7,750 Homes Could Still Be Sold Using Deferred Payments

Source : The Straits Times, Oct 30, 2007

Units are in projects that had approval; developers may opt not to do so though

UP TO 7,750 unsold homes could still be available for purchase under the deferred payment scheme, even though it was scrapped last week.

The Urban Redevelopment Authority (URA) said these units are in developments that already have approval for the scheme, but which have not sold out yet.

On Friday night, the Government scrapped deferred payments with immediate effect, saying it was no longer relevant given the now-buoyant property market.

The scheme was introduced 10 years ago when the market was down. It allowed homebuyers to defer the bulk of a home's purchase price until it was completed, which could be up to a few years later.

But the scheme was seen as encouraging speculation, as buyers could profit by reselling their homes before completion without much capital outlay.

Now, buyers will have to make progressive payments as construction proceeds.

The ending of the scheme is seen as a way to cool the hot property market. All developments that had not obtained approval for the scheme by last Friday can no longer offer it.

As at last Friday, 320 out of 443 licensed developers had approval to offer deferred payments for their projects, said the URA yesterday.

And about 140 of these developers still have a total of 7,750 residential units left unsold, it added.

But it is now up to the developers if they want to offer homebuyers the option of using the scheme, URA said.

The units include some in Bukit Sembawang's 102-unit Paterson Suites in Paterson Road and its 123-unit Vermont on Cairnhill. Ho Bee offers the scheme for the 51 unsold homes in Turquoise, its 91-unit project in Sentosa Cove.

Buyers can also look to CapitaLand's 327-unit Seafront @ Meyer in Meyer Road, which has 68 units left.

Developers which have approval for the scheme but have yet to start sales include Voda Land, for its 114-unit Amber Residences in Amber Road.

Even before deferred payments were axed, some developers had already dropped it of their own accord or never offered it. Those that did usually added a premium of 3 to 5 per cent of a home's price to purchases under the scheme.

Many property analysts believe the withdrawal of the deferred payment scheme is likely to hit sentiment only in the short term. They point to factors such as robust demand, low interest rates and favourable sales even when developers do not offer the scheme.

Citigroup economist Chua Hak Bin said ending the scheme seems justified on prudential grounds. 'There are growing signs of speculation, price distortions and accelerating mortgage growth,' he wrote in a report.

'Risk of a property glut longer-term cannot be ruled out if the boom is left unchecked.'