ST : A good time to buy resale flats

Sep 11, 2010

FIRST-TIME BUYER

A good time to buy resale flats

Old dreams, new hopes, real options. The recent anti-speculative measures have changed all the rules for property owners, buyers, sellers and hopefuls. Tan Hui Yee and Joyce Teo find out what it means for six people at various stages of life.

MR ALEX TEO, 28, bank executive

OLD DREAMS

If Mr Teo had his way, he would be living it up in a semi-detached house with a covered car porch and indoor swimming pool.

The house would have bedrooms on the ground floor, so the eldest son's parents need not climb the stairs should they have problems moving around. And there would be a family dog, an adorable cocker spaniel, to complete the picture.

But that is a distant dream now. In the meantime, he and his fiancee, both recent graduates of Nanyang Technological University, have been shopping for a matrimonial three- or four-room Housing Board resale flat in the east, where both their parents live. They plan to tie the knot in 2012.

His ideal flat?

'Just somewhere not so noisy, away from the road or highway. Preferably with front and back windows aligned and next to an MRT station.'

Mr Teo and his fiancee started viewing flats in the last week of last month, just one week before the recent changes to home-buying rules were announced. They had a budget of $550,000, including $60,000 to cover their 5 per cent cash down payment and cash-over-valuation amount.

Back then, the market was red-hot and they even came across a four-room flat in Marine Parade with a cash-over-valuation amount of $100,000.

'I felt a bit sian,' Mr Teo says, using the Hokkien term for weariness.

Then, they chanced upon a sixth-level, three-room flat in Marine Parade going for $390,000 plus another $35,000 cash-over-valuation. 'We liked it but thought we should view more flats before deciding. The next day, it was sold.'

He thought: 'Housing in Singapore is quite expensive. Just imagine, two graduates find it so difficult to get a small, nice home in a mature estate in the east. What about diploma holders and others?'

WHAT CHANGED ON AUG 30

The changes did not affect Mr Teo directly, but he will have to factor in new rules that will apply to him once he buys an HDB resale flat. These buyers now have to live in the flat for five years even if they have not taken a housing subsidy. Previously, they could sell it after just three years. Mr Teo would also not be able to invest in private property within five years of buying that flat.

NEW HOPES

The couple's budget has not changed, but Mr Teo hopes they can get a bigger, better flat now, with the sombre mood of today's market.

But he does wonder what it means for his plans to eventually upgrade to private property as his future income rises. He notes: 'The new rules make it quite tedious for people who want to change homes. It looks like the Government is trying to tell everyone that your first home should be your dream home.'

REAL OPTIONS

In three words: Go for it!

Housing experts say there is no better time for first-time buyers to purchase their resale Housing Board flats now that market sentiment has been dampened by the recent changes.

Mr Albert Lu, managing director of C&H Realty, expects the overall median cash-over-valuation amount to drop by $10,000 over the next three months.

'I won't advise you to wait, I suggest that you continue to hunt for your ideal home. A good time to buy is when the market is quieter and not when buyers are rushing out to buy.'

Dennis Wee Group director Chris Koh suggests that first-time buyers take the Central Provident Fund housing grant (of $30,000 to $40,000) to fund their purchase. Under the old rules, those who did not take the housing grant were subjected to a lower minimum occupation period of three years. With the changes, the five-year occupation period now applies to everyone.

But Mr Alastair Tong, senior manager of marketing, recruitment and training at HSR Property Group, warned these couples to temper their expectations of upgrading or investing in private property within five years of buying their flat.