Some flat owners sitting on a goldmine

Straits Times: Sat, May 26

SOME lucky Housing Board home owners, whose flats are entering the resale market this year, are looking at more than double the price they paid for the units. Property analysts say such high asset appreciation, attributable to good timing and a buoyant resale market, is one that is unlikely to be repeated in a long time. These flat owners, who had the keys handed to them in 2007, would have fulfilled the minimum occupancy period (MOP) of five years this year. 'Back then, HDB prices were in the doldrums because of Sars (severe acute respiratory syndrome) and the Asian financial crisis,' said PropNex chief executive Mohamed Ismail, who linked the windfall they could enjoy to the surge in resale flat prices in recent years. He noted that the HDB's resale price index in the first quarter of this year stood at 191.6. It was 104.9 in the first quarter of 2007. In a statement to The Straits Times, the HDB said these flats whose MOP could be fulfilled this year include those in mature estates such as Queenstown, Toa Payoh and Bukit Merah, as well as non-mature estates such as Punggol and Sengkang. Since the MOP begins on the date the keys are issued, not all the households, however, would be eligible for the resale market this year, it added. One owner whose MOP will be up this year is Mr Johnny Wan, 42, who balloted successfully and paid $330,000 for his four-room unit in Block 91, Tanglin Halt Road, in Queenstown. He now gets fliers from real estate agents who promise him at least $750,000. 'My friends called me crazy and said I could have landed myself a better deal elsewhere, maybe an executive condominium,' recalled the shipping firm manager of his decision to buy back then. 'But it's all about location to me, and I'm the one who's sitting on a tidy profit now,' said Mr Wan, who may sell his flat if the right offer comes along. It is a few minutes' walk from Commonwealth MRT station and is among about 1,000 flats built as replacement units for those affected by the Selective En bloc Redevelopment Scheme. Those living farther away, in non-mature estates, are also sitting on tidy paper profits. Mr Roslan Salam, 34, paid $170,000 for his four-room unit in Punggol and moved in in 2007. A similar unit in a nearby block sold for about $500,000 in March. 'It was a lucky buy. When we first checked the area, not much had been built and it wasn't as busy. Times have changed,' said the auxiliary police officer. 'It's like striking a lottery,' said SLP International head of research Nicholas Mak. 'These buyers came in at the right time before the property boom when prices started inching upwards.' To satisfy first-timer demand, the HDB has promised to ramp up supply, and launch 50,000 flats within two years. Mr Mak noted that as the prices of new flats are pegged to market rates, albeit at a discount, another chance to cash out at such a significant premium is unlikely to happen any time soon. In flat sales launched this year, for instance, the price of a four-room balance flat in Queenstown ranged from $505,000 to $613,000, while a unit in Punggol cost $257,000 to $333,000. 'The resale price index is likely to remain stagnant in the coming year, and any growth would be very small,' he added. Meanwhile, astute real estate agents are tracking MOP dates to find out where to lobby residents to sell. ERA agent Chris Neo said the pickings were hottest in Strathmore Avenue two years ago and Redhill Road last year. 'Most flats that have their MOPs up this year are likely to make a profit. It's only a matter of how much.' [e-mail] STRIKING LOTTERY It's like striking a lottery... These buyers came in at the right time before the property boom when prices started inching upwards. - SLP International head of research Nicholas Mak Source: The Straits Times