New HDB Upgrading Scheme Won't Add Much More To Resale Prices

Source : The Sunday Times, Feb 10, 2008

The Home Improvement Programme will not boost prices of resale flats as much because upgrading is on a smaller scale, say property experts

THE Home Improvement Programme (HIP) is the newest kid on the block in the Housing Board's two-decade long upgrading scheme.

Property experts, however, say that it will have a far smaller impact on the value of flats compared to previous upgrading plans. This is because upgrading under HIP will be smaller in scale.

THE HOME IMPROVEMENT PROGRAMME AND NEIGHBOURHOOD RENEWAL PROGRAMME were devised to stretch the government dollar over many more households and to pay closer attention to residents' views. They will be rolled out soon in up to 12 locations islandwide, including Tampines. -- ST FILE PHOTO

HIP and another scheme, the Neighbourhood Renewal Programme (NRP), are devised to stretch the government dollar over many more households and to pay closer attention to residents' views. They will be rolled out soon in up to 12 locations islandwide, including Yishun and Tampines.

The outgoing Main Upgrading Programme (MUP) involved more extensive work as it overhauled the insides of flats with new toilets, extra rooms and doors, as well as the common areas of the blocks and precincts.

The MUP proved a gold mine for people like Mrs N. L. Chan, who bought her four-room flat in Holland Close for $290,000 in September 2006, when her estate was in the last throes of the upgrading programme.

Just eight months later, she sold it for $330,000 as she had to move closer to her daughter in Dover Crescent.

Such jumps in value may be harder to come by under HIP, say property agents.

The new programme focuses on the essential improvements in the flat, such as the repair of spalling concrete and replacement of waste pipes.

Once at least 75 per cent of flat owners vote for such upgrading, this essential work is compulsory, although it is fully paid for by the Government. The flat owners, however, have the option of having their doors and toilets replaced at a subsidised rate.

Meanwhile, the NRP promises to spruce up a few adjoining sites together, unlike the previous Interim Upgrading Programme Plus scheme which was conducted in one precinct at a time.

Apart from the economies of scale, the bigger budget under the amended programme would make it possible for items such as tennis courts and skating parks to be considered.

About 300,000 flats will be eligible for the HIP, while 200,000 units can undergo work for the NRP.

A third programme - lift upgrading - will run concurrently with the new schemes. This aims to give almost every HDB flat resident direct lift access to his floor by 2014.

The director of Dennis Wee Properties, Mr Chris Koh, estimates that while the MUP usually boosts a flat's value by $20,000 to $30,000 over and above what the flat owner pays for the upgrading work, the equivalent expected for flats which undergo HIP is only about $10,000.

This is because the work done will be smaller in scale.

While flats which undergo the MUP make a big impression with their additional rooms, new doors and windows, and spanking new precinct facilities around them, the improvements under the HIP may not be that noticeable.

More people, for example, are now likely to opt out of having new doors and windows to reduce their bills under the HIP.

It may not produce the 'entire fresh look' needed to raise the value of the home by much, said Mr Koh.

Similarly, the executive director of Roof Real Estate Group, Mr Dave Lau, does not expect the value of a home under the HIP programme to rise by more than 2 to 3 per cent, compared to 10 to 20 per cent under the MUP before.

But he reckoned that 'the HIP would probably make property easier to sell'.

Both programmes were devised from the feedback received during a series of forums held last year to find out what it takes to strengthen bonding within HDB estates.

During these discussions, participants wanted a greater say in how their estate turned out.

No matter the smaller increase in value, the executive director for HSR property group, Mr Eric Cheng, said that buyers can usually wrangle a better price from sellers if they buy a flat that is undergoing upgrading, compared to after it is done.

Most of the time, sellers try to hold off putting their flat on the market until after upgrading, when the new look of their estate will bolster their position at the negotiating table.


Scope of work for new programmes

Home Improvement Programme:

Optional improvements:
# Upgrading of toilets
# New entrance door
# New entrance grille gate
# New refuse hopper


Essential Improvements:
# Replacement of waste pipes
# Repair of spalling concrete
# Repair of structural cracks
# Replacement of bamboo pole holders or installation of laundry rack
# Upgrading of electrical supply


Neighbourhood Renewal Programme (not exhaustive):
# Letter boxes
# Residents' Corners
# Senior Citizens' Corners
- New tables and seats
- Re-painting
- Drop-off porch
- Covered linkways
- Playgrounds
- Footpaths
- Fitness corners
- Jogging tracks
- Barbecue pits
- Skating parks
- Soccer hardcourts
- Tennis courts
- Block security or surveillance systems


Less noticeable improvements

Flats which underwent the outgoing Main Upgrading Programme made a big impression with their additional rooms and spanking new precinct facilities around them. However, the improvements under the new Home Improvement Programme may not be that noticeable as they focus on essential improvements such as the repair of spalling concrete.