Many retreat from planned purchases

Home buyers have already begun to back-out from planned purchases since new measures to cool the property market kicked in.

The early effects of the new measures are emerging as buyers back out of option to purchase (OTP) agreements – especially for HDB flats.

Those having second thoughts about home purchases either no longer qualify for an 80 per cent loan, or believe that prices are going to drop following the measures.

Also there are private property owners who bought HDB flats and have no intention of selling their private homes.

ERA Asia Pacific associate director Eugene Lim estimates that 10-20 per cent of buyers of HDB resale flats belong to this group.

On average, about 3,000 resale flats change hands each month. This could mean up to 600 sales are at risk of buyers backing out, depending on which stage of the sales process they were at when the rules were announced, said Mr Lim.

‘Buyers are checking whether they can appeal and they will have to make some hard decisions,’ he added.

Dennis Wee Group director Chris Koh said agents have already reported cases where buyers of HDB flats have walked away from deals and not exercise the OTP.

Malaysian permanent resident May Lee, 30, is one buyer caught in a bind. She had purchased a HDB resale flat last week had paid the option fee to buy a $260,000 three-room HDB flat in Aljunied. She also owns a private property in Malaysia – which she cannot sell because her parents are living there – she now has to give up the HDB flat and lose $1,000.

‘The new rules are very unfair as PRs are drastically affected,’ she said. ‘I cannot ask my parents in Malaysia to move, and yet, my dream to have a permanent HDB home in Singapore for my family has been shattered.’

Ms Lee intends to appeal.

HDB advised buyers who have already been granted or exercised their OTP but have yet to submit an application ‘may approach HDB’s Resale Office to see how best they could be assisted’.

The new rules apply to resale applications submitted on or after Aug 30, but many buyers, such as Ms Lee, would have already committed to a purchase although their resale application would not have reached HDB by Aug 30.

HDB said it is ‘prepared to exercise flexibility… depending on the merits of each case’.

The ramifications of the new rules have also hit the private property segment as buyers now think prices are going to come down, so they are changing their minds.

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