I have written to The Straits Times Forum regarding the problem of inconsistent and incomplete private property transaction data. Below is my letter (Dec 18, Thursday) and reply from URA (Dec 23, Tuesday).
Public deserves reliable, consistent data
Published on Dec 18, 2014
THE computation of the HDB’s resale price index has recently been improved to give a more accurate picture of price movements in the public housing market (“New way to better reflect HDB resale market”; Dec 10).
In contrast, there are different property price indexes tracking the private residential market – including the Urban Redevelopment Authority’s non-landed residential Property Price Index (PPI), the SRX Property Index (SPI), the NUS Singapore Residential Price Index, and Redas’ Real Estate Sentiment Index – with each one claiming to be more accurate than the others.
The conflicting results from the monthly and quarterly property performance reports released by these organisations confuse the public. For instance, there were at least seven quarters of conflicting price signals between the PPI and SPI from 2008 till now.
Also, the private home transaction data are incomplete owing to the following loopholes:
– Lodging caveats with the Singapore Land Authority is voluntary.
– Developers are not required to submit sales data of their delicensed projects after obtaining the Temporary Occupation Permit.
– All incentives from developers – including stamp duties, cash rebates and rental guarantees – for new projects are not captured, thus inflating the transacted prices of new sales.
The inflated prices of new sales in turn serve as a biased reference for valuation of similar properties. Thus, buyers risk taking bigger housing loans from banks and servicing mortgages higher than the actual market values of their properties.
This defeats the Government’s intentions of ensuring financial prudence of borrowers and maintaining a sustainable property market.
The conflicting indexes make it difficult for the public to have a real picture of the latest market situation.
The market confidence of buyers and sellers is influenced by the announcement of property sales data and price indexes, affecting their bargaining during negotiations and their final decision to buy/sell their properties.
The Government also needs a reliable and consistent private property index that it can monitor closely in order to identify a “meaningful correction” before revising property cooling measures.
Upgrading to a condominium is the dream of many Singaporeans. To many, it is the most expensive purchase in their lives. They deserve more complete, transparent, accurate and consistent data concerning private residential sales in Singapore.
Vina Ip (Ms)
URA index shows broad price trends in private home market
Published on Dec 23, 2014
WE THANK Ms Vina Ip for her letter (“Public deserves reliable, consistent data”; last Thursday).
The Urban Redevelopment Authority’s Property Price Index (PPI) provides the public with a broad indication of price trends in the private residential market. The index covers the entire private housing market, including uncompleted and landed properties.
In contrast, the other property price indices tracking the private housing market have different coverage and methodologies. Hence, the resulting price changes may vary.
To compute the PPI, we use data from caveats lodged with the Singapore Land Authority for sub-sales and resales. For new sale transactions, we have complete data on property prices from a regular survey of developers. All discounts and rebates provided by developers are deducted to derive the nett prices.
Besides the PPI, prospective home buyers can view the transaction prices of individual private homes on our website.
We are also working towards releasing the nett prices of individual units sold by developers on our website in the first half of next year.
We assure Ms Ip that we will continue to make improvements to our property market data.
Sin Lye Chong
Group Director, Land Sales and Administration
Urban Redevelopment Authority
What’s next after disclosure of nett prices
Today there is an article “Homebuyers to gain from fuller price disclosures” in The Straits Times that reiterates what URA mentions in their reply – the disclosure of nett prices of individual units sold by developers.
The reporter has interviewed spokespersons from a legal firm, a property agency and a consultancy firm, as well as a home owner and investor. They are all in favor of URA’s reporting of nett prices over the current inflated prices of new sales by developers. Hopefully, property buyers and investors can soon have more accurate and transparent sales transaction data – at least on new project sales by developers.
Looking forward, home buyers would welcome mandatory lodging of caveats with the Singapore Land Authority, and compulsory submission of delicensed project sales data by developers. Afterall, the two missing puzzles are critical to present a complete picture of Singapore’s private residential property market.
Finally !! The trend towards publishing individual pricing sold will certainly allow the general public and buyers alike to have a clearer insight into the trend of the property market in general . This will certainly help all of us to make better choices when it comes to purchasing our dream house in future . Well done
Long overdue!!
URA should have known that information has never been complete and is exploited by developers to cover up the actual buying prices. Though it is a step in the right direction but I would say it is a shame that only now URA take action.
Yes, consumers should speak up when they are not given the necessary information they need to make a good purchase decision. Afterall, it’s us (the home buyers and property investors) who are footing the bills here.
Well done, Vina.
Perhaps, your next suggestion to the government is a partial relief of the TDSR. Existing mortgagors are at the mercy of the banks because of the TDSR they cannot refinance. Some of the owners are facing serious problems because of the rising interest rates and a weak rental market. I believe more and more forced sales are on the way.
The first step is to have the property price indexes to reflect the nett prices of new sales rather than the current inflated prices. Only when the data show a “meaningful correction” will the government consider relaxing any restriction.
The next election needs to be held by Jan 2017. So don’t expect any drastic change in cooling measures until then, unless there is an economic recession or financial crisis that cause prolonged crash in property prices. Remember the previous times when lift of property gain tax, concession in stamp duties, higher LTV, etc. were announced, they were introduced with the off-budget measures in 2001, 2002 and 2005.
It will be interesting to see how URA will be able to enforce the regulations requiring disclosure of nett prices.. Some one I know purchased a condominium unit straight from the property developer (a very prominent property developer in Singapore) last month and he was given a straight cash refund representing a discount which he managed to negotiate. However, this cash refund was not documented in the Sale and Purchase Agreement and the purchase price as stated in the Agreement is still the gross price. Even with the new regime requiring mandatory disclosure it would be almost impossible to pick this up.
I agree with you that it is difficult for URA to capture the nett prices unless the government makes it illegal for developers and their marketing agents to hide any rebates or incentives behind the transacted prices.
Hi PS, may I ask what do you mean by “off-budget measures in 2001, 2002 and 2005” ?
Do you mean that the measures were introduced not together with the budget but were separate of the budget, during the 2001 – 2005 period?
You can do a google search on the off-budget measures introduced during those years. e.g. http://www.nas.gov.sg/archivesonline/speeches/view-html?filename=2002120901.htm
Hi PS, I also note the recent URA revamp on PPI methodology.
With stamp duty data from IRAS now being included, I’m thinking if this now represents the “missing puzzle” jigsaw of the private property residential market.
Of course, as Timothy commented earlier, it is still possible for agents & developers to hide behind transacted prices unless the government makes it illegal to do so.
That being said, it still seems a step up from the previous method of using caveats lodged with SLA which is voluntary.
What are your thoughts?
I agree. In fact I am drafting my next blog post on this. URA hasn’t been reviewing their methods behind PPI for years. Give them some time to improve it.