Top HDB Projects In Singapore

The shocking news of HDB Singapore flats fetching a record high of $1 million dollars has left many Singaporeans in astonishment. These flats are mostly maisonette or executive apartments located near a MRT station. However, newer HDB developments with the current standard floor area of 110sqm for a 5-room flat have not yet crossed the million dollar mark. In my opinion, million dollar HDB flats will become more common when flats in the following top HDB projects enter the resale market.

The Pinnacle @ Duxton

Located just minutes away from the Central Business District, The Pinnacle@Duxton is one of the most highly sought after HDB projects in Singapore. On 29 May 2004, HDB released 528 units under phase 1 of its Build-To-Order system and units quickly became oversubscribed.

This HDB Project was officially completed in December 2009 and a keys handover ceremony was held on 13 Dec 2009. The Pinnacle@Duxton is expected to reach the million-dollar mark as units will be eligible to be sold in the resale market after the five year Minimum Occupation Period (MOP) is fulfilled by 2014/2015.

Source : http://en.wikipedia.org/wiki/File:Pinnacle@Duxton,_Singapore_-_20100101.jpg

Tiong Bahru View

Situated right next to Tiong Bahru MRT and Tiong Bahru Mall, it is quite a surprise that this piece of land is not given to private developers instead. Just a month ago, the piece of land situated next to Tiong Bahru View was sold to Keppel Land for $550million or $1,163 per sqft, the highest price per square foot ever tendered for a purely residential site in the Government Land Sales (GLS) programme. In fact, I feel that Tiong Bahru View has a slightly better location than the GLS land parcel due to its closer proximity to the MRT.

The estimated completion date of this project is 31 Dec 2015, meaning that these flats will enter the resale market in 2020 after the 5 year minimum occupational period is fulfilled. With surrounding resale HDB flats selling for more than $900k, it will be a huge surprise if good units in Tiong Bahru View do not cross the $1million mark in 2020.

Mixed Development at Clementi Town Centre

The development, completed in November 2011, is a 40-storey mixed development. The residential component of the mixed development consists of 388 units of new HDB flats. They were built under the HDB’s Selective Enbloc Redevelopment Scheme (SERS) programme primarily to house home owners from within the same township. Located just above the Clementi Town Centre and less than a minute walk to the MRT and bus interchange, this development is set to be one of the top HDB projects in Singapore. 5 room resale flats located 300 metres from the MRT are already selling in the range of $800k-$900k. 

Source: http://www.hdb.gov.sg/fi10/fi10297p.nsf/ImageView/CORPORATE_PR_15052012_Pic1/$file/IMG_8645.jpg

Moreover, Clementi Town Centre is just one stop away from the upcoming Jurong Lake District. With plans to transform Jurong into the next commercial hub with a good mix of shopping malls, office buildings, hotels, hospitals and residential buildings, the area will be transformed to a unique destination for business and leisure by 2025.  Property prices in Clementi will certainly increase as a result of the spillover effect from the revamped Jurong Lake District. In addition, when these flats enter the resale market in 2016 after the 5 year minimum occupational period is fulfilled, property developments that are currently under construction such as Trivelis (DBSS), Clementi Ridges (BTO), Trilinq (Condominium) and SERS development right beside Clementi Mall, will all be completed. 

As more HDB projects in prime areas start to enter the resale market in the next few years, we will definitely see more million dollar HDB flats being transacted. The expansion of our MRT network will also drive up property prices across the island. Million dollar HDB flats will soon be the norm. What do you think?

Avoid Cash Top-Up For HDB Monthly Mortgage Instalment

According to HDB's website, 

"Buyers must use all the available savings in their CPF Ordinary Accounts for the purchase of or taking over the flat before any housing loan is granted by HDB."

This means that you have to deplete your CPF Ordinary Account (CPF OA) before a HDB loan can be granted. Your subsequent monthly CPF contribution will then be used to service the HDB monthly mortgage instalment. If your monthly contribution to the CPF ordinary account (23% of gross income) is insufficient to cover the monthly mortgage instalment, you have to top up the shortfall in cash. 

Assuming you bought a HDB BTO flat for $400,000, the 10% down payment, stamp fees and other fees will to approximately $50,000. You and your partner have accumulated $70,000 in your CPF OAs. According to HDB regulation, you have to deplete this $70,000 before any housing loan is granted by HDB.  However, the required amount you have to pay is only $50,000. This excess $20,000 is used to offset the purchase price, thereby reducing the loan you need. This sounds like a good idea but in the event that either you or partner gets retrenched, a substantial amount of cash-top up will be needed every month and this can put a huge strain on your finances. What you need is a buffer in your CPF OA for any unexpected circumstances. 

So how do you build a buffer when HDB requires you to deplete your CPF OA before a loan can be granted? With reference to the example above, all you need to do is to transfer the excess $20,000 into a CPF Investment Account by buying some investment products before you pay the down payment. After the HDB loan is granted, you can liquidate the investments and transfer the money back to your CPF OA. This excess $20,000 should be enough to cover at least a few months of mortgage instalments. Also, if your monthly contribution to the CPF OA is insufficient to cover the mortgage instalment, the $20,000 buffer can cover the shortfall and no cash top-ups will be needed. However, do note that the first $20,000 in your CPF OA cannot be used for investments in the CPF Investment Scheme. 

While paying a higher down payment can reduce the amount of the mortgage loan and monthly instalment, a buffer in the CPF OA provides more security and acts as an insurance to safeguard your finances against any unforeseen circumstances. At the end of the day, it all boils down to personal preference and balancing the trade-offs.

Consequences Of Giving Up Your HDB BTO Flat

I had a long conversation with my sister regarding HDB BTO flats today. To my surprise, she revealed to me that she is intending to apply for a flat at either Queenstown or Toa Payoh in the upcoming November 2012 HDB Build-To-Order exercise with her boyfriend of 7 months. In my opinion, 7 months of relationship is far from stable and absolutely not enough to determine if her current boyfriend is 'the one' for her. Furthermore, she is only 21 this year and there is no need to rush into things, especially when stakes are high.

Several thoughts ran through my mind immediately:

What if they managed to get the flat but break up afterwards?
What are the penalties for giving up a HDB BTO flat halfway?
Will the downpayment and grant be forfeited?
Do they have to pay back the Additional Housing Grant in cash?
Will the first timer privilege be affected?

I kept these thoughts to myself in order not to dash her hopes. As an elder brother, I am naturally protective of my sister and hope that every choice she makes is the perfect one. This led to a two hour research on the penalties and forfeitures for giving up a HDB BTO flat.

Here are my findings regarding the consequences of giving up your BTO flat in the event of a break up:

Giving up your BTO flat after the online application

At this stage of the application, monetary stakes are still low and the only thing you forfeit is the administrative fee of $10 should you decide to give up. However, do note that if your queue number is within range (queue number less than the number of units offered), or in the case where you are invited to select a flat even if your queue number is out of range(due to applicants before you giving up their chances), HDB considers a cancellation as a rejection to select unit. Also, you will lose your first timer priority after two rejections.*

So if you have previously rejected a chance to select your flat, stakes are higher as this means you will be stripped of your first timer privilege for a year if you reject the chance to select a flat for the second time. In addition, any additional chances accumulated from the previous unsuccessful applications will be set to zero if you reject to select a flat.

*From HDB Website : "To manage the growing trend of repeated non-selection of flat by First-timers, First-Timer applicants who reject 2 chances to select a flat will have their First-Timer priorities removed for a period of one year. If they apply for a flat in any HDB sales exercise within that one-year period, they would no longer enjoy the above priorities for First-Timers."


Giving up your BTO flat after unit selection but before signing Sales Agreement for Lease

By this stage, you would have already paid the option fee and selected your desired unit. Stakes are higher now. By giving up your BTO flat after booking a unit, the option fee* that you paid during flat selection day will be forfeited. Also, according to a new HDB regulation, buyers who cancel their bookings after putting down an option fee will now be barred from buying BTO (Build-to-Order) and resale flats with housing grants for a period of one year.


*Option fee for 4/5 room : $2000
 Option fee for 3 room : $1500
 Option fee for 2 room : $500
 Option fee for studio apartment : $250


Giving up your BTO flat after signing Sales Agreement for Lease

Now, things are turning ugly and stakes are getting higher. By now, you would have already paid the stamp fees and downpayment through your CPF/Cash/Additional Housing Grant (AHG).

5% of the flat purchase price and expended legal and stamp fees will be forfeited should you give up your BTO flat at this stage.

So if you are eligible for the Staggered Downpayment Scheme and paid 5% of the purchase price as downpayment, nothing will be refunded. If you paid 10% of the purchase price as downpayment, half of it (5% of purchase price) and the expended stamp and legal fees will be forfeited.

Also, if you were granted the Additional Housing Grant, you have to pay back the disbursed grant with interest in cash

Similarly, you will be barred from buying BTO (Build-to-Order) and resale flats with housing grants for a period of one year.


In conclusion, be sure that your partner is 'the one' for you before applying a HDB flat with him/her. Stakes are high and giving up your HDB flat halfway can have a huge impact on your finances. I guess I will have to talk to my sister about this someday.

CPF Not Enough for HDB Downpayment?

My girlfriend and I are eligible for the HDB staggered downpayment scheme where we pay the 10% downpayment as follows:

• 5% of the purchase price at the time of signing of the Agreement for Lease 
• Balance 5% at the time of keys collection which will be in 2016.

Signing of the Agreement for Lease is supposed to happen this month(October 2012) and our CPF savings are still insufficient to pay for the first 5% downpayment. HDB requires us to pay the balance in cash, which amounts to about $4000. A way to circumvent this problem is to delay the signing of the Agreement For Lease. By delaying the signing of the Agreement For Lease, our CPF will accumulate more money and this reduces the cash balance we have to pay. I am still a full time student and my girlfriend is the only person contributing to CPF. Given that her monthly salary is $2,400, contribution to the CPF Ordinary Account is approximately $550 every month. This means that for every month we delay, we will be able to reduce our cash payment by $550. To not pay single cent in cash for the downpayment, we will have to delay the signing of the Agreement for Lease by about 7 to 8 months.

So how to delay the signing of the Agreement for Lease?

As HDB will invite us to sign the agreement for lease only after our Additional Housing Grant(AHG) and HDB Loan Eligibility(HLE) are being approved, I decided to delay the application process of AHG and HLE by:

1)  Exceeding the submission deadline for the required documents
2)  Submitting an incomplete set of documents

This resulted in HDB sending us another letter requesting for the missing documents with a new submission deadline. Once again, I exceeded the new deadline and submitted an incomplete set of documents which resulted in HDB sending us another letter with a new deadline. This went on and on until HDB sent us a letter stating "If we do not receive the documents by the due date, we take it that you are no longer interested in applying for the HDB Loan Eligibility Letter." It is only after this letter that I finally gave in and sent them everything they needed before the deadline. By doing this, I managed to delay the whole application process by about 2-3 months.

Now, my HLE is approved and AHG is still pending for approval. However, I still need to delay the signing of agreement for lease by another 4-5 months in order to not pay a single cent in cash. This is when I called up my HDB officer and our conversation is as follows:

Me: Hi officer, my name is XXXXX and my reference number is XXXXX. I am calling to enquire about the status of my AHG application

HDB Officer: Oh it should be approved in a month's time. Just wait for the letter to be sent to you.

Me: May I know when is the signing of Agreement for Lease?

HDB Officer: It will be within a month after your AHG is approved.

Me: Oh, actually there is a slight problem here. My girlfriend is currently overseas on a work assignment and will only be back next year February. May I know if both parties have to be present for the signing of Agreement for Lease?

HDB Officer: Yes of course! (sounding slightly irritated) Did your girlfriend sign any documents to appoint an attorney to act on her behalf?

Me: No. What's that?

HDB Officer: Ok never mind. Just call me again to reschedule the date when u receive the invitation to sign the Agreement for Lease.

By the end of the conversation, I could sense that the HDB officer was rather pissed off. Anyway, it was still quite helpful of her to allow us to postpone the signing of Agreement for Lease.

As my girlfriend will be receiving her bonus in December 2012 and January 2013, our CPF savings should have accumulated enough to pay the full 5% downpayment by February 2013.

HDB Property Bubble In Singapore

MAS has just warned of a new property bubble in Singapore due to the prevailing and problematic low interest rates. Despite the ramp up of HDB flat supply, resale prices rose 2% as compared to 0.5% for private home prices. This worries me slightly as I just got a flat from one of the HDB Build-To-Order exercises.

To have a better understanding of a possible HDB property bubble in Singapore, I will first have to find out the demand for HDB BTO flats. For that reason, I went to the HDB website and compiled the total number of units and applications for September 2012 BTO and Sale of Balance exercise as shown below:

Examination on the HDB property bubble in Singapore - Demand

Since each household can submit only one application for either the BTO or SBF Exercise, I am able to compute the overall number of units and applicants. From the table above, we can see that after this round of HDB sales launch, there are still 18614 households who have not secured a flat. This number of 'homeless' households/couples is still significantly higher than the 6400 new flats to be launched in November 2012 and we are only talking about the 'leftovers' from the September's sales launch here. With that, we can safely say that the demand for HDB BTO is still strong. A significant portion of resale HDB flats buyers is the Permanent Residents(PR) as they are ineligible to apply for BTO flats. With the ever increasing number of PRs in Singapore coupled with 'downgraders' and desperate 2nd timers, demand for resale flats is likely to remain strong as well.

Examination on the HDB property bubble in Singapore - Supply
However, what concerns me is not the demand, but rather the ever increasing supply in both HDB flats and  private property which might soon burst the property bubble in Singapore. With the increasing number of both public and private homes, will there be an oversupply a few years down the road? I believe it will depend on Singapore’s economy and the global situations at that time.

Increasing supply, over-speculation and unjustified optimism might be some of the causes of a possible property bubble in Singapore. There is a certain element of investment demand among private home buyers as not everyone is buying for owner occupation. The potential risk is that a few years down the road, when these projects in the pipeline are physically completed, accompanied by higher interest rates and an economic downturn, demand for private homes will come off. Owners of these properties will then try to rent or sell them which consequently put pressure on rents and prices. HDB resale prices might be affected by the spillover effects of the bursting private property bubble in Singapore but then again, the 2008 crisis proved otherwise.