Many home buyers welcome move to scrap deferred payment scheme

Many home buyers have not been put off by the government’s decision to withdraw the deferred payment scheme for property purchases.

Some showflats still bustle with activity, especially those approved to offer deferred payments.

The latest change, which took effect on Friday, will only affect uncompleted private homes, commercial and industrial properties.

Alan Tan has just bought a penthouse at Park Natura at Jalan Jurong Kechil in the Bukit Timah area for over S$2 million.

The project can continue to offer deferred payment, but many home hunters say this is not a major factor that will sway their buying decision.

He says: “The deferred payment of course is a plus factor, but at the end of the day we look at the property itself, the location as well as the view. It’s also a freehold properties – these are the factors that we considered.”

The scrapping of the deferred payment scheme is seen as a move to cool the hot property market.

Buyers will now have to make progressive payments every few months at various stages of the construction process, instead of postponing payment till the property is completed two to three years later.

Some home buyers welcomed the move as it would deter speculators and stabilise the market.

Lim Guan Huat, Home Buyer, says: “For those who are more on the speculation, they have to think twice, because they cannot predict the market in two years’ time. So it’s the risk they have to consider.”

Cheam Heng Peng, Home Buyer, says: “Less speculators, maybe the price will be down. It’s uncertain right now.”

Property agents say buyers will now have to be more prudent in their selection and they must also be prepared to incur interest from bank loans taken to service the payments.

But there is a flip side to it.

David Poh, Director, Strategic Planning and Development, PropNex, says: “When they opt for deferred payment scheme, they would normally pay a higher purchase price because developers would probably build in a small percentage for them, an interest element. Now if they just go for the normal progressive payment scheme, their purchase price would be lower, so with that saving they can use to pay the interest, it’s still a zero sum game.”

Industry watchers do not expect the change to have major impact on the market.

But they say developers will have to tweak their marketing activities to focus on other selling points like design and eco-friendly environment, rather that offering an attractive deferred payment scheme.

Source : ChannelNewsAsia – 27 Oct 2007

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