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No delaying payments, so home hunters turn cautious

Move may have initial dampening effect but experts say it will chase away only speculators

MARKETING manager Simon Loh has put an abrupt halt to his house hunting.

The 38-year-old had been looking for a new place for the last six months, but now that he cannot defer payments until the new apartment is ready, he has had to shelve his plans.

The Urban Redevelopment Authority announced on Friday that buyers of uncompleted private homes and offices will no longer have the option of using a deferred payment scheme.

This allowed home buyers to pay as little as 10 per cent of the purchase price upfront, footing the rest only when the property is ready.

All buyers now will have to use the progressive payment scheme where they pay between 5 per cent and 25 per cent of the purchase price every few months.

Mr Loh, who currently has to pay the bank a monthly mortgage of $1,300 on his condominium unit in Yio Chu Kang, cannot afford to take up another loan to buy a new home in town.

‘I’ll have to drop the idea, but I could have done it with the deferred payment scheme,’ he said.

Other house hunters are also thinking twice.

Sales manager Lawrence Chen, 35, who has been looking for a terrace house since last year, said he has to be ‘more conservative’ now.

Some buyers, though, are not affected by the change, saying they will just have to take up bank loans earlier.

IT manager Daniel Lim, 36, who was at a showflat in Paya Lebar, said: ‘You still have to pay for the property eventually.’

Typically, a buyer who chooses to take the deferred payment route is charged between 3 per cent and 5 per cent more than one under the progressive scheme. Still, property agents say up to 90 per cent of their buyers take up the deferred scheme.

They agree that removing the scheme will achieve the Government’s aim of driving away speculators. But the agents believe low-budget buyers could also be hit.

ERA Singapore assistant vice-president Eugene Lim said: ‘The mass market projects will be most affected because buyers there could need the three years’ construction time to build up their funds.’

But most agents believe the market will remain strong.

Property developers believe the move would have a slight initial dampening effect on sales, chasing away speculators but not buyers.

They are not taking measures, like lowering prices, to counter the new rule.

Singapore-based developer Chip Eng Seng, which will launch CityVista Residences in Peck Hay Road in about two weeks, said: ‘There are many genuine buyers and though they may be more cautious initially, the demand’s still strong.’

 

Source: The Sunday Times 28 Oct 07

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