10,450 private residential units sold under DPS still uncompleted

Source : Channel NewsAsia - 19 Dec 2008

10,450 private homes sold under the Deferred Payment Scheme are still uncompleted as of end November. This is according to figures released by the Urban Redevelopment Authority for the first time.

The report comes amid concerns that a large number of uncompleted homes bought under the scheme may be sold at distressed prices as the property market softens.

68 per cent of uncompleted homes sold under the Deferred Payment Scheme will be built over the next two years.

With falling property prices, there are concerns whether home buyers have enough cash to complete their purchases.

Despite this, some property analysts said it’s unlikely that home buyers will be forced to return their homes to developers.

Nicholas Mak, director, Consultancy and Research, Knight Frank, said: “I don’t think it will come to that drastic level where many of them would return their homes to the developers because if a buyer were to return the home to the developers, the developers could firstly sue them for completion of the contract. Or, the other thing is that the buyer would actually lose all their deposits which could be 20 per cent or so.”

Under the scheme, selected developers were allowed to offer home buyers the option of deferring the progressive payments due after the initial 10 to 20 per cent down payment.

At the end of November, of the uncompleted units approved for sale under the scheme, 77 per cent or 18,208 units have been sold.

Of these, 57 per cent or 10,450 units are not fully paid for.

4,560 of these units will be completed next year while another 2,540 will be completed in 2010.

Despite the bulk of properties completing next year, market watchers said they don’t expect home buyers to come under pressure to sell their properties below market value. They said home buyers would still be able to get good returns, despite weak property market.

Said Mr Mak: “Many of these homes were bought in 2005 and 2006 when prices were still relatively low. So the owners would actually have more leeway. If they were to take possessions, they can still rent it out at a fairly attractive rate of return.”

72,384 private homes have been allowed for sale under the deferred payment scheme.