Showflats to show fact, not fiction, come May
The days of "artificially" enlarged showflats decked up with made- to-measure furnishings are numbered, following changes to the Housing Developers Rules (HDR) yesterday.
Developers will now need to provide drawn- to-scale location plans and a breakdown of a unit's floor area by its various components - comprising bedrooms, balconies and bay windows - to help buyers better visualise the amount of usable space.
In addition, developers will also need to obtain a buyer's consent for any alterations to the layout of a property (such as changes in the location of facilities) and offer more information on the project before the option-to-purchase is issued.
Shoebox units have become increasingly popular and there are concerns about whether buyers - who predominantly hold HDB addresses - truly understand how small these units really are.
It is widely known that many of such showflats do not demarcate the living space, planter and balcony area clearly, giving an inaccurate impression of a unit's actual size.
Developers are also unlikely to build showflats for all the different unit types in a development as it would not be practical. Hence, much is left to the imagination of buyers.
Still, most consultants do not expect demand for shoebox units to take a big hit following these measures. Smaller units remain sought after as they are affordable - being priced around the $1 million mark - amid a low-interest-rate environment. A huge number of them will be rolled out over the next few years.
Other changes that will take effect come mid-May include the need for developers to offer buyers details on their past projects in Singapore, prior to the issuance of the option-to-purchase.
The amendments to the HDR will apply to sales of all private residential properties with effect from May 18, regardless of the launch date of the project.
URA noted that some of the changes proposed previously, such as directions on setting up showflats, will require amendments to the Housing Developers (Control & Licensing) Act and will be implemented only in the later half of this year.
Source: Business Times – 19 April 2012
'Beware oversupply of shoebox flats'
PROPERTY analysts have issued a blunt warning to investors keen to buy so-called shoebox apartments in hopes of capital gains and good rental returns.
The strong interest in these units - mainly 500 sq ft or smaller - is playing a central role in fuelling the robust demand in the overall private property market.
Analysts at major research firms cautioned that investors should look before they leap even though the price tags look tempting, given the units' small size.
They said investors should understand that thousands of these tiny homes are set to flood the market in the next year or so, which could mean headaches in getting a tenant - or a good resale price.
The analysts said most buyers for such units tended to be investors rather than owner occupiers, many of whom lived in HDB flats that were larger than the shoebox units they were buying.
The BNP report also stated that tighter immigration rules may mean investors would face even more difficulty finding enough tenants for the units.
'Facing an uncertain demand ahead, we believe the physical market could start to feel the first pains of oversupply as early as (the second half of next year) via softening rents and buyer sentiments,' it said.
The researchers also warned that rising interest rates could dampen home demand. 'Coupled with other risks such as an earlier-than-expected climb in interest rates, this could indeed have a significant impact on the financial well-being of HDB households, which typically have less holding power,' said Nomura.
Likewise, the BNP report warned that a rise in mortgage rates could hurt home affordability, 'unless household income rises faster or home prices fall faster'.
Source: The Straits Times – 19 April 2012
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