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The HDB market is fracturing...

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PNGMK
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The HDB market is fracturing...

Postby PNGMK » Tue, 10 Dec 2013 9:38 am

Two things I have recently become aware of and a third we're all aware of;

1. From Sept you can no longer use 100% of your CPF OA for a HDB apartment with an "old" lease (I'm not sure what the definition is but I think one that has only 50 years or so left). That immediately caused a fracture in the market because resale flats depend very much on OA for funding. Owners with older flats such as my ex are now finding the market is in free fall.

2. The ethnic quota system is a real problem in some areas - such as TP - there are far too many chinese so any Malay/Indian sellers are forced to sell only to the same races and are a finding NO buyers.

3. The banning of PR's owning HDBS (in various ways such as the most recent capping of %) is taking out a lot of buyers in the market.

I guess they reap what they sew. It's been a good run but I was wondering two decades ago what happens when the leases start to get short. I guess the answer is the last bag holder loses out.

Thank God I own freehold. I ALMOST bought HDB.

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Postby JR8 » Tue, 10 Dec 2013 12:10 pm

Interesting.

Under UK law you'd be entitled by statute to buy a lease extension (IIRC this is an additional 90 years), that is added onto your existing remaining term.

Can you not do such a thing here? I think I've made the point before, that if you can't you're progressively going to get an avalanche of unmortgagable and unsaleable property.

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Postby sundaymorningstaple » Tue, 10 Dec 2013 1:07 pm

I believe is doable on application but isn't guaranteed. But this, only with private housing. HBD, Not yet. But they are going to half to do something in the next 10~15 years for sure. I'm sure they are aware of the problem, but I doubt that they have a comprehensive solution short of forcing people out and whatever the gahment feels is a fair price and allowing them to repurchase and a subsidized rate in a new flat (of the government's choosing - are far a locale is concerned). Of course the new flats might be the same size (number of rooms) but you can bet they will be fully 25% smaller or more in liveable area.

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Postby PNGMK » Tue, 10 Dec 2013 1:38 pm

sundaymorningstaple wrote:I believe is doable on application but isn't guaranteed. But this, only with private housing. HBD, Not yet. But they are going to half to do something in the next 10~15 years for sure. I'm sure they are aware of the problem, but I doubt that they have a comprehensive solution short of forcing people out and whatever the gahment feels is a fair price and allowing them to repurchase and a subsidized rate in a new flat (of the government's choosing - are far a locale is concerned). Of course the new flats might be the same size (number of rooms) but you can bet they will be fully 25% smaller or more in liveable area.



The adhoc solution at the moment appears to be forced repurchasing of older block - (not necessarily for enblock redevelopment - there's one in TP that's been sitting for 5 years empty so far).

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Postby PrimroseHill » Tue, 10 Dec 2013 3:32 pm

What about en bloc? The govt re-built and exchange?

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Postby JR8 » Tue, 10 Dec 2013 3:55 pm

PNGMK you mentioned a 'TP' yesterday, but where is it, Tanjong Pagar, Toa Payoh, Tampines, I'm a bit confused?

When people grow up, and see their expected future inheritance expiring near valueless, I expect action will be taken :wink:

[Example: When born your parents have a 75 year lease on a flat. By your 50th birthday, they still live there, but the unit is unmortgageable, and probably unsaleable. Your potential inheritance is now worth no more than the remaining open-market rental value of the unit, and even that would probably have to be heavily discounted in order to find a buyer (i.e. the market has narrowed to purely, and acutely commercially aware, landlords).]

p.s. @PH. There was say originally a 100 year lease, and it's (leasehold) an exponentially wasting-asset. You are a leaseholder, with no rights upon the land on which the building stands, and so cannot en-bloc.

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Postby PNGMK » Tue, 10 Dec 2013 4:01 pm

JR8 wrote:PNGMK you mentioned a 'TP' yesterday, but where is it, Tanjong Pagar, Toa Payoh, Tampines, I'm a bit confused?

When people grow up, and see their expected future inheritance expiring near valueless, I expect action will be taken :wink:

[Example: When born your parents have a 75 year lease on a flat. By your 50th birthday, they still live there, but the unit is unmortgageable, and probably unsaleable. Your potential inheritance is now worth no more than the remaining open-market rental value of the unit, and even that would probably have to be heavily discounted in order to find a buyer (i.e. the market has narrowed to purely, and acutely commercially aware, landlords).]

p.s. @PH. There was say originally a 100 year lease, and it's (leasehold) an exponentially wasting-asset. You are a leaseholder, with no rights upon the land on which the building stands, and so cannot en-bloc.


Toa Payoh. The first really large 'new town' estate built after the smaller experimental inner fill ins.

Yes you're right about the lease hold issue.

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Postby taxico » Sat, 14 Dec 2013 8:47 am

JR8 wrote:...p.s. @PH. There was say originally a 100 year lease, and it's (leasehold) an exponentially wasting-asset. You are a leaseholder, with no rights upon the land on which the building stands, and so cannot en-bloc.


as a leaseholder, you are entitled to sell your building en-bloc... privatized HUDC (?) owners have done so successfully, as have other condos on 99-year lease - some at good prices (whatever years remaining on their lease). the developer almost always tops up the lease to 99/103 years.

i think the issue here is if the land is HDB-owned and cannot be privatized, it cannot be en bloc'ed!

if you looked at the historical transaction prices for 99 year leasehold property, you will see a familiar curve. this makes them attractive purchases for resale - at least for the first decade or so (and also because they are fairly affordable to most (at the moment anyway) to most locals).

personally, i would never buy them as they tend to be too competitively priced to be able to net a bargain.

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Postby Wd40 » Sat, 14 Dec 2013 9:36 am

My view is, the HDB market has had a serious adjustment in COV levels in the last one year. Most sellers still cant believe this and are holding out until the get the COV of 30-40K but that is not happening. So its taking 6-8 months to sell a flat and the COVs have come down to 10-15k for small flats in areas like Tampines and large flats in places like Punngol and Sengkand are trading at 0 COV.

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Postby PNGMK » Sat, 14 Dec 2013 4:14 pm

Wd40 wrote:My view is, the HDB market has had a serious adjustment in COV levels in the last one year. Most sellers still cant believe this and are holding out until the get the COV of 30-40K but that is not happening. So its taking 6-8 months to sell a flat and the COVs have come down to 10-15k for small flats in areas like Tampines and large flats in places like Punngol and Sengkand are trading at 0 COV.


In the case of my ex wife's place in TP it's actually negative COV. The potential buyers are asking my ex "can you pay us $10k to buy" as she has an older flat with a tight racial quota! They're basically asking her to refund 10k cash from their loaned monies back to her for them having bought it. Those of us who buy and sell motorbikes will recognize this tactic.

She may have to actually do it to move it as the flat is realistically over valued.

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Postby Wd40 » Sat, 14 Dec 2013 5:04 pm

PNGMK wrote:
Wd40 wrote:My view is, the HDB market has had a serious adjustment in COV levels in the last one year. Most sellers still cant believe this and are holding out until the get the COV of 30-40K but that is not happening. So its taking 6-8 months to sell a flat and the COVs have come down to 10-15k for small flats in areas like Tampines and large flats in places like Punngol and Sengkand are trading at 0 COV.


In the case of my ex wife's place in TP it's actually negative COV. The potential buyers are asking my ex "can you pay us $10k to buy" as she has an older flat with a tight racial quota! They're basically asking her to refund 10k cash from their loaned monies back to her for them having bought it. Those of us who buy and sell motorbikes will recognize this tactic.

She may have to actually do it to move it as the flat is realistically over valued.


May be thats true. I remember, when the place we rented, the owner was trying to sell initially at 40K COV and the initial valuation was 365K for 3A flat. It was unsold for 3 months and then they had to do revaluation and the new valuation was 368K :o That is 3k higher than the initial one even though COVs were falling. The valuation is kind of a trailing indicator and it will take sometime for the valuations to fall. May be its a good idea to sell it off now at 10K below valuation rather than waiting for the valuation itself to fall.


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