, before they even propose (marriage)," said Ms Tay. She and her fiance, marketing manager Russell Tan, 26, will be moving in with his parents after the wedding.

Mr Wong said the shorter wait will be pushed out as soon as possible, but added that the Housing Board still needs to work out the details. "Exactly how many of these units can we offer, what steps do we need to take in order to advance the construction process - that's something we are all studying now."

Mr Wong said he does not expect prices of flats with shorter waits to be higher, adding that price points are "more location specific".

Shorter waits for BTO flats is one of three areas that Mr Wong's ministry hopes to focus on going forward.

The second involves making it easier for seniors to unlock the value of their flats for retirement. The third will be the rolling out of the Fresh Start Housing Scheme from February's BTO launch. It will help families with young children in public rental flats buy homes again.

Mr Wong also touched on other housing-related issues during the interview. He said that property cooling measures, which have dampened demand for homes and pushed down prices, are still needed to keep the market stable.

Future public housing projects in coveted downtown areas might come with stricter resale conditions, he added, in a bid to mitigate any "windfall effect" from the resale profits and ensure more equity.

Plan to mitigate 'lottery effect' of downtown flats
Future HDB flats in city area may have a longer minimum occupation period, shorter lease or higher resale levy
By Wong Siew Ying, The Straits Times, 10 Oct 2016

Prospective home buyers hoping to cash in on future public housing flats in prized downtown locations may be disappointed, as the Government mulls over ways to tighten resale conditions for such units.

Possible measures could include a longer minimum occupation period (MOP), a shorter lease or higher resale levy, said National Development Minister and Second Finance Minister Lawrence Wong.

The review comes as the Government looks at introducing HDB flats into choice locations such as the Greater Southern Waterfront, to be developed in the Pasir Panjang area after port activities move to Tuas South.

"I think to do more (public) housing in the city under the same regime would not be plausible and we shouldn't do it... I have to sell it potentially with different parameters," Mr Wong said last week, citing the experience at the Pinnacle@Duxton in Cantonment Road.

Flats there are regarded as a goldmine, as many owners have reaped hefty windfalls - some close to $500,000 - when they sold units after having met the five-year MOP in December 2014.

The Housing Board launched the project in 2004 at prices ranging from $289,200 to $439,400. In 2008, 111 five-room flats were relaunched at prices ranging from $545,000 to $645,800.

HDB resale data shows 174 transactions at the Pinnacle@Duxton so far, of which 18 were sold for $1 million or more, property consultancy OrangeTee said.

The highest price fetched was for a five-room unit located somewhere from the 43rd to 45th floor, which was sold last month for $1.12 million or $982 per sq ft.

The high market value of such units has sparked questions about equity as they are heavily subsidised and securing a unit is largely down to chance from having to ballot for them.

"There will be a bit of a lottery effect because whoever gets it will be very lucky and there will be... more than a bit of a windfall effect for that person too, because they will have a huge appreciation potentially," added Mr Wong.

To address this in a "fair and equitable" way, the Government will look at potentially selling future public housing within the city under a different model, be it implementing a longer MOP from the current five years, or a shortened lease from the 99 years now.

Another consideration is raising the resale levy payable when the owner sells the subsidised city flat and subsequently buys another subsidised unit from the HDB.

The resale levy depends on the size of the flat and ranges from $15,000 for a two-room unit to $50,000 for an executive flat.

One property seller who wanted to be known only as Mr Ng, sold his Pinnacle@Duxton unit for about $900,000 last year, and thinks there should not be too many restrictions. "No one knows how the market will be in the future. If you have too many rules based on the assumption that the price will appreciate, then it may put more risks on the buyers," he told The Straits Times.

However, resident Angeline Tay who lives in a five-room unit at Pinnacle@Duxton agrees that having different provisions for city flats is fair. Ms Tay said: "I'm lucky to get a flat here. The location is great, which helps to support pricing. The potential rules seem fair, in view of all the positive attributes."

Mr Wong added that the intention is to still have flats in the broader city area to avoid "social and physical stratification", but he noted that they are not likely to be in the very prime locations.

Property cooling measures to remain for now
By Wong Siew Ying, The Straits Times, 10 Oct 2016

Prices of private homes have been sliding for three years but the property cooling measures are here to stay for now, said National Development Minister Lawrence Wong.

Flash estimates showed that prices fell 1.5 per cent in the third quarter from the second - the steepest quarter-on-quarter drop in seven years.

That marked the 12th consecutive quarter of decline, and left overall private home prices 10.8 per cent lower from the third quarter of 2013.

But Mr Wong, who took over the National Development portfolio a year ago, told The Straits Times last week: "It's not as though there is a price point for which we say, '(It) dropped by this per cent already, therefore I can change the measures'... We look at the broader considerations."

Various cooling measures, including the additional buyer's stamp duty and loan curbs, that have been implemented in the last few years have weakened demand for new homes and sent prices falling.

Mr Wong said the measures were introduced not just to put a lid on prices, but also "in response to a very unique global context and environment" marked by sluggish growth, very low interest rates and liquidity searching for higher yield.

"If and when capital inflows come, be it from local or foreign sources, it's very easy to cause fluctuations in our property market, and we don't want that to happen," said Mr Wong, who is also Second Minister for Finance.

He added that "we don't want to be a nation of property speculators".

Taking into account the global outlook, the external environment and domestic situation, the Government has assessed that the cooling measures are necessary to keep the property market "stable and sustainable".

OrangeTee's head of research and consultancy, Mr Wong Xian Yang, told The Straits Times that the cumulative dip in prices of 10.8 per cent would not seem big enough for the Government to act, given that prices rose 62 per cent from the second quarter of 2009 to the third quarter of 2013.

"What would be more pertinent would be the pace of the fall. Should the pace of decline start to accelerate, say by more than 1.5 per cent each quarter, this could push the Government to gradually ease measures," he added.

While relaxing some measures could help spur the real estate market and in turn support economic growth, Mr Wong said any move to use the property sector to stimulate the economy must be weighed against the cost and risk.

He noted that there is still a relatively strong underlying demand for property and that buyers and investors have become more selective - favouring good locations and competitive pricing, going by the response to recent condominium launches.

"That's not a bad thing because you want people to be more conscious and more thoughtful about their property purchases... and don't think of property as a sure bet," Mr Wong said.

He also pointed out that the 21,500 or so unsold and uncompleted private homes as at the second quarter was the lowest on record .

Meanwhile, there were a further 5,471 unsold and uncompleted executive condominiums - the lowest number in two years.

Mr Wong added that the Government will continue to maintain a steady stream of sites by offering more of them on the reserve list, coupled with a few on the confirmed list under its land sales programme.

Short-term home stays a 'breach of faith' but Singapore will not close door on it permanently
By Yeo Sam Jo, The Straits Times, 10 Oct 2016

Short-term stays are a "breach of faith" for those who have bought homes for residential use, but Singapore will not close the door on it permanently, said National Development Minister Lawrence Wong.

Addressing the debate on home sharing in an interview last week, Mr Wong said there are strong reasons for not legalising short-term rentals here, but acknowledged that circumstances may change. "I think the sharing economy is here to stay... we certainly want to support more shared spaces."

He noted that it would be very different if, say, a building is built from scratch to be a shared space and everyone is clear about that.

"But if... I've purchased (a unit) on the basis of (it) being a home and then suddenly you're changing the rules on me and making it into a shared space, with strangers coming into my apartment building, using my... common facilities, I think that's not about sharing," he said.

"That's just a breach of faith for many people. And it's an intrusion into my private space which I think many people will find intolerable."

Rentals shorter than six months are not allowed in Singapore for both public and private housing. But that has not stopped such listings from popping up on home- sharing websites such as Airbnb.

Early last year, the Urban Redevelopment Authority held a public consultation to gather feedback on short-term rentals in private homes. But in May this year, it said views were split and it needed more time to study the issue.

Those in support of short-term rentals often cite benefits such as a boost for tourism and supplemental income for home owners. On the other hand, some have concerns over disamenities arising from the presence of transient strangers.

Mr Wong said Singapore's high-density living renders it less suited to short-term rentals, unlike many European and American cities. "We live cheek by jowl with one another. And once you allow for that (to happen), I think it does change the character of our living environment and we have to be very mindful of that."

While he understands the strong feedback against home sharing, he stressed that Singapore is "not saying no forever". Circumstances and mindsets may evolve, which is why businesses such as Airbnb are not banned from operating here, he explained.

When asked if regulating such rentals could address the issue, Mr Wong pointed out that it is equally important to get the necessary "buy-in" for home sharing.

It could work here if a piece of land or building is built specifically for short-term stays, or if there is strong support from stakeholders of existing establishments, he said.

"We are still in the process where we are prepared to look at the situation, to study what is happening elsewhere, to study also how Airbnb's practices continue to evolve."

Housewife Dolly Lai, 59, who lives in a condominium in Pasir Ris, said she is not against short-term rentals, but thinks safety checks should be put in place, especially if children live in the area. "It would be good if they can screen prospective tenants to ensure there is no security issue and they won't cause any disturbance."

An Airbnb host who has been leasing out a room in his Woodlands Housing Board flat for the past two years said it helps him pay his mortgage. The 55-year-old, who travels frequently for volunteer work, charges about $40 a night. "I prefer short-term tenants because it's easier to do periodic repairs and cleaning (in the room)."

Lease Buyback Scheme not likely to cover 5-room flats
By Yeo Sam Jo, The Straits Times, 10 Oct 2016

It is unlikely that the Lease Buyback Scheme (LBS) will be extended to five-room flats, as that would not be an "efficient use of space".

But elderly home owners will be getting more help to downsize their flats in time to come, said Minister for National Development Lawrence Wong last week. He was addressing the need to help seniors monetise their homes for retirement.

Introduced in 2009, the LBS allows elderly home owners to sell part of their flat lease back to the Housing Board for retirement income. Previously, the scheme applied only to three-room and smaller flats, but it was expanded in April last year to include four-room units.

Asked if his ministry would consider extending the programme to five-room flats, Mr Wong said there was no such urgency.

"I'm reluctant to do so... it's still not an efficient use of space," he said, pointing out that an elderly couple may not require an entire five-room flat.

"I know a lot of elderly (people) want to age in place, continue to live at the same place, but the question is also whether there's a need for that size of space, given that their life circumstances have changed and the children have moved out."

He added: "We have extended it to four-room (flats) for now - I think let's keep it there for a while and we will study other options for right-sizing first."

Currently, elderly home owners who wish to monetise their flats can do so through schemes such as the LBS and the Silver Housing Bonus.

The latter gives seniors a cash grant if they downsize their flat and top up their Central Provident Fund retirement account with the sale proceeds. More can be done to smoothen such transitions, said Mr Wong.

"It sounds straightforward to do but there are a lot of transactions that you have to go through," he noted, adding that some people may have problems with financing and timing their moves.

"You have to make sure that the timing works well, (that) everything is back to back, otherwise, you would end up caught in between," he said.

"All of these are frictions that may get in the way of the decision to right-size," he added. "We are seeing what more we can do to help this particular group of home owners, especially when it comes to right-sizing (their flat)."

Mr Wong did not specify when and how this will be done, but added that it is a work in progress that will be delivered within his term.

R'ST Research director Ong Kah Seng said the decision to keep the LBS to smaller flats makes sense, as many elderly folk are still more conservative and do not want to sell part of their lease.

"Many prefer to bequeath their flat to the next generation instead," he said.

As of May, more than 1,500 households have taken up the scheme, with 541 doing so between April last year and March this year.

On the issue of helping seniors unlock the value of their flat, Mr Ong suggested that the Government could provide more comprehensive, individualised counselling on monetisation options.

"Many of the elderly take reference from their friends and siblings, but their circumstances might be different. What the Government can do is advise them on the pros and cons of each option," he said.

"Or maybe it can work with property agencies and have some agents who specialise in such transactions for elderly home owners."

Aiming for a highly liveable Singapore
Minister's goal is a people-friendly, green city with high-quality living environment
By Rennie Whang, The Straits Times, 10 Oct 2016

It is one of the Government's most demanding portfolios but after one year in the job, National Development Minister Lawrence Wong remains upbeat about the possibilities it presents for shaping a future Singapore.

He told The Straits Times last week that the ministry has built on the work done in the preceding terms of government as well as expanded into new areas, including introducing Car-Free Sundays: "What we are hoping to achieve is a Singapore that's highly liveable, that's people-friendly and green, and provides a high-quality living environment wherever you are."

Mr Wong said there is far more to be done, citing three priority areas.

One is ensuring affordable and quality housing - and building communities. "That means thinking very hard about how we do infrastructure, urban design, and putting it all together to strengthen that sense of home and create a high-quality living environment."

The ministry is working on several pilots exploring ways of rejuvenating Housing Board towns, including adding green features in Yuhua, introducing smart-town services and processes in Punggol and walking and cycling options in Ang Mo Kio.

It is even more proactive in designing new towns as it can include many eco-friendly initiatives from the start, as seen in the master plan for Tengah unveiled by Mr Wong last month.

Another priority centres on urban transformation. This includes moving the ports in Tanjong Pagar and Pasir Panjang to Tuas, developing the second central business district in Jurong and rejuvenating Paya Lebar after the old Paya Lebar Airport moves out.

"These major long-term plans will allow us to build a more attractive Singapore, (with) better infrastructure that will also support the economy," said Mr Wong.

The ministry's crucial role in infrastructure planning allows it to weigh the benefits of pooling new industry clusters. This clustering strategy has worked well for Jurong Island and the Biopolis and Fusionopolis campuses in one-north.

Mr Wong said having that digital infrastructure is crucial as the Government is now looking at developing the digital economy. This means ensuring Singapore is a node for submarine cables, with infrastructure that is "plug and play ready, (which) companies and individuals can tap any time and anywhere".

"There are still gaps that we can fill and things we can do."

Some of the large urban transformation plans will allow the ministry to build new growth clusters. Once the ports move to Tuas, for example, there will be a site about three times bigger than Marina Bay to develop the Greater Southern Waterfront.

Jurong presents a new area to develop as a business centre, while Punggol North can also accommodate a new business cluster.

"We have many options. It's not as though we are so squeezed for land that we have no land for new clusters," said Mr Wong.

"Urban transformation affords us new and large parcels of land that allow us to think about how to support new growth engines."

The ministry will also continue to expand land options, such as by going underground or via reclamation.

Mr Wong's final priority is to push boundaries on creating a greener and better environment.

Singapore is well-placed not just to adapt ideas from other cities , but to try cutting-edge ones, he said.

"We have the ability to integrate across different government agencies, and the scale to do it for the whole city, much more than any other country in the world.

"We can really push the boundaries and frontiers to create something very special in Singapore."


1. Ensuring affordable and quality housing and building communities.

2. Urban transformation, which includes moving the ports in Tanjong Pagar and Pasir Panjang to Tuas, developing the second central business district in Jurong and rejuvenating Paya Lebar after the old airport moves out.

3. Push boundaries on creating a greener and better environment.

Curbing 'lottery gains' of flats may backfire: Experts

Measures to stop speculative demand could lead to other problems like higher asking prices
By Yeo Sam Jo, The Sunday Times, 16 Oct 2016

Imposing tighter resale conditions on public flats in prime areas may not deter buyers from cashing in, and may even lead to other problems, said property experts.

They were responding to National Development Minister Lawrence Wong, who said in a Straits Times report last week that the Government is considering measures to mitigate the "lottery effect" of such flats, which tend to reap hefty profits when they hit the resale market.

Possible measures include lengthening the current minimum occupation period (MOP) of five years, shortening the usual 99-year lease and imposing a higher resale levy.

But these may not work, as flats in the city will still draw demand and high capital gains because of their coveted location, said observers.

R'ST Research director Ong Kah Seng said: "Buyers of flats in prime areas generally emphasise the location and pride of having a flat in central locality, such that they will usually do what it takes to have the chance to own such a flat."

SLP International Property Consultants research head Nicholas Mak noted that a shorter lease and longer MOP will not curb the lottery mindset among buyers.

He said: "The owners will still sell the flat after the MOP if they don't intend on staying there. Even if the lease is shorter, the next buyer may also have a short-term mentality."

Mr Mak said the Selective En bloc Redevelopment Scheme (Sers) might defeat the purpose of a shorter lease. Under Sers, old HDB estates are demolished and replacement flats are offered to residents. As a result, even if the lease is shorter, flats will still be in demand if people anticipate that they will receive replacements before the lease is up.

As for raising the resale levy, which ranges from $15,000 for a two-room unit to $50,000 for an executive flat, Mr Ong said this might lead to higher prices if sellers raise their asking price to offset the levy.

OrangeTee research and consultancy manager Wong Xian Yang said that while a longer MOP might stop speculative demand, this might put owners who genuinely need to sell the flat urgently in a difficult position.

Instead, he suggested controlling the original launch prices. "Even if a flat is sold for $1 million, if they buy it at $800,000, the capital appreciation is not that much," he said.

Mr Mak suggested taxing away any "lottery" gains. But implementing it in a fair way might be hard.

"How do you determine what is a super normal profit? And where do you execute the tax?" he asked, noting that non-city locations such as Bishan and Clementi also command high resale prices.

Chief executive of International Property Advisor Ku Swee Yong feels that public housing subsidised by taxpayers should not be built on expensive, prime land. "We can begin by rezoning all HDB sites in the core central region (CCR) as private residential sites," he said, citing the HDB blocks in Tanjong Pagar Plaza.

He added: "The higher land value for residential sites in the CCR will return more cash into our national reserves when private developers pay for these sites.

"Such a move will also reduce the burden on taxpayers subsidising 'lottery flats' and creating millionaires of subsidised home owners."

Handsome profits

The Sunday Times, 16 Oct 2016

Many public flats in prime areas have reaped handsome profits.

The Pinnacle@Duxton in Cantonment Road, for instance, has seen 186 resale transactions so far, said SRX Property. Most units there were allowed on the market at the end of 2014. Twenty of these flats went for $1 million or higher, including a five-room flat sold last month for $1.12 million.

National Development Minister Lawrence Wong had noted that such windfall gains are unfair as these flats are subsidised and obtained through a ballot.

This concern will crop up again as the Government looks to introduce HDB flats in other choice locations like the Greater Southern Waterfront, to be built on land freed up when ports in Pasir Panjang and Tanjong Pagar move to Tuas by 2027.

A pricing model for downtown flats

Editorial, The Straits Times, 20 Oct 2016

There has always been an element of luck involved in getting one's dream HDB flat - for example, in beating others waiting for a new apartment in a mature housing estate and in getting a queue number via ballot to pick a choice unit in a block. Fortune also plays a part in riding the property market cycle in order to buy low and sell high consistently. So, one might not begrudge those who happen to make a capital gain from subsidised public housing, especially when there's a prospect the market could favour others too in the same way. Indeed, appreciation over time of the biggest asset most people own is the basic assumption that is often made when they contemplate financial contingencies and retirement.

However, an outsized short-term gain rankles, all the more when it's available to only a few. This response was all too evident when owners of HDB flats at the Pinnacle@Duxton in Cantonment Road made huge profits - up to nearly $500,000 - when they sold their assets after the five-year minimum occupation period. If they qualified, they could have got back in the queue to buy another subsidised flat from the HDB. The public policy question that arises is whether state funds ought to be used to offer a potential windfall to a small category of buyers when there is a big gap between the subsidised price and the market value of a flat in a particular location - typically public housing in prime areas.

Location being a timeless factor affecting property values, it is necessary to review the existing HDB practice when planning for more downtown flats, like those to be built in the Greater Southern Waterfront. This is prized real estate - blue and green assets near the city, offering the possibility of a new reservoir and a 30km trail stretching from Gardens by the Bay to Labrador Park. The area cannot possibly exclude public housing, given the overarching need to promote social integration and social mobility. Treating it as a gold mine for a lucky few would perpetuate what National Development Minister Lawrence Wong called the "lottery effect". Clearly, a more equitable model is required by adjusting the usual parameters - a resale levy, minimum occupation period and lease duration - or devising something different.

Some industry players have suggested raising the launch price to limit the capital gains of buyers cashing out as soon as the rules permit. That would make public housing less affordable - an undesirable feature of the Design, Build and Sell Scheme, which was suspended in 2011 after a public outcry over high prices. The social mix that is desired in all areas would be crimped if only the better-off can afford to get a limited supply of HDB flats in prime districts like the Greater Southern Waterfront. Ultimately, luck might have to be a determiner, but it should be allowed to smile upon a broad base of home hunters.


East Coast may offer 6,000 new HDB flats

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