Carrots Galore For Home Buyers

Source : The Sunday Times, Jan 25, 2009

Developers, agents offer perks like cash hongbao, stamp duty waivers

With the property market currently at a standstill, developers and agents are dangling carrots with the hope that buyers will bite.

Cash hongbao, stamp duty waivers and outright discounts of as much as 50 per cent have all been rolled out to entice home buyers.

Some agents have also resorted to tricks such as advertising an unusually low price for a unit, just to get home buyers to call.

And this could be just the tip of the iceberg, said property experts. In past recessions, developers have been known to offer free cars with certificates of entitlement, years of maintenance fee waivers and free interior decoration services.

No other sweetener interests buyers more than price discounts, according to property agents.

As buyers adopt a wait-and-see attitude towards buying property, an increasing number of developments have slashed their prices - some by as much as 50 per cent.

AG Capital's The Aristo@Amber for example, has had its prices cut from about $1,700 per sq ft (psf) last July to $900 psf last month.

At City Square Residences in Kitchener Road by City Developments, prices have fallen from a high of over $1,000 psf last year to less than $800 psf for some units recently.

Developers are also giving non-official discounts to buyers who bother to haggle.

Businessman Derrick Wong, 44, who has been shopping for an apartment, said he was offered discounts ranging from 6 to 10 per cent even before he asked.

'These developers seem really desperate to sell. A year ago, when the property market was booming, getting a 3 per cent discount was unimaginable,' he said.

The most common sweetener offered by property developers, it seems, is a stamp duty waiver.

Of the 10 new property developments The Sunday Times checked with, eight cited waiving stamp duty fees as a perk for buyers.

Stamp duty is a tax on commercial and legal documents that buyers have to pay. It is about 3 per cent of the transacted price of a property.

It may not sound like a lot, but stamp duty fees for a $1 million property can come up to $30,000. Buyers can pay the amount by cash or from their Central Provident Fund monies.

Other developers are luring home seekers with cash giveaways.

Far East Organization, for example, is giving out $12,888 hongbao to the first eight buyers of the Lakeshore and Hillview Regency condominiums starting today.

Agents marketing its Waterfront Waves condominium in Bedok Reservoir also recently text-messaged their clients informing them of hongbao giveaways of up to $12,888 for those who buy now.

But developers say the hongbao are not bait.

'The hongbao are meant to add to the good cheer of the season, rather than a sweetener per se,' said a Far East Organization spokesman.

Still, agents are so keen to sell that some even offer to open showflats at night and during the Chinese New Year public holiday specially for busy potential buyers.

One agent who is marketing a new apartment project in the east said that he would open showflats for clients as late as 10pm.

'Most of our clients are professionals who work until very late. Some even work on weekends. So we try to accommodate their schedules as much as we can,' he said.

Stories of agents using dirty tricks have also surfaced.

Engineer Aloysius Tan spotted an online advertisement for a two-bedroom Bayshore apartment selling for $680,000. But when he called the agent, he was told that the price is actually $1.2 million.

The agent then tried to push to him the other apartments she was selling that fell within his $700,000 budget.

Said Mr Tan, 29: 'I don't understand how the agent could have got the price wrong in the ad, unless she had the intention to deceive in the first place.'

Other home shoppers say agents would entice them to visit showflats with the promise of discounts, although they would not say how much.

Said housewife Rina Mohamed, 37: 'The agents will make us go down to the showflat and then we find out they are offering just $1,000 to $2,000 worth of discounts. What a waste of time.'

In the East Coast and Telok Kurau area, where more than 15 new residential developments will be ready in the next few years, competition is especially stiff among property agents.

Some have resorted to bad-mouthing their competitors to buyers and are all too happy to list the inferior qualities of the other developments.

Said Mrs S. Goh, 32, a teacher: 'Sometimes, I find agents tend to focus more on the negative points of other developments instead of marketing their own projects.'