COVs may fall as BTO priority given to married couples with children

Married couples with children below the age of 16 will now stand a better chance at securing a new public housing flat.

Some analysts added this may also bring down the cash premium for resale public flats as demand is driven to the Build-To-Order market.

Twenty-seven-year-old Mohamed Rafie has been trying to secure a new public housing flat for two years.

He and his wife have been unsuccessful in all three of their attempts.

They had applied under the Build-To-Order (BTO) exercise in March 2011 and also under the two Sale of Balance Flat exercises in March and September 2012.

Mr Rafie said they had chosen flats that were near his parents and in-laws homes in Jurong West but they now stand a better chance as a married couple with two young children.

Previously, 85 per cent of flats in non-mature estates were allocated to all first-timers.

But now, 30 per cent will be specifically catered to married couples with young children under the Parenthood Priority Scheme.

This is a welcome move for Mr Rafie, who currently lives with his in-laws and is expecting an addition to the family later this year.

Mr Rafie said: “More kids means more space is needed. It is more crammed living with our parents so having our own house will be better.”

National Development Minister Khaw Boon Wan said he expects the demand from couples like Mr Rafie and his wife to be met this year.

Mr Khaw said: “Luck does play a part, but because of this ramped up programme for two years now, actually first-timers most of the problems have been resolved. This scheme will make these readjustments, and almost certainly within this year, all those who are married with kids should get a chance to select a flat.

“Whether they will get one flat is partly up to them too because if they are determined to get a flat unit, in the Pinnacle for example, there is no way I can help. But for our general HDB programme, which is BTOs in non-mature estates, I think those families should have no difficulties in the next few months.

“Once we have cleared the backlog of those married with kids, then we can of course go to the next group, which is married but kids coming, hopefully this package will push them along faster.”

It is at least a three-year wait before couples can move into their completed BTO flats and analysts said this has been a concern for many couples with children, especially since they have immediate housing needs.

The government said it is addressing this concern.

It will provide interim rental housing for such couples who are waiting for their BTO flats to be completed.

The HDB will launch about 1,150 units of three to five room flats under the Parenthood Provisional Housing Scheme.

The flats will be launched in locations like Ang Mo Kio, Bedok, Jurong West and Queenstown at the end of this month.

The monthly rentals will range from S$800 to S$1,900.

Analysts said this rate is attractive compared to the rental rates of other flats in the same area.

A four-room flat in such locations could be rented out at S$2,500 to S$3,000.

These flats are primarily vacated Selective En-bloc Redevelopment Scheme (SERS) that are not immediately needed for land redevelopment.

They will be retrofitted with basic fittings.

Eugene Lim, key executive officer at ERA Realty Network, said this move will take some pressure off the Cash-Over-Valuation (COV) for resale public flats.

Mr Lim said: “Traditionally, this is the group that needs immediate housing, so actually they form quite a big percentage of buyers in the resale market. With the new scheme, they can expect more of these buyers to be diverted to the BTO market because they are given priority and given interim housing.”

“When there are fewer buyers in the resale market, prices will start to moderate, possibly we will see COVs coming down over the next couple of months and that is an indication that the market is moderating. Whether we will see zero COV or not remains to be seen, because there is always people who need immediate housing and are willing to pay,” he added.

The HDB will be launching 3,346 BTO flats later this month.

Source : Channel NewsAsia – 21 Jan 2013

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