Smaller buyer pool leaves some with below-average resale prices
By Yuen Sin, The Sunday Times, 7 Oct 2018
When account director Vijeshwariee Yoganathan put her five-room flat in Redhill Road up for sale in October last year, she thought she would have no problem selling it within a few months, given that it was opposite an MRT station and on the 26th storey.
However, after 10 fruitless months, only one offer came in.
Ms Vijeshwariee, 37, eventually sold her flat at $813,000 last month - more than $60,000 below the average price of about $880,000 that other five-room flats on high floors in the vicinity had fetched over the past five months.
She believes the reason is that her block had reached the ethnic quota for Chinese residents. That meant she was able to sell the flat to only people from minority races, a factor that significantly reduced the pool of potential buyers.
Ms Vijeshwariee, who received inquiries from Chinese people who were interested in the flat, feels she has been penalised by the rule. The flat had been advertised for sale at $860,000.
More attention is being focused now on home owners like her who have been affected by the Ethnic Integration Policy (EIP), which specifies the proportion of units in an HDB block and precinct that can be owned by a particular racial group to ensure a balanced mix.
Four MPs raised concerns in Parliament last week about the EIP, saying that while it is useful in promoting racial harmony, the policy has affected residents' ability to sell their flats quickly or at market value.
National Development Minister Lawrence Wong reminded them that the EIP is not the sole factor in the sale of a flat as issues such as location, the storey it is on, its condition, remaining lease and market sentiments would also be considered.
He turned down Mountbatten MP Lim Biow Chuan's suggestion for the Government to buy back HDB flats from owners who cannot sell due to the EIP, but said the ministry would consider a suggestion from Bishan-Toa Payoh GRC MP Saktiandi Supaat to put out monthly guidelines on how much flats affected by the EIP could sell for.
Mr Saktiandi told The Sunday Times that he hopes this can help to cap any potential economic shortfall from the sale of such flats, compared with those in unaffected blocks.
Dr Leong Chan-Hoong, head of the Institute of Policy Studies Social Lab, said owners from other races looking to sell flats in blocks where the Chinese quota has been maxed out usually offloaded their homes at about 10 per cent below the average transacted prices of a similar flat type in the same neighbourhood.
His estimates were based on focus group discussions with 26 estate agents in June and July.
ERA Realty key executive officer Eugene Lim said the price differential is because of the smaller pool of home-seekers eligible to buy a flat that has met the ethnic quota for the majority race.
By Yuen Sin, The Sunday Times, 7 Oct 2018
However, after 10 fruitless months, only one offer came in.
Ms Vijeshwariee, 37, eventually sold her flat at $813,000 last month - more than $60,000 below the average price of about $880,000 that other five-room flats on high floors in the vicinity had fetched over the past five months.
She believes the reason is that her block had reached the ethnic quota for Chinese residents. That meant she was able to sell the flat to only people from minority races, a factor that significantly reduced the pool of potential buyers.
Ms Vijeshwariee, who received inquiries from Chinese people who were interested in the flat, feels she has been penalised by the rule. The flat had been advertised for sale at $860,000.
More attention is being focused now on home owners like her who have been affected by the Ethnic Integration Policy (EIP), which specifies the proportion of units in an HDB block and precinct that can be owned by a particular racial group to ensure a balanced mix.
Four MPs raised concerns in Parliament last week about the EIP, saying that while it is useful in promoting racial harmony, the policy has affected residents' ability to sell their flats quickly or at market value.
National Development Minister Lawrence Wong reminded them that the EIP is not the sole factor in the sale of a flat as issues such as location, the storey it is on, its condition, remaining lease and market sentiments would also be considered.
He turned down Mountbatten MP Lim Biow Chuan's suggestion for the Government to buy back HDB flats from owners who cannot sell due to the EIP, but said the ministry would consider a suggestion from Bishan-Toa Payoh GRC MP Saktiandi Supaat to put out monthly guidelines on how much flats affected by the EIP could sell for.
Mr Saktiandi told The Sunday Times that he hopes this can help to cap any potential economic shortfall from the sale of such flats, compared with those in unaffected blocks.
Dr Leong Chan-Hoong, head of the Institute of Policy Studies Social Lab, said owners from other races looking to sell flats in blocks where the Chinese quota has been maxed out usually offloaded their homes at about 10 per cent below the average transacted prices of a similar flat type in the same neighbourhood.
His estimates were based on focus group discussions with 26 estate agents in June and July.
ERA Realty key executive officer Eugene Lim said the price differential is because of the smaller pool of home-seekers eligible to buy a flat that has met the ethnic quota for the majority race.
As the quota for Chinese residents tends to be filled up in central regions such as Ang Mo Kio or Bishan, where prices tend to be higher, it could put a further squeeze on minority sellers as the supply of their flats could outstrip demand from viable buyers, he added.
On the other hand, blocks that are constrained by the Indian/Others and Malay ethnic quotas usually do not see a similar situation as they can still be sold to the relatively large pool of buyers, said Mr Lim.
More minority flat owners could be facing such issues now.
Dr Leong noted that 30 per cent of HDB blocks had reached at least one ethnic quota as of July this year, up from 27.9 per cent in 2016 and 24.4 per cent in 1989, when the EIP was implemented.
It was also noted in Parliament last week that the HDB received 1,600 requests to waive the quota rule between 2015 and last year. The HDB told The Sunday Times that about one in five appeals was successful.
Some sellers, such as retiree R. Sivanandam, 72, say they are unable to find buyers despite leaving their flats on the market for a long time.
Mr Sivanandam, who used to work in marketing, is asking for $720,000 for a five-room flat in Bishan Street 13, $50,000 below the average resale transaction price of five-room units in his block over the past year.
More minority flat owners could be facing such issues now.
Dr Leong noted that 30 per cent of HDB blocks had reached at least one ethnic quota as of July this year, up from 27.9 per cent in 2016 and 24.4 per cent in 1989, when the EIP was implemented.
It was also noted in Parliament last week that the HDB received 1,600 requests to waive the quota rule between 2015 and last year. The HDB told The Sunday Times that about one in five appeals was successful.
Some sellers, such as retiree R. Sivanandam, 72, say they are unable to find buyers despite leaving their flats on the market for a long time.
Mr Sivanandam, who used to work in marketing, is asking for $720,000 for a five-room flat in Bishan Street 13, $50,000 below the average resale transaction price of five-room units in his block over the past year.
But no one from the eligible Malay and Indian/Others ethnic groups is biting, though he has been trying to sell the flat for about two years.
"How long must I wait before I can find a buyer? I have diabetes and other liver and cardiac problems, and I need the cash for my retirement and medical issues," he said.
Mr Singh, 65, a security guard, who declined to give his full name, has been trying to sell his four-room flat in Clementi Avenue 1 for more than a year after his divorce.
He is asking for around $740,000, $10,000 less than what two other four-room flats in his neighbourhood had fetched in June, and earlier this month.
"My ex-wife doesn't believe me when I say that there are no takers. I just want to settle this so that I can move on with my life," said Mr Singh, who hopes the EIP can be reviewed.
But 54-year-old Mr Jain (not his real name), who is Indian, is more sanguine about the EIP, despite the fact that he had to let go of his three-room flat in Toa Payoh Lorong 7 for just $211,000 in August, below the average transaction rate of around $240,000 in his neighbourhood for the last three months. "We have to think about the country's interests and it is important to have a good racial mix in our housing blocks."
The EIP is also less restrictive for buyers who are in mixed-race marriages as they can choose their household ethnic classification based on either the applicant's race or their spouse's race at the point of purchase. But the same ethnic classification will apply when they sell.
When teacher Mohamed Shahrom Mohamed Taha, 39, and wife Yvonne Neo, 35, were hunting for a resale flat in the Bedok Reservoir area eight years ago, they knew that many blocks had filled their quotas for Malay families.
"We eventually got a flat that did not face any ethnic restrictions, but we were not worried even if there were, as we knew we could get around it by using my wife's race classification," he said.
When teacher Mohamed Shahrom Mohamed Taha, 39, and wife Yvonne Neo, 35, were hunting for a resale flat in the Bedok Reservoir area eight years ago, they knew that many blocks had filled their quotas for Malay families.
"We eventually got a flat that did not face any ethnic restrictions, but we were not worried even if there were, as we knew we could get around it by using my wife's race classification," he said.
Parliament: No plans to buy back HDB flats from owners who cannot sell them due to ethnic quota
By Rachel Au-Yong, Housing Correspondent, The Straits Times, 3 Oct 2018
National Development Minister Lawrence Wong has turned down an MP's suggestion that the Government buy back HDB flats from owners who cannot sell them owing to the Ethnic Integration Policy (EIP).
"The EIP is an important policy that is applied to all ethnic groups consistently," Mr Wong said in Parliament yesterday.
He was responding to Mr Lim Biow Chuan (Mountbatten), who had proposed helping non-Chinese flat owners avoid "the squeeze" of the EIP's effect on prices.
His ministry, however, will consider a suggestion from Mr Saktiandi Supaat (Bishan-Toa Payoh GRC) to put out monthly guidelines on how much flats affected by the EIP could sell for.
The duo were among four MPs who expressed concerns about the EIP, saying that while it is useful in promoting racial harmony, the policy has affected their residents' ability to sell their flats quickly or at market value.
The EIP specifies the proportion of units in a Housing Board block and precinct that can be owned by a particular racial group.
It was implemented in 1989 to ensure a balanced mix of ethnic groups living in HDB estates, in a move to promote racial harmony and strengthen social cohesion.
But some minority home owners have complained the EIP makes it difficult for them to resell their flats and, last month, three of them wrote to The Straits Times' Forum page, spelling out their difficulties.
Between 2015 and last year, the HDB received 1,600 requests to waive the quota rule, Mr Wong said when replying to Mr Pritam Singh (Aljunied GRC). But he did not say how many appeals were successful.
The figure given yesterday is higher than the 1,200 appeals received between 2013 and 2015, according to statistics disclosed previously by the ministry. Four in five of those appeals were not successful.
But the EIP is not the sole factor in the sale of a flat, Mr Wong said. "While home owners may have their own expectations of how much their flat can sell for, flat attributes such as location, storey, physical condition of the flat, remaining lease and market sentiments would also be considered by prospective home buyers," he added.
As for residents, especially the elderly, who face difficulty in selling their flats for months or years, Mr Wong said any help by the ministry would be given on a case-by-case basis. But "we have seen recent transactions within that same neighbourhood", he added in his reply to Mr Chong Kee Hiong (Bishan-Toa Payoh GRC).
Still, the HDB may give more time to those struggling to sell their flats and advise them to be realistic about their asking prices, he said, adding that it will "continue to exercise flexibility for households with exceptional circumstances".
By Rachel Au-Yong, Housing Correspondent, The Straits Times, 3 Oct 2018
National Development Minister Lawrence Wong has turned down an MP's suggestion that the Government buy back HDB flats from owners who cannot sell them owing to the Ethnic Integration Policy (EIP).
"The EIP is an important policy that is applied to all ethnic groups consistently," Mr Wong said in Parliament yesterday.
He was responding to Mr Lim Biow Chuan (Mountbatten), who had proposed helping non-Chinese flat owners avoid "the squeeze" of the EIP's effect on prices.
His ministry, however, will consider a suggestion from Mr Saktiandi Supaat (Bishan-Toa Payoh GRC) to put out monthly guidelines on how much flats affected by the EIP could sell for.
The duo were among four MPs who expressed concerns about the EIP, saying that while it is useful in promoting racial harmony, the policy has affected their residents' ability to sell their flats quickly or at market value.
The EIP specifies the proportion of units in a Housing Board block and precinct that can be owned by a particular racial group.
It was implemented in 1989 to ensure a balanced mix of ethnic groups living in HDB estates, in a move to promote racial harmony and strengthen social cohesion.
But some minority home owners have complained the EIP makes it difficult for them to resell their flats and, last month, three of them wrote to The Straits Times' Forum page, spelling out their difficulties.
Between 2015 and last year, the HDB received 1,600 requests to waive the quota rule, Mr Wong said when replying to Mr Pritam Singh (Aljunied GRC). But he did not say how many appeals were successful.
The figure given yesterday is higher than the 1,200 appeals received between 2013 and 2015, according to statistics disclosed previously by the ministry. Four in five of those appeals were not successful.
But the EIP is not the sole factor in the sale of a flat, Mr Wong said. "While home owners may have their own expectations of how much their flat can sell for, flat attributes such as location, storey, physical condition of the flat, remaining lease and market sentiments would also be considered by prospective home buyers," he added.
As for residents, especially the elderly, who face difficulty in selling their flats for months or years, Mr Wong said any help by the ministry would be given on a case-by-case basis. But "we have seen recent transactions within that same neighbourhood", he added in his reply to Mr Chong Kee Hiong (Bishan-Toa Payoh GRC).
Still, the HDB may give more time to those struggling to sell their flats and advise them to be realistic about their asking prices, he said, adding that it will "continue to exercise flexibility for households with exceptional circumstances".
Proximity to popular schools affects ethnic quota in central areas
By Yuen Sin, The Sunday Times, 7 Oct 2018
The Chinese quota under the HDB's Ethnic Integration Policy tends to be filled up in central areas such as Cheng San, Marymount and Serangoon Central, according to Dr Leong Chan-Hoong, head of the Institute of Policy Studies Social Lab.
He believes the proximity of such blocks to popular primary schools, including Special Assistance Plan schools that offer only Chinese as a mother tongue, contributes to the high demand from Chinese buyers - and their higher resale prices.
Parents are perhaps more willing to move closer to schools that they want to enrol their children in, he said.
The Malay quota tends to be filled in fringe locations such as Woodlands and Pasir Ris, while the Indian quota meets its limit in areas such as Admiralty and Kampong Java.
One possible remedy to address the influx of Chinese residents is to move these schools out to other locations where the quotas have not been filled, so that there will be more amenities in the fringe areas that will attract Chinese buyers, suggested Dr Leong.
This could reduce demand from Chinese buyers in the central region, and also remove the ethnic quota restriction for affected blocks so that minority sellers can sell to a larger market of buyers.
"It can also help to prop up resale prices in these fringe locations."
Mr M. Singh, who declined to give his full name, has been trying to sell his five-room flat in Queen's Road, Bukit Timah, for more than two years, with an asking price of about $910,000, on a par with resale prices for similar flats in his block over the past two years.
But he has had only two viewings.
"In comparison, my next-door neighbour, who has also put his flat on the market, gets people coming to see it every weekend.
"Unfortunately, the biggest draw is Nanyang Primary School, which mostly attracts Chinese buyers," said Mr Singh, who is in his 40s and works in the transport industry.
By Yuen Sin, The Sunday Times, 7 Oct 2018
The Chinese quota under the HDB's Ethnic Integration Policy tends to be filled up in central areas such as Cheng San, Marymount and Serangoon Central, according to Dr Leong Chan-Hoong, head of the Institute of Policy Studies Social Lab.
He believes the proximity of such blocks to popular primary schools, including Special Assistance Plan schools that offer only Chinese as a mother tongue, contributes to the high demand from Chinese buyers - and their higher resale prices.
Parents are perhaps more willing to move closer to schools that they want to enrol their children in, he said.
The Malay quota tends to be filled in fringe locations such as Woodlands and Pasir Ris, while the Indian quota meets its limit in areas such as Admiralty and Kampong Java.
One possible remedy to address the influx of Chinese residents is to move these schools out to other locations where the quotas have not been filled, so that there will be more amenities in the fringe areas that will attract Chinese buyers, suggested Dr Leong.
This could reduce demand from Chinese buyers in the central region, and also remove the ethnic quota restriction for affected blocks so that minority sellers can sell to a larger market of buyers.
"It can also help to prop up resale prices in these fringe locations."
Mr M. Singh, who declined to give his full name, has been trying to sell his five-room flat in Queen's Road, Bukit Timah, for more than two years, with an asking price of about $910,000, on a par with resale prices for similar flats in his block over the past two years.
But he has had only two viewings.
"In comparison, my next-door neighbour, who has also put his flat on the market, gets people coming to see it every weekend.
"Unfortunately, the biggest draw is Nanyang Primary School, which mostly attracts Chinese buyers," said Mr Singh, who is in his 40s and works in the transport industry.
Most flat sellers are able to secure buyers from eligible ethnic groups
We refer to the letters by Ms J. M. Daniel, Mr Raj K. M. and Mr William Gomez (Flexibility needed for minority-race flat owners, Sept 7; Medical bills loom, but unable to sell flat, Sept 12; and HDB needs to look at plight of minority-race flat owners, Sept 14; respectively).
The Ethnic Integration Policy (EIP) was introduced in 1989 to ensure a balanced mix of ethnic groups living in our HDB estates, promote racial harmony and strengthen social cohesion.
It applies to the sale and purchase of all new and resale HDB flats, and is implemented for all ethnic groups. Prospective flat buyers and sellers can check the ethnic proportions via the HDB InfoWEB.
Given the large volume of buyers on the market every year, most home owners are able to secure buyers from eligible ethnic groups.
The saleability of a flat in the open market is dependent on many factors, not just the EIP.
While home owners may have their own expectations of how much their flat could sell for, flat attributes such as location, storey height, the physical condition of the flat and market sentiments would also be considered by prospective home buyers.
Home owners looking to sell their flat would have to set realistic asking prices.
For those who are unable to sell their flats, HDB may grant them an extension of time.
Additionally, HDB has and will continue to exercise flexibility for households where there are exceptional circumstances.
Besides selling their flats, elderly home owners who wish to unlock the value of their existing flats can also consider taking up the Lease Buyback Scheme or renting out spare bedrooms.
However, we understand that each individual has different considerations and needs.
HDB branches offer one-on-one financial consultation services to help home owners better understand the various monetisation options so that they can make decisions that best meet their needs and preferences.
Lily Chan-Wong Jee Choo (Mrs)
Director (Policy & Property)
Housing & Development Board
ST Forum, 20 Sep 2018
We refer to the letters by Ms J. M. Daniel, Mr Raj K. M. and Mr William Gomez (Flexibility needed for minority-race flat owners, Sept 7; Medical bills loom, but unable to sell flat, Sept 12; and HDB needs to look at plight of minority-race flat owners, Sept 14; respectively).
The Ethnic Integration Policy (EIP) was introduced in 1989 to ensure a balanced mix of ethnic groups living in our HDB estates, promote racial harmony and strengthen social cohesion.
It applies to the sale and purchase of all new and resale HDB flats, and is implemented for all ethnic groups. Prospective flat buyers and sellers can check the ethnic proportions via the HDB InfoWEB.
Given the large volume of buyers on the market every year, most home owners are able to secure buyers from eligible ethnic groups.
The saleability of a flat in the open market is dependent on many factors, not just the EIP.
While home owners may have their own expectations of how much their flat could sell for, flat attributes such as location, storey height, the physical condition of the flat and market sentiments would also be considered by prospective home buyers.
Home owners looking to sell their flat would have to set realistic asking prices.
For those who are unable to sell their flats, HDB may grant them an extension of time.
Additionally, HDB has and will continue to exercise flexibility for households where there are exceptional circumstances.
Besides selling their flats, elderly home owners who wish to unlock the value of their existing flats can also consider taking up the Lease Buyback Scheme or renting out spare bedrooms.
However, we understand that each individual has different considerations and needs.
HDB branches offer one-on-one financial consultation services to help home owners better understand the various monetisation options so that they can make decisions that best meet their needs and preferences.
Lily Chan-Wong Jee Choo (Mrs)
Director (Policy & Property)
Housing & Development Board
ST Forum, 20 Sep 2018
Oral Answer by Ministry of National Development on Ethnic Integration Policy -2 Oct 2018
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