Property Agencies spooked by talk of changes to public housing system

HDB Owners Beware! Sell your houses in the resale market now when you still can! Ask me how! **

Alarm and uncertainty are permeating property agencies after National Development Minister Khaw Boon Wan floated three suggestions on how he might reboot the public housing system.

While some fear that the changes could cause redundancies in the industry, others worry that they might produce the opposite of the desired result.

On Sunday, Mr Khaw said reverting to the pre-1971 system of allowing flats to be sold back only to the Housing Board, with minimal capital gains, could be one way of bringing down the prices of new flats. He has pledged to reduce these by some 30 per cent.


If applied to all existing flats, this would effectively shut down the resale market, property analysts said.

"Okay, we can all close shop already," said ERA Realty key executive officer Eugene Tan, referring to the reactions from the 5,000 agents in his company.

Observers said clarity is needed on whether HDB intends to revert to its beginnings of providing homes just for people to live in, or maintain the option of having them as a form of investment, which they have evolved into.

Mr Khaw's two other ideas - shortening flat leases from the current 99 years, and lengthening the minimum occupation period (MOP) so buyers must wait longer before they can sell their flats - also drew mixed reactions.

Extending the MOP, currently at five years, would stop people from treating flats as asset classes to sell for profit.

But in the short term, it might actually cause resale flat prices to spike as a longer MOP means fewer flats put up for sale, said Savills Singapore research head Alan Cheong. "Resale flats would be more limited, but the buyer demand would still be there as it is an independent market."

As for selling cheaper flats with shorter leases, this would mimic the situation in the private property market, where there are 99-year-leasehold developments and freehold ones, with the latter type of unit about 20 per cent more expensive.

Source: The Straits Times –12 March 2013