Sweepstake That Draws The Plucky Opportunist

Source : The Straits Times, Apr 28, 2008

HDB SURPLUS FLATS

I DON'T know if the Government knows this.

Many first-time buyers of Housing Board flats are treating the balloting system for new units as a chance to strike the lottery.

You can tell them apart from genuine home buyers because they will faithfully put in an application whenever new flats are offered for sale in mature estates.

Occasionally, they may test the waters by applying for flats in new townships but will find excuses to reject them should they be successful in getting a queue number.

Like seasoned 4-D punters, they are undeterred by repeated failures to land the Big Prize - a new flat in much sought-after towns such as Queenstown, Toa Payoh and Telok Blangah.

A colleague's son has balloted unsuccessfully on more than 10 occasions for flats in mature estates. He's not compromising, preferring to wait for the next offer of new flats in such estates instead of buying a resale flat or booking a Build-To-Order (BTO) flat under the mainstay programme for new public housing.

BTO flats are less popular as they tend to be in outlying areas like Sengkang.

A desire to live near their parents or workplace is often cited by couples as a reason for wanting a flat in a mature estate. Some even resort to creative 'threats', arguing that the Government's effort to encourage Singaporeans to marry early and have more children is undermined by its failure to provide them with affordable homes in a location of their choice.

I remember feeling incredulous when reading a story in this paper last November, 'No (HDB flat) = No (wedding)', in which a couple said they delayed their marriage plans because they could not get a new flat in Ang Mo Kio or Toa Payoh.

'Were they for real?' I wondered.

To be sure, some reasons are valid, such as wanting to live near aged parents who are in poor health. But for the majority, I suspect the real reason for being picky boils down to dollars and cents.

Landing a new flat in a mature estate and selling it after five years can yield several hundred thousand dollars in profit. Who would want to give up this once-in-a-lifetime windfall by accepting a flat in a less desirable address?

While the HDB allows upgraders to buy a second new flat, in reality, their chances of doing so are very slim due to priority for first-timers.

Consider this: In 1996, my wife and I bought a five-room flat for $160,000 in Woodlands. In the same month, my parents-in-law balloted successfully for a four-room flat in Holland Village. Coincidentally, the price tag was also about $160,000.

Last December, I sold my flat for $300,000. During that same period, one four-room flat in my in-laws' block fetched $550,000 while another went for $589,000.

This underlines once again the widely held belief that homes in prime locations appreciate in value faster than those in outlying areas.

Is it any wonder then that many first-timers stubbornly refuse to accept flats other than those in mature estates?

Also, the dice is loaded in their favour. Under the HDB priority scheme, first-time buyers and newly-weds get an extra chance in a future ballot every time they are unsuccessful in selecting a new flat.

Even so, competition is stiff. In February, the HDB received 9,900 applications for 278 surplus new flats in mature towns.

Some ingenuous buyers have tried to exploit the system to improve their chances.

There are anecdotes of first-timers applying for BTO flats they have no intention of taking up in the hope of accelerating their failure rate so as to enjoy a higher chance of success by the time flats in a desirable area are available.

If they are 'lucky' and get picked to select a BTO flat, they will just turn it down. After all, there is no penalty.

One couple, shortlisted for a BTO flat in Punggol last year, did not pick a flat despite having more than 400 units to choose from, according to the HDB. They subsequently applied for a BTO project in Yishun and complained publicly when they were not successful.

This lack of deterrence has prompted National Development Minister Mah Bow Tan to ask the HDB to review its application process to discourage such people.

One possible solution is to revert to the Registration for Flats System for BTO flats. Under this, buyers form two queues - one for first-timers and the other for upgraders. The queue for first-timers will move a great deal quicker.

Buyers who reach the head of queues will be invited to pick a flat. If they don't, they will be considered dropouts and will have to start all over again if they wish to re-apply for a new HDB flat.

As an extra deterrent, the HDB might consider imposing a registration fee on new buyers who join the queue. This can be used to offset the purchase price if they subsequently select a flat.

In the past, the fee was $200 for first-timers and $600 for upgraders, excluding GST.

As for surplus flats in mature estates, the HDB should bar upgraders from buying them since they already have a home. This will leave the field open only to first-timers.

Do away with the complicated system of multiple chances for failed attempts and give all an equal chance in a ballot. After all, you don't ask Singapore Pools to increase your chance vis-a-vis a novice just because you have not had a winning ticket after years of trying, do you?

As surplus flats are so few and applicants so many, treat them as what they really are - a sweepstake, with prized homes going to the lucky few.