Mr Lim’s problem is that he also owns a condominium in Kuala Lumpur that he inherited when his father died. Previously, this would not have hindered his purchase of a resale flat. But now it will.

The HDB announced on Monday that people who buy an HDB resale flat on or after Aug 30 must dispose of their private property - including any held overseas - within six months of the HDB purchase.

The intention is to ensure that HDB flats go to owner occupiers first and are not viewed as an investment. This means Mr Lim, who has been living in Singapore for 10 years, must sell the condo in Kuala Lumpur if he wants to upgrade from a four-room to a five-room HDB flat to fit his family of four.

But his mother-in-law is living in the condo and he has no plans to sell it.

Mr Lim, 33, hopes the HDB will make an exception in his case, given that he did not buy the condo as an investment.

‘Malaysia is also our home and it’s weird if we go back and do not have a place to stay… It’s not fair to make me choose when I have ties to both countries.’

Ms Bhavani Prakash, 40, a PR from India who has a home in Chennai, said the new rules will also deter her from buying an HDB flat.

‘The measures are quite draconian. Whether someone owns a property overseas really does not have an impact on the Singapore market… There are other ways to counter speculation,’ she said.

There are many other PRs who could find themselves in a similar dilemma.

Experts say a significant number of PRs still have homes in their native countries since overseas properties are often cheaper than real estate here and are not as great a financial burden. A number of them may also have families back home living in those properties.

Ms Prakash’s Chennai condo cost her between $200,000 and $300,000 - a quarter of the cost of a suburban condo in Singapore.

ECG Property chief executive Eric Cheng estimates that 40 per cent of PRs - especially those from Malaysia - own homes abroad, while PropNex chief executive Mohamed Ismail puts the figure at up to 30 per cent.

ERA Asia Pacific associate director Eugene Lim believes that more than half of the PRs arriving over the past few years would still have properties back home.

The curbs could also catch out Singaporean retirees with property offshore that they had bought for rental income or retirement. With strong family ties and business connections here, they might also be looking at buying HDB flats for their frequent visits here.

Now, if they want to buy a resale HDB flat, they will have to dispose their overseas real estate or risk penalties by trying to dodge the new rules.

Despite the tougher measures aimed at cooling the property market, a 99-year luxury project, Dorsett Residences, above Outram MRT Station was sold out in one day when it was launched at an average price of $1,800 per sq ft yesterday. But The Straits Times understands that 40 per cent of the 68-unit project was bought by a single buyer.

Source: Straits Times (subscribers only)

The proof must come in the form of a signed sale and purchase agreement and a certificate showing that the buyer of their current property has already paid the stamp duty for the deal, said the Monetary Authority of Singapore (MAS) yesterday.

The Government unveiled on Monday a range of measures designed to dampen property speculation, including tighter lending rules for home owners with existing mortgages looking to buy another property.

They will now have to fund a 30 per cent downpayment for the new property, up from 20 per cent previously, and can borrow up to only 70 per cent of the value, down from 80 per cent.

The moves prompted questions from many home owners unsure whether they would qualify for 80 per cent financing if they intended to sell their existing property - or were in the process of doing so - and move into a new one.

The MAS clarified yesterday that borrowers who have sold their existing homes, but are still in the process of completing the sale, will still qualify for an 80 per cent loan provided they have supporting evidence of the sale.

For private property, this includes a signed sale and purchase agreement and a certificate from the Inland Revenue Authority of Singapore (Iras) showing that stamp duty has been paid by the buyer of the existing home.

For HDB flats, the MAS requires an approval letter from the Housing Board to the seller within two weeks from the date of the first sales appointment.

The home owner should also provide additional information, such as a letter from the bank providing the current housing loan, stating that the borrower will discharge his outstanding loan by the time the property sale is completed.

Industry analysts predicted yesterday that the stricter lending rules will mean lengthier negotiations between buyers and sellers.

PropNex chief executive Mohamed Ismail said that while it usually takes about 12 weeks for a sale to be completed, sellers may now negotiate for 14 to 16 weeks.

‘This gives them time to look for a new home, get a loan and move out of their property,’ he said.

HDB home owners are required to move out of their existing home upon completion of its sale, usually eight weeks after the first sales appointment.

But sellers may negotiate mutual agreements with buyers that allow them to stay beyond the sale completion date as a condition for selling the flat, said a 40-year-old property agent who declined to be named.

Banks that The Straits Times spoke to yesterday said they had been sent a new set of home loan rules by the MAS.

A circular issued on Tuesday by the MAS stipulated that banks had to ‘conduct comprehensive checks’ on borrowers with credit bureaus and the HDB.

OCBC Bank head of consumer secured lending Phang Lah Hwa confirmed that the bank could offer 80 per cent financing ‘to genuine home buyers who have sold their existing homes… provided these customers can show evidence of the sale of the existing property at the point of loan application’.

Home owner Ming Fang Goh, 30, who is looking for an investment property, has mixed feelings about the new rules, but thinks they could be a ‘blessing in disguise’.

‘If the cooling measures help to bring prices down by 10 per cent, then even with a 30 per cent downpayment, some investment homes could become more affordable.’

Source: Straits Times (subscribers only)

WHAT home owners need to have to qualify for an 80per cent loan if they already have an outstanding loan:

For private property, the supporting documents must include the signed sale and purchase agreement indicating the borrower has sold his existing property, and a certificate from the Inland Revenue Authority of Singapore showing stamp duty has been paid by the person who bought the existing property from the borrower.

For HDB flats, the supporting documents must include the approval letter from the HDB to the seller within two weeks from the date of the First Appointment.

The borrower should also provide supplementary information, such as a document from the financial institution that provided the outstanding housing loan, stating the outstanding loan will be discharged on that existing property by the completion of the property sale.

Source: Straits Times (subscribers only)

The clarification yesterday came amid uncertainty over who might or might not be exempt from the rules announced on Monday.

The new regulations state that if you buy an HDB resale flat you must dispose of any additional private property within six months of the HDB purchase.

That rule also applies to people who own homes offshore, according to the HDB yesterday. This means an overseas property must be sold within six months of buying an HDB resale flat.

And an owner of a non-subsidised HDB flat who has yet to meet his minimum occupation period (MOP) of five years will also not be allowed to buy a private property locally or abroad.

How new financing rules affect owners of homes offshore was also made clearer yesterday.

Under the revised regulations, a buyer with a mortgage on a local property must stump up a downpayment of 30 per cent when buying an additional property. This is up from 20 per cent previously.

And at least 10 per cent of this deposit must be in cash - up from 5 per cent before - with the rest coming from his Central Provident Fund (CPF) accounts.

But the Monetary Authority of Singapore (MAS) said that a buyer with a home loan for an overseas property will not be subject to these financing rules if buying an additional property here.

However, the MAS said it ‘expect(s) financial institutions to take into account the borrower’s outstanding loans when making their credit assessment’.

Industry players say that the new rules effectively delineate the HDB resale market as ‘public housing’, reserved for those whose HDB flat will be their only property, whether here or abroad.

They will also put pressure on permanent residents (PRs) who might own a home in their native country to choose where they want to be based permanently.

PRs make up about one in five resale flat buyers, and some Singaporeans have blamed the influx of PRs in recent years for the soaring prices of these homes.

Mr Colin Tan, research and consultancy director of Chesterton Suntec International, said the new rules were similar to an income ceiling. ‘Basically, it seems to be saying: If you can afford to own a private property then you don’t deserve to own an HDB flat,’ he said.

While the new rules are aimed at keeping HDB flats for owner occupiers and not for investment purposes, Mr Tan felt that exceptions should be made for genuine cases such as retirees looking to monetise their overseas assets through renting out an offshore property.

But enforcement and implementing penalties for those who flout the rules would be a challenge, say experts.

Mr Steven Tan, executive director of residential at OrangeTee agency, said enforcement would be difficult when buyers pay for overseas property all in cash.

He added that the new rules could be an extension of an existing one that prevents owners of build-to-order flats and executive condominiums from buying private property during the five-year MOP.

Ms Flora Lam, 32, a PR from Malaysia, said the rules had placed her in a tough spot as she would now have to sell her Malaysian home if she wanted to buy a resale flat. ‘I feel like I have to decide now where I want to be based and it’s a tough call to make. Maybe I’ll continue renting before I make up my mind,’ she said.

Source: Straits Times (subscribers only)

“Gila” (crazy in Malay), said one friend. Totally exorbitant, chided another.

But I have only one question: How much would you pay for the home of your dreams?

I don’t just mean a flat which looks impressive and sits in a prime location.

I mean a real home - one where you imagine you’ll watch your children grow up in and where you’ll spend your twilight years. A home for keeps.

This was why I felt it was worth paying $755,000 for the four-bedroom executive maisonette in Choa Chu Kang, even though I feel that property prices have hit ridiculously high levels.

The 12-year-old flat has 87 years left on its 99-year lease.

Resale prices for HDB flats rose for the eighth straight quarter from April to June, surging 4.1 per cent from the previous quarter.

The median COV also hit a record high of $30,000.

COV is the amount a buyer must pay the seller in cash over the HDB’s valuation of the flat. It is not covered by a bank loan.

Typically, the agreed price for a resale flat includes a cash premium on top of the official valuation determined by an HDB panel of independent professional valuers.

The Business Times reported last month that the median COV for executive flats and five-roomers in hot areas, such as Bishan, was $70,500 and $52,500 respectively.

Sure, the amount I paid was more than that. But it wasn’t an impulse buy.

My wife and I considered many things before choosing this flat and finally signing on the dotted line.

Firstly, we needed more space - more than our current three-bedroom condominium.

Growing family

With an infant son and plans to have another child soon, we imagined a flat with a bedroom for each of them, as well as an additional room for our elderly parents one day.

So we hit the market with only five-room flats or executive flats in mind.

Secondly, we needed a place near my parents’ home as we both work full-time and my parents would be baby-sitting our children most of the day.

Finally, we needed a place near an MRT station and close to amenities such as a supermarket, food courts and schools.

So with these pre-requisites, our choices were certainly narrow.

It was during a month’s worth of searching that we chanced upon what would be our new home - an executive maisonette in the north-west of Singapore.

It is large (almost twice the size of our current place) with four decent-sized bedrooms and is less than two minutes’ walk to the MRT station.

My friends asked: You sure you want to pay so much?

“It’s just a HDB flat. Not private some more, you know,” said one with a tone of scepticism.

True. And we also have to factor in an estimated $30,000 for renovations.

Plus, we’ll be paying $1,600 to the bank every month for the next 35 years.

But the minute I laid eyes on this place, I saw value in my purchase.

This is an HDB penthouse - one of only 12 units in the area.

Only five areas in Singapore - Bishan, Strathmore Avenue in Queenstown, Pasir Ris, Hougang and Choa Chu Kang - have such units.

In Strathmore Avenue, there are only four rooftop penthouses and in Bishan, there are 50 such units.

Earlier this year, a penthouse at Bishan Street 24 was sold for $900,000, making it the most expensive HDB flat to change hands in Singapore at the time.

My new home is part of a design-and-build estate, with covered walkways leading to the MRT station and a basement carpark with a lift that takes you straight up to your flat.

I especially like the grounds - a basketball court, playground and lush greenery with no cars, where I can imagine watching my children play safely.

As for the flat itself, it boasts a living room with a high two-storey ceiling and a roof garden.

Still, it wasn’t just about value in terms of dollars and cents.

To me, the whole point of searching for a home is just that.

It’s a place to live in, a place to relax when I come home from work and a place to spend time with my family. Not for investment or to make a quick buck.

If you assess the place in those terms, it more than justifies the numerous zeroes on the cheque.

And in the months before this when my housing agent shuttled me from flat to flat for viewings, one thing became clear.

COV prices are currently sky-high. Many of the five-room units we viewed were asking for COV ranging from $40,000 to $65,000.

Shelling out another $30,000 seemed a worthy sacrifice.

So what happens when the property market cools and prices start dropping? Will I regret how much I have put into my newhome? The answer is no.

I certainly don’t plan to sell. Not even if someone dangles a $150,000 COV offer.

That’s because I’ve found my dream home, where one day you’ll find me relaxing in my roof garden, sipping a home-made teh tarik and watching the world go by from my 12th-floor perch.

By then, I hope I won’t even remember how much of a hole I’d burnt in my pocket.

Experts: Not practical to pay so much for HDB flat

HOME buyers should scout around carefully and do their sums before they decide to pay high cash-over-valuation (COV) premiums for a HDB resale flat.

When told of Mr Zaihan Mohd Yusof’s HDB penthouse purchase of $755,000, at $100,000 COV, two experts felt it should not be the model for most people.

Mr Roy Varghese, foundation adviser and director at Ipac Financial Planning Singapore, said: “It’s not just a matter of affordability. Even if you are flushed with cash, that’s still absolutely crazy.”

He pointed out that there is “a big difference between the resale value of private and public housing”.

“Private housing will appreciate in the long run while public housing is more like a decent roof over your head,” said Mr Varghese.

It all comes down to doing your homework properly, he said.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said that sufficient time should be invested on house-hunting.

“Now with the Internet, it’s even easier to check out figures across the island for comparison,” he said.

Mr Mak said it’s also important not to buy on impulse.

He said: “Most of us work hard to have a better life - so if he’s satisfied, then it may be a sound reason.

“But getting the legwork - yes, it means lots of walking around and viewing - done is vital. Do it until you’re really sure.”

Mr Mak cited figures from the second-quarter statistics which show the COV for an executive flat in Choa Chu Kang at $30,500.

“The buyer could have tried to bargain for a lower premium, but it sounds like he is very attached to the unit,” said Mr Mak.

“And when emotion is involved in the process of decision-making, it’s harder.”

A fair number of Singaporeans see buying property as a form of investment, said Mr Mak.

“So it’s necessary to ask yourself, will you be able to hold on to it if the prices start to fall?”, he said.

“In investing in a home, a buyer should consider if it’s for needs, use and enjoyment of him and his family.

“It looks like this is the case for your colleague.”

Yet, to cough up so much cash for public housing does not seem practical, he added.

“The total sum he’s paying can buy a typical three-room 99-year-lease condo unit in a suburban part of Singapore.”

Less money left for HDB renovation

MORE Housing Board resale flat buyers are having to forgo lavish renovations as the property market heats up.

Said Ms Rebecca Wong, deputy editor of Home & Decor: “In the last two years, it was the condominium renovation market that was booming.

“The high COV meant that HDB resale buyers didn’t have much money left to splurge on renovations.”

High COVs have also narrowed the price gap between resale HDB flats and condominiums, pushing many prospective buyers towards the latter, added Ms Wong.

Mr Jeffrey Lin, 36, managing director of Free Space Intent, who’s been in the business for 11 years, said that most high-end renovations are done for owners of private homes nowadays.

“About two years ago, 60 per cent of clients who spent six-digits on renovations live in condos and landed property and 40 per cent in HDB.

“Now, 70 per cent of my high-end renovation clients live in private property and 30 per cent in HDB,” he said.

Mr Lin heard “feedback” from his HDB clients that their flats were costly and they had little left for renovation.

“Perhaps some of the others feel they may as well get a condo instead, causing the shift in demographic,” said Mr Lin.

Mr Jaesonn Tan, of Baroque D.zign, said HDB renovations typically cost between $30,000 and $50,000. A $100,000 project would be considered high-end.

The median cash-over-valuation (COV) in the second quarter this year was $30,000.

But five-room flats in the central zone had a COV premium of $89,000 - the highest across all flat types and towns. Bukit Timah five-room flats were next with a median COV of $80,000.

It is worth noting, however, that there were fewer than 20 resale transactions for these areas and flat types, so the figures “may not be representative”, HDB said.

HDB also offered a total of 13,500 new flats last year and said it is ready to supply more flats this year if there is sustained demand.

Source: AsiaOne

Buyers who hold more than one mortgage can only borrow up to 70 percent of a property’s value, versus 80 percent previously, and must pay 10 percent in cash, up from 5 percent, the government said in a statement today. A seller’s stamp duty will apply to all residential units and land sold within three years of purchase, from one year. The changes take effect today.

Singapore joins Hong Kong and China in introducing measures this year to cool their property markets amid concerns that asset bubbles are forming as home prices surge. Hong Kong said this month it will tighten mortgage lending rules and increase the supply of land, while China’s restrictions include higher down payments and mortgage rates for multiple-home buyers.

“The government is taking a preemptive approach to make sure prices don’t get out of hand,” said Donald Han, a Singapore-based managing director at real estate adviser Cushman & Wakefield Inc. “Most of the measures are really targeting repeat buyers and speculators who buy and sell over the short term, which is now defined as within three years.”

Source: Bloomberg Businessweek