ST : Cancelled condo purchase

Sep 11, 2010

HDB UPGRADER HOPEFUL

Cancelled condo purchase

MR B. RAMASWAMY, 36, project manager

OLD DREAMS

Mr Ramaswamy became a Singapore citizen six years ago and has taken quite enthusiastically to its property fever. For the past four months, he has traversed across Singapore in search of his perfect condominium unit.

The former Indian national bought a new Housing Board (HDB) executive flat in Sengkang after he got his pink identity card six years ago, and lives there with his wife and two sons.

He used his Central Provident Fund (CPF) savings to pay for his flat, but squirrelled away enough cash for the down payment of his dream condo unit - a $1.35 million three-bedroom apartment at Sanctuary Green in the upscale Tanjong Rhu. 'I've been living simply and saving to buy a private condominium for about seven years.'

Mr Ramaswamy planned to hold on to his HDB flat as a home and rent out his condo unit for at least two years before moving into the private property to enjoy the facilities.

'I am the only family member who is working. I want to invest in property because of the regular rental income.'

He almost got there.

Two days before the Government imposed stricter lending rules on property buyers, Mr Ramaswamy gave his agent a cheque for the 1 per cent option fee to book the unit.

But he realised on the morning that the changes were announced that he would not have enough cash for the down payment. 'I took back my cheque,' he said. And the owner kindly allowed him to, without penalty.

WHAT CHANGED ON AUG 30

Under the revised regulations announced on Aug 30, a buyer with one or more outstanding housing loans must stump up a down payment of 30 per cent when buying an additional property.

This is up from 20 per cent previously.

At least 10 per cent of this down payment has to be in cash, up from 5 per cent previously. The rest of the down payment can be paid using CPF monies.

Those who do not have any outstanding housing loans can continue to borrow up to 80 per cent of the property's price.

NEW HOPES

With the new rules, Mr Ramaswamy's cash savings of $270,000 would be enough to buy him only a $900,000 property, instead of the $1.35 million Sanctuary Green unit.

'I don't see the measures as draconian but I am disappointed,' he said. He now wants to wait for a few months before trying again for a lower-priced condo in the west of Singapore.

On the flip side, he hopes the cooling measures will bring down prices, which would put his condo dream within reach again.

'I may not get what I want now, but there will be other opportunities,' he said. 'I have not lost anything and life is just not all about property.'

REAL OPTIONS

The outlook is not all that gloomy for upgraders. ECG Property chief executive Eric Cheng said Mr Ramasawamy just has to downsize his expectations and go for a smaller property or one that is further away from the city.

HSR Property Group's senior manager of marketing, recruitment and training, Mr Alastair Tong, says property sellers are more 'realistic and reasonable' now.

'We should see more serious sellers in the market instead of sellers asking for inflated prices,' he said. Besides, in the mid to long term, buyers can expect to see positive returns on their purchases.