When Mr Peter Breitkreutz decided to buy a Housing Board resale flat in July last year, living close to other Australians was hardly uppermost in his mind.

A permanent resident since 2008, all the Brisbane native wanted was a five-room unit on a mid to high floor, lift access on each floor and a flat that was not too old.

‘We were very open to many areas, except the west because we weren’t too familiar with places like Jurong,’ said the 43-year-old who works in the financial industry.

He and his wife, who is from China, viewed properties in Woodlands, Ang Mo Kio and Pasir Ris before settling for one in Sengkang.

The flat was close to a pre-school in Yio Chu Kang that they could enrol their two-year-old son in.

It was also a five-minute drive to his office in Ang Mo Kio, until he took up a new job in the city recently.

The flat’s valuation was $400,000 but, after negotiations with the seller, the couple knocked back the price to $375,000.

The factors influencing their purchasing decision are not unique, said property agents.

They, as well as other PRs from countries like India, China and Indonesia, confirm that similar considerations are at play behind their resale-flat transactions.

The issue of PRs and resale flats was in the spotlight last week. Minister Mentor Lee Kuan Yew said at a dialogue that the Government did not want to see new citizens congregate and would disperse them across HDB estates.

The HDB also disclosed that it was considering introducing a separate ethnic quota for PRs to prevent enclaves from forming in housing estates.

The latest statistics show there are 533,200 PRs. They own around 5 per cent of the nearly 900,000 HDB flats islandwide.

According to property agents, PRs pick a resale flat primarily based on what they can afford.

They also hope for the flat to be close to their workplace, transport options like an MRT station or bus interchange, and facilities such as schools and supermarkets.

Being near others of the same nationality is not a major pull factor, said agents, though certain locations may see a higher concentration of PRs from a specific country, compared with other districts.

PRs from Myanmar, for example, like Jurong West because they work in shipyards, offices and factories in the area.

PropNex agent Abdul Hamid has seen many Indian PRs going for flats near Lorong Ah Soo ‘as there’s an international school for Indians there’.

Proximity to places of worship sometimes matters, with some Indian PRs plumping for units in Race Course Road or Farrer Park, to access temples in Little India.

Filipinos choose areas such as Jurong West, Simei and Bukit Panjang for the relatively cheaper prices.

But PRs from Malaysia and China are scattered islandwide.

ERA agent Joyce Lim said her PR clients ‘don’t really say they want to stay near friends’. It is mainly pricing that influences where they buy, she added.

Deals involving PRs – usually young couples or those with kids – make up 20 to 30 per cent of property agents’ monthly transactions.

They note that PRs with higher incomes pick newer estates like Punggol or Sengkang and those closer to town like Queenstown.

In such areas, they may pay up to $350,000 for a three-room flat and $500,000 for a four-room one.

The less well-off opt for more mature neighbourhoods such as Bukit Batok where a three-room flat may cost $300,000, and a four-room type up to $430,000.

But while certain areas may be preferred, agents said they do not know any specific block that has a high concentration of PRs in general, or those from a specific country.

The fact is that PRs and Singaporeans are subject to the same quotas under the Ethnic Integration Policy, introduced in 1989.

Proportions for the main ethnic groups – Chinese, Malays, and Indians/Others – in each block, and each precinct of around 10 to 12 blocks, are subject to quotas.

Sale of a flat to a buyer from an ethnic group that has reached the block or precinct limit is not allowed.

The aim is to maintain a healthy racial mix in estates.

Dennis Wee Group agent Ivy Eyu said a Chinese customer of hers was unable to buy a five-room flat in Queenstown because the quota had been reached.

PRs from Japan, Myanmar, Europe and Africa fall under the Indians/Others category.

And given the influx of immigrants in recent years, agents like ERA’s Ms Angeline Lim said they have run into a roadblock when representing Indians.

They have been unable to close deals if the quota for a block or precinct has been reached.

Which is why ERA’s senior division director Syed Abdullah Alhamid said: ‘Looking into the policy now is a plus point, but I think it’s also time to up the quota for the Indians/Others group.’

His firm’s marketing director Tan Yam Seng agreed, saying: ‘If the Government wants to do anything about it, they should adjust it to reflect the current ratio of the market population.’

Source : Sunday Times – 31 Jan 2010

In this era of homeland security, a building should not be a house built on sand.

When a truck bomb went off outside a building in Oklahoma in the United States in 1995, most of the 168 victims died – not from the direct blast effects, but from the partial collapse of the building.

There would have been more survivors if it had been designed against progressive collapse, that is, the failure of one part leading to the crumbling of a much larger part, or even the entire building.

In hindsight, too, the 18-year-old building could have been retrofitted with added structures to strengthen it.

Meanwhile, one outcome of the Sept 11, 2001 terrorist attacks in the US is a worldwide drive to strengthen the security design of buildings.

In Singapore, the Ministry of Home Affairs (MHA) on Jan 20 produced a 138-page document to help those who design, construct and manage buildings to protect their properties against terrorist strikes.

The draft version of the Guidelines for Enhancing Building Security was first released in November 2007.

Home Affairs Minister Wong Kan Seng, in his foreword, called on the building and construction community to use the document to improve building security.

He described it as a ‘comprehensive compilation of international best practices in building security that can be applied to Singapore’.

The document cited several cases to bring home the reality of the regional threat.

Last July, seven people were killed and scores injured when suicide bombers breached the JW Marriott and Ritz-Carlton hotels in Jakarta and set off explosives.

The document noted that the terrorists’ targets ‘are now commonly hotels or resorts’.

It recommended different tiers of protection, based on factors like the number of people who use the building, its purpose, nature of activity and if it is symbolic or iconic.

The proposed modes of protection include access control and alarm systems, vehicle anti-ramming barriers and even how vegetation can help or hinder security.

‘Trees with a trunk diameter of larger than 50cm can be used to stop a vehicle, depending on the protection level required,’ said the document.

But thick vegetation can also be exploited to hide bombs and weapons, it said.

Building owners may claim that such measures are costly, but the ministry said costs will not increase much if security concerns are addressed from the beginning – during the design stage.

This is the practice of City Developments, which said security issues are addressed from the design phase of each new development, encompassing architectural design, building security infrastructure and the needs of the various stakeholders.

Its spokesman added that building security was of the utmost importance.

‘In our existing commercial buildings, we continually review security technology and innovation with the aim of enhancing security within our buildings,’ she said.

For example, independent assessors conduct regular security reviews at Republic Plaza. The company is studying the MHA’s guidelines ‘with the view of further enhancing security within our premises’.

At Marina Properties, which manages Millenia Tower and Centennial Tower, an annual budget is dedicated to upgrading security equipment and staff training.

Its measures include secure card access, regulated driveways to prevent unauthorised parking and the recording of vehicles moving in and out of the compound.

There are cameras at strategic locations, including the lifts, while security officers conduct regular patrols, sometimes in plainclothes.

‘Flowerbed bollards’ function as anti-crash barriers, proving that strong buildings need not look like fortresses.

A spokesman for United Engineers said: ‘The beauty of a good design lies in functionality and aesthetics co-existing. With advanced design technology and good creativity, this is increasingly possible.’

Source : Sunday Times – 31 Jan 2010

Ever since the release of the latest housing statistics last week, public housing prices have become the talk of town.

And no wonder: Figures by the Housing and Development Board (HDB) showed resale flat prices rising 3.9 per cent in the final quarter of last year, hitting yet another fresh record.

They have risen about 40 per cent from 2007 to last year, and are now some 10 per cent higher than the previous peak achieved in the fourth quarter of 1996.

For the whole of last year, resale flat prices rose 8.2 per cent.

But while disgruntled home hunters lament that resale flats are now priced out of their reach, property analysts say there are still gems to be discovered in some housing estates.

An analysis of the latest statistics by The Sunday Times shows some estates still offer flats for less than $400,000.

Four-roomers in Yishun – an established estate – turned out to be the cheapest, going by the statistics. The median resale price for the fourth quarter was $292,000 – the lowest among all estates (see table). In comparison, four-room flats in the most expensive estate, Queenstown, had a median resale price of $523,000.

Bukit Panjang, Woodlands, Jurong West and Choa Chu Kang were some other estates that offered affordable four-roomers in the low $300,000 level.

For buyers looking for five-room units, the median resale price for such homes in Woodlands at $365,000 was the most affordable, followed by flats in towns such as Bukit Panjang and Sembawang.

Executive flats in Sembawang, Yishun and Woodlands were sold at the lower range of the $400,000 level.

Chesterton Suntec International research and consultancy director Colin Tan said that ‘from time to time, you see good value in some locations’.

For example, some estates have been slated for rejuvenation and upgrading such as Tampines, Yishun and Jurong. But because the plans are long term and have not materialised yet, flats in such estates remain affordable.

Buyers who are patient and buy units in such estates could see capital appreciation of their property when the rejuvenation is completed, say analysts.

But to some extent, the current prices of the more affordable flats already reflect the value that the market attaches to them, added Chesterton’s Mr Tan.

The fact that these estates are not in prime locations is reflected in the prices. Those who cannot afford flats in central locations can find good alternatives in the suburban towns, he said.

One upside about living in suburban areas is that you can typically get more space for your money, he added.

PropNex chief executive Mohamed Ismail noted that other estates which remained relatively affordable included Bedok, Hougang and Jurong East.

Suburban towns may also see an appreciation in flat prices if HDB does implement a quota on the number of flats permanent residents (PRs) can buy, he said.

The HDB said recently it is considering introducing a separate ethnic quota for PRs to prevent them from forming enclaves in public housing estates – but details are not available yet.

‘If there is indeed such a quota imposed and PRs are restricted from buying too many flats in a specific area, for example, central locations near an MRT station which they tend to favour, then demand for resale flats will spread more evenly throughout the island,’ said Mr Ismail.

Chesterton’s Mr Tan pointed out, however, that housing statistics serve only as guidelines. ‘In truth, market information is imperfect and bargains can be found just about anywhere – central as well as suburban. You have to be patient to look for it,’ he said.

ERA Asia-Pacific associate director Eugene Lim said: ‘My advice to home buyers is, buy what you can afford. Prices are at an all-time high now, home buyers will do well to be very prudent with what they spend on.’

Source : Sunday Times – 31 Jan 2010

The wait lasted nearly half a year. Since I exercised the option to buy my first new home some time last August, I had eagerly awaited the day I could move in, pop open a bottle of champagne and bask in the smell of my freshly painted walls. That day finally arrived just in time for New Year’s Day – the beginning of a whole new decade – and I was understandably excited. But just before and after The Big Move, I was besieged by a phenomenon I had never thought about: post-purchase cognitive dissonance (PPCD). I’m not making it up, really. Cognitive dissonance is defined as a condition of conflict or anxiety resulting from one’s actions. And PPCD is when, after buying something, you feel that an alternative would have been preferable. In fact, you go through a rationalisation process in your head, questioning all the factors that made you decide to buy the said thing, and wonder if it was all one big mistake. You see, in my quest for a spacious, affordable home somewhere in the suburbs, I had bought a 99-year leasehold apartment. I surprised myself because I have traditionally been on the side of freehold property in the freehold versus leasehold debate. I know the typical arguments for both sides of the case but I never gave it much thought till I became a home buyer and the cold, hard, facts were staring me in the face. I had started off looking at freehold properties but, when it came down to dollars and cents, I realised that the difference between a freehold and leasehold apartment of the size I wanted was more than $150,000 and it made a big difference. I took the plunge. Today, my 1,650 sq ft property has 85 years left on its lease. After spending every penny my other half and I had on renovations and furnishings, we were thrilled the day we moved in. Everything was gleaming and it felt good that we owned everything we saw. But this lasted only a few days. Acutely aware of the new depths my bank accounts had plunged to, I was overcome by an attack of PPCD during lunch with my mother one day while shopping for cutlery. Mum, I asked, did I make a bad move sinking all my money into a property that will take me 30 years to pay off? And at the end of 99 years, would be worth absolutely nothing? Also, given the price I’d paid for the property, is it likely that I could even break even on costs if I wanted to sell my apartment a few years later? I was panicking, and convinced that nobody would buy my apartment when I want to sell it. I would incur a huge loss on it – something I wouldn’t be able to live down as a property reporter. In an attempt to alleviate the symptoms of my PPCD, I spoke to some property analysts for an objective assessment of my choice to invest in a leasehold home. This is the list of factors to consider that I eventually came up with: 1. Affordability The major advantage of a leasehold property is that it is cheaper and offers a first-time home buyer a good opportunity to get on the property ladder without financial stress. 2. Yield Leasehold homes also typically give you a higher yield compared to a similar freehold property as you can command the same rent but your capital outlay is lower. 3. Depreciation, and factors that will compensate for this The main drawback is that the value of your property depreciates with age. I have now come to accept this fact, but there are some factors that can influence the rate of depreciation, such as location, quality of amenities and transport network. For those contemplating a leasehold home, is it near an MRT station? Is your estate slated for major upgrading? Thankfully, I thought, my new home will benefit from the upcoming Bukit Timah MRT line. 4. Collective sales Leasehold properties typically receive less proceeds as developers have to pay the Government a fee to top up the lease, unlike for freehold properties. I’m personally not one for collective sales. But it is comforting to know that even an old leasehold estate such as Farrer Court could command a premium of $2.15 million per home when it went en bloc. 5. Historic figures Looking at property cycles in the last decade, analysts say the rate of appreciation of freehold homes does not always outperform that of leasehold homes. In general, the numbers show that in an upswing, leasehold properties tend to gain more, although in a downturn, they also fall more rapidly – meaning prices are more volatile. So if you buy a leasehold property and intend to hold on to your home for some time, you could easily choose to sell in an upswing instead of a downturn. All in all, I felt my anxieties dissolve when I realised that my leasehold home was affordable, will give me a reasonable yield if I choose to rent it out, and would likely appreciate – or hold – in value when transport networks are improved. Analysts say there is no conclusive evidence to show one is definitely better than the other, and that the decision you make depends mainly on budget and preference. I now realise that my home, which I love because it has four bedrooms and is surrounded by four different nature parks, was really the best choice for me, given what I could afford. My mum, in her infinite wisdom, said: ‘If history is anything to go by, you’ll be fine.’ My parents recently sold an HDB flat in Jurong after my grandmother who lived there passed away. It had aged 20 years since they bought it, yet they sold it at a price far higher than what they paid for it. See? Why worry so much, my mum chided, HDB flats are also leasehold and their values go up every year. It was a good point. I decided then I would just enjoy my first home, day by day. Source : Sunday Times – 31 Jan 2010

Aspen Heights may be 11 years old, but the massive 606-unit condominium located along River Valley Road has been enjoying a resurgence of interest from homebuyers, riding on strong sales of new developments nearby. After only 15 transactions hovering at the $1,000 psf level in the first half of 2009, more than 30 units have changed hands in 2H2009, with prices surging past $1,400 psf. For the period Dec 23 to 31, there were three caveats for units sold at $1,250 to $1,450 psf, according to URA Realis.

After the onset of the financial crisis in late 2008, prices at Aspen Heights sank below $1,000 psf for about half a year, before rebounding strongly in June 2009 with the rest of the market. The main reason for the upturn could be the strong sales of nearby developments, including The Wharf Residence and Martin Place Residences, which were among the top sellers last year.

The two upper-mid-tier projects were relaunched in mid-May last year at prices that were 20% lower than in early 2008. For instance, in mid-May last year, CapitaLand had priced the remaining units at the 173-unit The Wharf Residence on Tong Watt Road off River Valley Road at $1,200 to $1,500 psf, compared with $1,500 to $1,900 psf for the first phase released at previews in mid-2008. Meanwhile, Frasers Centrepoint Ltd also relaunched Martin Place Residences at Martin Place off Kim Yam Road at $1,260 to $1,700 psf, compared with its soft launch in early 2008, when 28 units were sold between $1,700 and $2,000 psf.

Since last May, however, prices of both projects have enjoyed an uplift. Last October, a high of $1,496 psf was achieved in a new sale by the developer when a 2,206 sq ft unit at The Wharf Residence was sold for $3.3 million. The condo is expected to be completed in 2013.

Likewise, at the 302-unit Martin Place Residence, sales have picked up since May. Last month, a 1,044 sq ft unit was sold for $1.88 million, or $1,800 psf, in a sub-sale according to a Dec 2 caveat. This is a 13.7% gain for the original owner, who purchased the unit from Frasers Centrepoint Homes and sold it in just six months.

The buoyant demand for homes in the River Valley Road area could also have been sparked by the new shopping centres that opened along Orchard Road last year: ION Orchard, Orchard Central, 313@Somerset and Triple One Somerset (at the former Singapore Power Building site). Easy access to a range of good schools like River Valley Primary School and Singapore Management University as well as cafés and restaurants in the Robertson Quay area continue to reel in families with school-going children as well as investors.

New developments under construction have also drawn buyer interest to existing developments in the River Valley and Mohamed Sultan neighbourhood. The largest project in the area is easily Aspen Heights, developed by the former DBS Land (now part of CapitaLand). Units range from 882 sq ft two-bedroom apartments to 1,604 sq ft for four-bedrooms, while penthouses measure 2,691 to 3,143 sq ft.

With prices recovering to 2007 levels, it’s also a good time for owners looking to sell their properties. According to a Dec 30 caveat, a 1,324 sq ft unit on the fifth floor of block 263 (one of two blocks) changed hands for $1.67 million, or $1,260 psf, translating into a 23% gain for the seller, who purchased the unit in early 2007.

On the 10th floor of the neighbouring block 261, a 2,691 sq ft penthouse fetched $3.9 million, or $1,450 psf. That’s a 19% gain for the seller, who purchased the unit for $3.28 million three years ago, according to a March 2007 caveat.

With renewed investor interest in projects in Orchard Road and investors targeting both older projects and new launches, it won’t be surprising to see resale prices at Aspen Heights returning to or even surpassing mid-2007 levels.

Source : The Edge – 25 Jan 2010

LAST December, MP Lim Wee Kiak saw a notice pasted illegally on a wall in his Canberra ward of Sembawang GRC. It was written entirely in the Myanmar language.

Curious, he got it translated. The notice was from a real estate agent offering his services solely to Myanmar permanent residents (PRs) looking for flats here.

Dr Lim was disturbed as he saw this as a tell-tale sign that ethnic congregation of foreigners was beginning in HDB estates.

Such concerns are evidently shared by the Government.

The HDB disclosed on Wednesday that it was considering introducing a separate ethnic quota for PRs to prevent enclaves from forming in estates.

Earlier, Minister Mentor Lee Kuan Yew said at a dialogue that the Government did not want to see new citizens congregate and would disperse them across HDB estates.

Recognition of this as an issue was welcomed by seven MPs who were contacted yesterday about the situation in their wards, and for their views on how such a quota could be implemented.

The HDB has not provided details of what the changes might entail.

But several MPs did point out yesterday that it was through renting of flats in the same areas – and not necessarily buying flats – that PRs have also been able to congregate.

Latest available data showed that as of June last year, only 4.9 per cent of HDB flats were owned by PRs.

Hence, a quota imposed on home-buying by PRs might make little difference.

The Ethnic Integration Policy (EIP), introduced in 1989, aims to maintain a healthy racial mix in housing estates by stipulating maximum proportions for the key ethnic groups.

But MP Charles Chong, whose Punggol Central ward, like all new estates, has seen an influx of foreigners, said the EIP now is too porous for a new generation of PRs.

‘The Indian community is pretty diverse. Sri Lankan is classified as Indian; Bangladeshi, Pakistani, northern Hindi-speaking Indians are all classified as Indians (for purposes of the EIP).’

If there are no sub-divisions, there could arise an enclave, say of Bangladeshis, all staying in the same block or precinct, he pointed out.

The same goes for mainland Chinese, Taiwanese or Chinese-Indonesians, who are all classified under ‘Chinese’.

Dr Lim argued, however, that the important distinction to make is not within ethnic classifications, but between Singaporeans and PRs. He said there are some floors of HDB blocks in his ward where more than half the residents are foreign.

They are a mix of nationalities. So although there is no ‘ethnic’ enclave as such, there is a high concentration of foreigners ‘to the point where Singaporeans feel threatened and become a minority’.

When that happens, then it becomes an issue, he said.

Dr Lim suggested a quota limiting the proportion of PRs in each precinct or block to the proportion of PR homeowners nationwide – or about 5 per cent.

MP Ho Geok Choo – who recalled a visitor describing her Boon Lay ward as being so cosmopolitan that it felt like being overseas – said a quota would help dampen excessive property prices. This would make it more difficult for PRs to artificially inflate prices in certain areas by all snapping up flats there, she said.

It would also assuage the concern of those Singaporeans who feel besieged in their neighbourhood by new sights and smells. On her house visits, every block throws up at least two or three Singaporeans who voice their concerns about this, she said.

But ultimately, a quota on home-buying may not make much of a difference.

Jurong GRC MP Halimah Yacob said more than 70 per cent of foreigners in her Bukit Batok East ward are renting. They rent in the area as it is close to their workplaces in the West.

While it is possible to envision an ethnic enclave of renters, ‘there’s nothing you can do (about where PRs rent)’, she said. The rental market is left entirely to free market forces.

Regardless, director of Dennis Wee Properties, Mr Chris Koh, foresees a big plus if a new quota is implemented: It would puncture the belief that some Singaporeans have that their flats can fetch a higher price if they sell them to PRs.

Sellers who hear that a certain nationality is prominent in the neighbourhood pressure agents to find such buyers, thinking it will mean more profits, he said.

‘If quotas are set… we can tell them, ‘We hit the quota max already and we have to be realistic about the price.”

Source : Straits Times – 29 Jan 2010

I REFER to last Saturday’s report, ‘Cash premiums for HDB flats hit a high’.

Why is there so much focus on premium over valuation when valuations by property agencies have no fundamental basis?

Such valuations are based simply on comparable recent transactions and are virtually meaningless to the long-term buyer.

For example, in the landed housing segment, valuations were severely depressed during the economic downturn from November 2008 until March last year, and property agencies used valuations based on transactions of similar properties.

So, if a desperate seller needed to sell his property at virtually any price (which was the only price available at that time), that absurdly became the ‘valuation’ for the next seller.

Many so-called valuations were even less than government land auction prices 12 to 15 years ago, even though the replacement cost of these properties was far higher.

Ultimately, the fundamental value of properties depends on future rental yields, replacement cost of the property and more subjective ‘growth catalysts’ such as higher incomes and population, and new developments.

Based on these factors, the public market valuation reflected in cash premiums is a more reliable indicator than superficial valuations by property agencies, which is nothing more than a fee generator for them.

Bobby Jayaraman

Source : Straits Times – 29 Jan 2010

I READ with interest Wednesday’s letter by Mr Robin Chua, ‘Costly flats – How did it come to this?’

Mr Chua appears to allude to the fact that the procreation rate has not risen because of higher prices of public housing, and ‘mixed signals’ in which young couples are urged to marry and have children early to help increase the procreation rate but then told indirectly to wait five years to buy a flat and start a family.

Without doubt, there have been calls to stop the practice of high cash over valuation (COV) and lower HDB resale prices. My take is that things should remain as they are and be dictated by market forces.

My paternal grandparents bought their first HDB flat in Bedok in the 1970s for about $7,000 – a sum that was paid in full in cash. Today, that three-room flat in a mature estate could be sold for $200,000 or more.

I believe elderly Singaporeans who bought such flats would be thankful they can cash out and unlock the value of their fully paid-up flats to see them through their remaining years.

Other Singaporeans who bought their flats later, say in the 1980s, would also be exuberant as they can capitalise on the capital appreciation of their HDB flats to downgrade to smaller units and use the savings for retirement and other needs.

A case in point is the Lease Buyback Scheme, where Singaporeans living in three-room flats can unlock the value of their homes and live on regular monthly payments from the authorities. This mechanism shows how the housing system can enrich Singaporeans when they reach retirement age and that citizens have a stake in the country and their well-being is not forgotten.

Another group who would have benefited from high HDB resale prices and COV prices is those who were caught in the property craze of 1996-1997. Some Singaporeans bought their HDB flat at a peak, and the value of their home tumbled. In negative equity then, these owners must now be relieved and thankful for the system, plus other external factors that steered them back to positive territory.

In essence, these factors play a part in stimulating economic activity where sellers of HDB resale flats with excess cash and housing agents with their sales commission contribute to gross domestic product figures with their spending. When this happens, the economy is buoyant, jobs are created, people are employed and confidence is restored.

Again, my take is that we are fortunate to have a system to help citizens secure an HDB flat tailored to suit their household income, have a stake in the country and ensure capital appreciation of their assets which will come in handy for future needs.

Irwan Jamil

Source : Straits Times – 29 Jan 2010

THE Housing Board is embarking on a review of its rules to ensure that property speculators are not abusing the system – and driving up flat prices.

It will check if any rules are ‘encouraging or allowing’ people to speculate on HDB flats, said National Development Minister Mah Bow Tan.

At the same time, it will step up efforts to make sure people do not get away with abusing the system.

Some disgruntled homebuyers, priced out of a rising market, worry that some HDB buyers are exploiting the rules to try to make a fast profit.

They claim these speculators snap up flats on the resale market and then either rent them out illegally or sell them legally after the stipulated one-year period.

Under HDB rules, citizens and permanent residents who buy resale flats without housing grants or HDB loans must live in the flats for at least one year before selling, or at least three years before renting out the entire flat.

Speaking on the sidelines of a housing conference hosted by the HDB on Wednesday, Mr Mah said these claims were worth checking and he wanted to ensure that such factors were not inflating the market artificially.

He said it would not do if buyers were buying flats because they hoped to make money through flipping or selling the flats later on, or by renting them out without living in them.

He did not know how prevalent such practices were, but added that ‘anecdotally, you do hear cases, so I want to make sure that this is not happening’.

The HDB’s findings will be out in a couple of months, he said.

Industry observers said that if there were speculators, they would be less likely to be flipping HDB flats – reselling them quickly – and more likely to be renting them out.

‘HDB flats in good locations enjoy very high rental yields, up to 7 or 8 per cent. Even if owners are not legally allowed to rent out their whole flat, you hear of creative cases where they do so anyway,’ said ERA Asia Pacific associate director Eugene Lim.

Agents said an owner might lock up a room to make it seem he is still living there, even though he has rented out the entire flat.

Chesterton Suntec International research and consultancy director Colin Tan said this has gone on for years, but these cases were hard to prove and needed a major effort to enforce.

Mr Mah acknowledged that recent housing data had raised fresh concerns about high resale flat prices.

Latest HDB figures showed the median cash amount paid by buyers for resale flats over and above a flat’s valuation, known as Cash-over-Valuation (COV), doubled to $24,000 in the last three months of last year compared to the previous quarter.

Resale flat prices also rose 3.9 per cent in the final three months of last year to hit a fresh record, taking the full-year jump to 8.2 per cent.

Mr Mah said the Government did not wish to meddle in the resale market, and COV payments were part and parcel of the market.

‘If you’re a buyer, you feel anxious, understandably you want prices to be low. But if you’re a seller, you want prices to be high. It’s not possible for the Government to set the resale prices,’ he said.

‘The buyer might be happy today, but tomorrow he’s a seller and if we set the prices of what he wants to sell, he’ll be unhappy.

‘Let the price be set by willing buyers and willing sellers. We don’t, and should not, interfere in the resale market.’

Mr Mah also downplayed the impact of permanent residents on the resale market.

‘Our numbers show that the PRs are buying about 20 per cent, or one in five flats sold. So yes, they do have some impact, but they don’t have such a great impact,’ he said.

Asked if PRs should be restricted from buying in the resale market, Mr Mah said that was not the right thing to do.

PRs also need a place to live, he said, and the solution was to make a clear distinction between Singaporeans and PRs in terms of the grants they get.