How do changes in housing developers rules impact the property industry?
Changes implemented by the Urban Redevelopment Authority generated mixed feelings especially on practicability.
Eric Tng, senior district director, ECG Property
Under the new rules, amenities within a 500m must be clearly labelled and drawn to scale. This will help buyers make a better informed choice as compared to the current practice of marking down the nearby amenities (especially schools and MRT station) on a map and making them appear to be closer than they really are.
However, on the rules of building an actual size show flat unit, developers may choose to showcase the bigger units (which might be the minority in the development). In the end, buyers of the majority smaller units will still have to leave it to imagination.
Finally, I feel rules should be drawn up to better train and police show flat's agents to ensure buyers are not pressured or misled to buy. Even with all the facts presented, I wonder how many buyers will go home, study the information before committing to the purchase? More often than not, buyers will purchase after listening to the agent's sales pitch.
Ong Kah Seng, research director, R'ST Research
These rules can safeguard the interests of buyers, especially when homebuying interest have been so immense recently and the profile of homebuyers could be increasingly diverse – ranging from seasoned, savvy buyers, to amateurish private property buyers who have little knowledge in the specifics of a property. There are also increased private property buyers who are first time property buyers, who never even bought a HDB flat and they may have weaker necessary property sense.
Viewed actively, these rules which require more transparency from developers serve to enhance and bring about a proper standard of communication with buyers, and minimize the buyers’ remorse if the delivered products do not turn out to their expectations.
The recent discussions on how to bring about sustainability in the private residential market have been on probable new cooling measures and how to cope with increased buyers’ interest. But if homebuyers’ interest remain strong and that part aspect cannot be downplayed, then it is at least effective to ensure such strong buying interest are well considered and lasting decisions, through transparency in the buying procedures, that are available for homebuyers.
By showing explicitly the details of a unit, these rules are still however unlikely to reduce future homebuying interest as fundamentally, it is difficult to discourage a home seeker who has already psychologically tuned himself into the mode of buying. They will not really wane the demand for shoebox apartments, primarily these buyers are mostly singles and shoebox apartment’s living size do fit into his general living space requirements. Intent buyers of shoebox apartments from developer projects will still go ahead with the purchase and may be still interested in pursuing a shoebox apartment to ‘live by it, breathe by it’.
Buyers will welcome these new rules, especially those who do not fully know their rights and property specifics in their pursuit of dream property, and may have to think about it when situations arise in the aftermath of purchase or physical possession of the property. It will require significant efforts from developers to fulfill these requirements, but it provide opportunities for many to position as trusting providers of quality space.
Alan Cheong, property analyst, Savills
Prima facia, the provisionment of more information in increased frequency would be good for developers and professionals in the property industry. With weekly data, real estate specialists would be able to collate and compile close to real time market research of what sells at what prices and vice versa. Now, specialists would get a flavor of the market psychology and determinants of sales sorted in terms of: Preferred sizes, Quantum paid per unit, Units sold by level and facing within a certain period of launch, Preferred layouts by the market.
This new information flow is a boon for real estate specialists. It enables the relevant professionals hone their instincts to provide greater market intelligence to clients. However, for buyers, it may easily develop into a case of information overload. Consumer and investment decisions are seldom rationale and whilst the provisionment of more information does necessarily translate to assisting home-buyers to make more “informed decisions”, it does not imply that informed equates rationality. The same set of information can be interpreted differently depending on whether you are in the profession or not. In the final analysis, with interest rates at such low levels, and likely to remain so for the foreseeable future, asset prices are prone to head north. Having greater information therefore may not yet have answered this important question afflicting many home-buyers: If I do not buy now, it will be more expensive later.
David Neubronner, Head of Residential Project Sales, Jones Lang LaSalle
“The implementation of the new measures is the right direction moving forward as the residential market evolves and the average sizes of new build apartments shrink. Nevertheless regulations can only do that much. Property buyers must do their own homework and exercise due diligence in their purchase. For a start, buyers should consider buying only from good and reputable developers. The market condition also plays its part. In an exuberant market, regulations may mean nothing as buyers rush to book units even before the marketing collaterals like the show apartments and brochures are ready.”
Kemmy Tan, CEO of YTL Land and Development:
Changes are good as it seeks to weed out errant practices and provides transparency to the consumers. The principle of caveat emptor is further reinforced; reducing potential future disputes between developer and buyer over mis-representations, non-awareness etc. However, any further changes to the housing developer’s rule must not be too limiting on the developer’s operations, it must also take into consideration whether these changes can be implemented practically, to be effective.