Schemes and Grants for the New Home Buyer

Buying your first home in Singapore could be extremely daunting. Singapore has one of the world’s most expensive properties, and cost of living is nothing short of cheap at all. Fortunately, HDB has provided several schemes and grants to help with this financial commitment and initial cash outlay.

  1. CPF Housing Grants for HDB Flats
    On top of the already subsidised purchase prices for new HDB flats, eligible buyers can also receive further subsidies in the form of a CPF Housing Grant of up to $80,000. The eligibility and amount granted is dependant on several factors such as whether you are a first time applicant, or if you are married. More information could be found here.
  2. CPF Housing Grants for DBSS Flats
    The new Design, Build and Sell Scheme (DBSS) flat is offered for sale under similar conditions as that of a new HDB, the only difference being that the purchase is made directly with the developer. More information could be found here.
  3. CPF Housing Grants for ECs
    Two types of grants are basically allowed for EC purchases from developers, The Family Grant, and the Half-Housing Grant. The family grant only applies if you are a first time home buyer, while the half housing grant applies if one of the applicant is a first time citizen applicant, while the spouse has previously enjoyed a housing subsidy. The grant amount is reflected in the table below:

    Average gross monthly household income of all persons in application, i.e. applicants and occupiers Family Grant Half-Housing Grant

    If you are a first-timer (FT) SC and your co-applicant is a second-timer (ST) who has previously taken 1 housing subsidy, i.e. FT/ ST couple

    Singapore Citizen (SC/  SC) Household SC/ Singapore Permanent Resident (SC/ SPR) Household
    $10,000 or lower $30,000 $20,000 $15,000
    $10,001 to $11,000 $20,000 $10,000 $10,000
    $11,001 to $12,000 $10,000 Nil $5,000
    $12,001 to $14,000 Nil Nil Nil

 

Property Valuation: Some factors to take note of

What Affects the Value of your Property?

 

Properties in Singapore rank among the highest in the world, and often do we see huge fluctuations in the property market. There are many other factors that can affect a property’s value, some dealing with the property itself, and some relating to the environment. This article details out 5 of the main external factors that can drastically affect property value.

  • Access to Public Transportation

 

This point applies very strongly to Singapore due to the outrageously high car prices here. It hence makes sense especially so in Singapore to rely on our public transportation systems for the daily commute.

 

One can easily expect their property prices to increase as they place closer to big MRT lines and bus interchanges. This effect has recently seen a slightly smaller effect due to the influx of newer MRT lines.

 

A small downside comes with being near public transportation systems though, and that is the noise level. Situating close to a public transportation system comes with the added road buzz and expectations of way higher noise levels, a feature that is immensely undesirable to some.

 

  • Value of Neighbouring Properties

Well it comes with no surprise that the closest market indication is a property that is close by.  It is hence important to understand the transaction properties of similar projects in the neighbourhood, give and take.

  • Location

This is by far the most important factor of property pricing. In general, properties located near to the Central Business Districts or prime shopping centres are worth a way heftier price tag, while those closer to the outskirts tend to be priced a tad lower. The disparity here could set prices of properties near Orchard road almost 5 times the price of those situated further out.

  • Nearby Amenities

While on the topic of location, what surrounds the location usually affects property price quite significantly. It is the convenience that people are willing to pay for, and everyone just seems to be addicted to it. Amenities such as ready access to grocery stores, a park, food nearby or shopping centres could inflate prices quite significantly.

Conversely, being close to a crematorium or industrial properties tend to adversely affect the prices negatively. A good way for home buyers to review this is to look at the Urban Redevelopment Authority’s Master Plan as a guide to forecasting the value of properties.

  • Layout

One of the more often overlooked factors is that of the apartment layout. This often has to do with the location of windows or balconies that could permit more or less sunlight inside the house, which could drastically affect internal temperature or create undesirable reflections on reflective displays. So do take note on how the sun could be facing the next time you are looking at a property.

Property Analysts forecasts on Property Land Prices

Favourable real estate share markets have led to booming business for property developers, leading to increased pressure for developers to keep up to shareholder expectation with some solid sales figures.

According to FTSE Straits Times Real Estate Holding and Development Index have risen 26.8% last year, a stark jump from previous years. Firms that are able to push out several new launches to ride the bullish market will be able to benefit from this market upswing, especially companies which have built up their land area before last year’s spike. This is a clear indication that the property market is in good health

Property analysts from JPMorgan foresees a re-rating of some of the property stocks, hinting even at potentially at the current market situation to be the start of a 3-year upswing. Their analysis of major land tenders in 2017 suggests that prices should rise between 6 to 13 % over the next one to two years, allowing developers to reap profit margins of between 5% to 10%.

Though views differ from one analyst to others, what is apparent is that there is a larger margin of safety for property developers that purchased large land areas earlier at lower prices, given the ambiguity over whether buyers will buy at higher prices.

It was noted by Mr Vijay Natarajan, RHB Research Institute’s property and Reits analyst that developers have paid a high price due to the apparent competition for land lately. Expecting only a 3 to 7% rise in property prices for 2018.

Developers have to pay additional buyer’s stamp duty (ABSD) on the land cost with interest if they do not build, sell and complete a project within five years, and banks area already imposing constrains on home loan packages, reducing affordability for buyers, and generally dampening the market.

The overly optimistic land bids will limit developers’ profit margins and raise the risk of more supply-side cooling measures from the Government, Mr Natarajan said.

City Developments (CDL) and UOL Group are seen by most analysts as among the best large-cap proxies to ride the impending market ascent given their sizeable residential land bank and decent exposure to the local office sector, which is also on the mend.

RHB’s Mr Natarajan favours the small-mid cap space where stocks are still trading at relatively higher discounts of 30 to 50 per cent with Apac Reality the top pick. He expects transaction numbers to remain high irrespective of price movements as developers are bound by the 5 years to launch and sell their units. He also views that if property prices could climb more than 5 percent, there should be another rally in large-cap developers.

The Choice Between the Executive Condominium and Condominium

Executive Condominium (EC), Condominium, what’s the difference? This article intends to bring light to one of the lesser understood terminologies in Singapore’s property and home buying landscape. Often simply understood as the home of choice for Singapore’s upper middle to middle class, the EC presents a potentially rewarding investment especially for first time home buyers. By definition, the EC is a public-private hybrid that provides the comfort and luxury of a private condominium with its full-blown facilities, luxury, amenities and comfort, with the attractive perks and grants of public housing.

While Private Condominiums have been a part of Singapore’s real estate landscape since the seventies, Executive Condominiums is by contrast a relatively new construct that came into fruition 20 years later. Singapore’s public policy has always been one to align towards home ownership, and with a strengthening middle class, new ways had to be had to be found to house the new found affluent. The Executive Condominium came into play, serving as a hybrid bridge between private and public housing, catering to the upper middle-class segment of the society.

It is no wonder the EC finds itself as one of the more obvious choice for Singaporeans with a little further spare cash to allocate to housing, but cannot yet afford a fully private apartment. This article explains in detail the various scenarios where one might find themselves purchasing an EC and the eligibility criteria to be able to qualify one.

 

Eligibility:

The EC with all its perks, comes with some caveats, it is hence important to first understand the stringent criteria set forth by the government to ensure that not all people could apply for this unique type of flat to begin with. You can apply for an Executive Condo if you meet the following criteria:

  • Your household income must not be above $14000
  • You are a Singaporean Citizen
  • You have not owned any property, locally or overseas, in the last 30 months and you do not own any property now
  • You have not owned more than one HDB or EC flat previously

You also have to fall under one of the following schemes:

  • Public Scheme: you apply either with your spouse (and children, if any), your parents (and siblings, if any), or solely with your children (granted that you have legal custody).
  • Single scheme: you are applying by yourself, as a single.
  • Fiance scheme: you are applying with your fiance.
  • Orphan scheme: you are an orphan and you are applying with a sibling.

And:

  • If you are applying under the single scheme as detailed above you will have to be 35 years or older whilst an age of at least 21 will suffice if you are applying under any of the other schemes.
  • If you are applying for either the Orphan, the Fiance or the Public scheme, then at least one co-applicant needs to be either a Singapore Citizen or a Singapore Permanent Resident.

If you fulfil the above stated criteria, congratulations! You are granted save passage to applying for an Executive Condominium.

Similarities

Other than the rules governing it and its public housing traits, the Executive Condominium is in essence absolutely identical to a Private Condominium with no distinction. It shares the same myriad of amenities such as private function rooms, pools, gyms and under the comfort of 24/7 security, on top of an enhanced aesthetic outlook.

Differences

An Executive Condominium is fundamentally designed to be a home rather than an investment option. Hence comes the caveat of an EC owner having to live in the EC for at least 5 years before it can be transacted out like a private property. Even to that end, one is also imposed with a further constraint of having to only transact an EC to a Singaporean Citizen or Singapore Permanent Resident until the 10-year mark, where an EC essentially transforms into a private condominium and can be sold freely in the market. This constraint is also better known as the Minimum Occupation Period (MOP) who brings no harm to anyone who intends to buy an EC as a roof instead of a investment vehicle.

An Executive Condominium also comes with the strong perk of being up to 30% cheaper than a Private Condominium of similar stature. With the option of a grant from HDB, it is no wonder why so many first timers swear religiously to an EC before upgrading to a private condo. However, sitting out that 10-year mark essentially brings about immense capital gains for any potential applicants.

Conclusion

A pretty clear decision, if you are a first-time home buyer, with surplus over a HDB loan, go for an EC. The long-term capital appreciation more than justifies the 10-year minimum occupation period. If you intend for short term appreciation, are not purchasing property for the first time, or if you have even more disposable income to afford a private condominium, that might just be the right choice for you.

Property Reflections and 2018 Outlook

Total home sales for 2017 number at 10,682 for private homes from developers according to industry experts, analysts and URA. This rise indicates a steep increase from the 7,972 number of units sold in 2016, marking a 34% increase, and the highest since 2013.

EL Development’s Symphony Suites in Yishun which was launched in Feb 2015 and Parc Riviera which was launched in Nov 2016 came in top in new home sales in the month of December. While 50 units were sold at a median price of $1,027 psf, Parc Riviera was so popular that it sold 44 units at a median price of $1,223 psf. Coming in third in the new home sales category is Parc Botannia of Wee Hr Holdings, which sold 32 units at a median price of $1,283 psf.

“Developers might be witholding property launches in lieu of projecting  further increase in prices in 2018,” says Christine Li, Cushman & Wakefield’s head of research for Singapore. However, according to Li, expected launches in 1H2018 include Low Keng Huat’s 99-year leasehold, mixed-use development along Perumal Road at Farrer Park; MCL Land’s 99-year leasehold, 275-unit residential development along Margaret Drive; and City Developments’ 124-unit New Futura, a freehold condominium at Leonie Hill Road, where private preview by invitation only will be held on Jan 18.

In December, traditionally understood as one of the slower months in property sales, only 231 units were taken up compared to the 450 units in November. Faster clearance of Developer’s holding inventory was due to the higher take-up rates in December this year, almost twice the number of units launched for sale.

We at SG Home Partner are slightly negative of the outlook of the property market in 2018. We expect the month of Jan to project increased sales in anticipation of the auspicious lunar new year. With increase in interest rates in property loans, volatility in property transactions may dip to a decline.

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