Condo-style HDB flat prices going up

Source : Staits Times – 5th Sep 2009

PROPERTY developers have raised the prices of condominium-style public flats for the first time since their inception, in a bid to ride the mass market property boom.

A check by The Straits Times revealed that prices of flats at Natura Loft at Bishan and The Peak@Toa Payoh have risen by up to 3 per cent, or $20,000, depending on the attributes of the flats.

This move has surprised industry analysts, as buyers of such hybrid flats under the Housing Board’s Design, Build and Sell scheme (DBSS) have a fixed household income ceiling of $8,000.

‘The prices are higher but the income ceiling is still the same. These buyers are unlikely to have seen their wages rise, given the recent recession,’ said one industry analyst who declined to be named.

DBSS projects are designed, built and sold by private developers. They offer condominium-style fittings, layouts and facilities but are subject to public housing rules, such as the household income ceiling, ethnic quotas and a five-year minimum occupation period.

Developers told The Straits Times yesterday their move was in line with the booming market, with a stunning 2,767 private homes sold in July.

Mass market condominiums such as Centro Residences in Ang Mo Kio and Trevista in Toa Payoh have been launched in these mature HDB estates to good response; Centro reportedly sold at the $1,100 psf level and Trevista at $900 psf.

Three centrally located DBSS projects – The Peak@Toa Payoh, Park Central in Ang Mo Kio and Natura Loft at Bishan – priced slightly above $500 psf, have reported brisk sales, as demand for private homes has spilled into the HDB market.

Mr Zuo Hai Bin, managing director of Natura Loft developer QingJian Realty, said the 480-unit project is now more than 80 per cent sold, up from 75 per cent just a month or so ago.

Four-roomers are now all sold out, leaving five-room flats. QingJian has raised prices by between $5,000 and $20,000 on the back of an improved market, he said. But the firm has also been giving away free household appliances to attract buyers, he added.

The Peak’s developer, Hoi Hup Sunway, said prices had risen only for selected units by about 1per cent, or $5,000 to $7,000. ‘The public is still receptive to the development and demand is still strong,’ said its spokesman.

Other DBSS projects, like Park Central in Ang Mo Kio and Parc Lumiere in Simei, however, have maintained their prices.

Managing director David Liew, of Park Central developer United Engineers Developments, said prices had held at an average $500 psf as ‘DBSS housing is, after all, public housing’.

‘There’s an obligation by us to keep the selling price relatively affordable for the masses,’ he added.

From a commercial viewpoint, said PropNex chief executive Mohamed Ismail, it is ‘only natural that developers want to ride the market momentum’.

But others feel the real competition for DBSS flats is not mass market condominiums, but HDB resale flats.

‘The price gap between DBSS flats and resale HDB flats must not be too wide. Otherwise, developers will find it takes a long time to sell their flats and DBSS projects may not be viable in the future,’ said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

When contacted, HDB said that, while developers can decide and adjust selling prices, they should ensure that prices are affordable to the target group of buyers.

‘If they overprice DBSS flats, they face the risk of poor demand and having to hold onto vacant flats. Therefore, it is in their own interest to set appropriate pricing in order to sell their flats,’ said an HDB spokesman.

Home buyer Cheow Kai Ying, 27, is one who feels that couples with an $8,000 income ceiling are unlikely to be able to afford such upmarket HDB flats if prices increase any further.

‘Public flats are, after all, meant to be subsidised,’ said Mrs Cheow.