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Sudden change affects at least 150 property deals

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At least 150 property deals have hit the skids due to a sudden Housing Board policy change which requires new permanent residents (PRs) to wait three years before they can buy a resale flat.

The figure is an early estimate by property agents, who say that similar cases are streaming in, with PRs having been caught out by Tuesday night's surprise announcement, which took effect immediately.

Before then, PRs could buy a resale flat as soon as their residency had been confirmed.

National Development Minister Khaw Boon Wan said the move was part of efforts to stabilise and "restore balance" in the HDB market.

But it has stranded buyers like IT customer service officer Gong Wei.

The 26-year-old Hebei resident, who received his PR status last year, had already paid the $1,000 option fee and was waiting for the bank's letter of offer to signify his finances were healthy before submitting his application.

The bank's letter arrived on his doorstep on Wednesday.

"The new rule is a decision made by the country leaders and it's a policy I can accept," he said in Mandarin.

"But I feel that a grace period for those who are already in the middle of a deal is a fair concession to make."

While it is not known how many PRs have been caught out by Tuesday's move, official figures show that Singapore granted residency to about 30,000 people a year in the last three years.

Mr Tony Du, president of the Tian Fu Club for new Chinese immigrants - mainly from Sichuan province - said new members typically buy a home within the first three years of being granted residency.

"About 90 per cent go for HDB flats because they're cheaper," he noted.

The development has already led to a drop in demand, which has trickled down to affect sellers and agents.

Some agents report that PRs are cancelling viewings altogether, choosing instead to continue their current rental arrangements or opting for comparatively smaller two-bedroom suburban condo units at the prices they would have paid for a large resale flat in a better location.

Purchasing supervisor William Sin had planned to sell his five-room Woodlands flat to Mr Gong Wei for $502,000. He will now have to look for a new buyer.

Mr Sin, 44, had put down $1,000 on a three-room flat and now risks losing both.

Even before Tuesday, he noted that genuine buyers have been few and far between.

The mortgage servicing ratio limit, capped at between 30 per cent and 35 per cent at the start of the year to cool the market, has already led to the lowest number of HDB resale transactions in the first two quarters since 1997.

"I've heeded the Government's call to reduce my debt," said Mr Sin. "But, ironically, holding on to a bigger unit now is not as good an asset as it was a couple of years back."

Bosses at several of Singapore's largest property firms, including ERA Realty, plan to appeal on behalf of buyers affected.

A spokesman for HDB told The Straits Times yesterday that it plans to review the transactions on a case-by-case basis.

Credit from The Straits Times - 30 August 2013

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