Stock Of Surplus Flats Vanishing Fast

Source : The Straits Times, Feb 12, 2008

Buyers on tight budgets looking for finished flats will be vying for fewer units

THE Housing Board's offer of 278 surplus flats in mature towns yesterday will be likely to slash its stock of readily available units to less than 2,000, down from 17,500 in 2002.

Surging demand and a shortage of affordable completed property has dramatically cut the surplus supply.

At the end of last year, HDB was estimated to have just 2,200 surplus flats left. The almost 100 per cent take-up rate in previous sales exercises will push this figure down further.

It means that buyers on tight budgets hoping to purchase a completed flat will find themselves vying for fewer and fewer units, with the only alternative being coughing up more cash to buy a resale flat.

Those who were unlucky in ballots or who lack the cash will just have to wait.

Most new HDB flats come under the build-to-order (BTO) scheme. These flats are constructed only when most units are taken up. A person booking a BTO unit today could still have to wait three years or more for his home to be ready.

In the meantime, newly married couples will just have to rent or live with their parents until their new flat is ready, said PropNex chief executive Mohamed Ismail.

The resale prices of HDB flats jumped 17.5 per cent last year, prompting hordes of buyers to try their luck in the queue for surplus new flats, which come at highly subsidised prices.

A batch of 316 flats in Hougang, Punggol and Sengkang drew 5,147 applications, while 840 units offered in other parts of Singapore were all snapped up.

While the Government has committed to offering more flats under the BTO system - 4,500 in the first half of this year - it cannot guarantee that these new flats will be available on the spot.

It learnt a hard lesson in the 1990s when it built too many flats in anticipation of demand that fizzled out fast in the Asian financial crisis.

The subsequent overhang, which numbered 17,500 in 2002, meant that families wanting a flat could simply walk into an HDB branch and pick a ready-built flat on the spot.

In 2005, the HDB even sold about 100 of its older surplus flats on the resale market. This had HDB flat owners fearful that the move could depress the value of their homes.

Those days look set to be over, say property experts.

C&H Realty managing director Albert Lu said that buyers will simply have to choose between waiting for a new flat or paying more for a resale one in move-in condition.