More and more condo buyers have trouble paying up

There are more and more private condo buyers have missed the deadline in paying up according to AsiaOne. So will these represent the burst of housing market, or the demand can support the massive resale? Let us take a look.

Fernhill condominium off Stevens Road by MCL Land - 20 units - a Hong Kong company.

The buyer, reported to be a company called Concordia Overseas controlled by a Hong Kong resident named Chan Ki, had purchased all 25 units in the project and managed to resell 5soon after. But when the time came to make payment for the 20 units it still owned, Concordia missed a few deadlines.

It subsequently managed to resell 19 units in time to meet the final deadline, but reportedly at a loss. The price Concordia paid for the units was $1,410 psf, but the Business Times reported that it fetched only $1,180 psf for the 19 units it resold.

We believe that the clearing price of S$1,180 psf is at an attractive 46% discount to the peak price of S$2,200 psf. Even though the sale price is below the purchase price, it is still 2% above the resale transaction of S$1,163 psf in Oct 2008 for a unit at Pinetree Condo on Balmoral Park in the vicinity. The swift block sale indicates that liquidity is still very much intact, at the right price. We expect the continued sales momentum to aid in base formation and to improve the overall homebuying sentiment.


The Suites @ Central in Devonshire Road by Keppel Land - 51 units - an Indonesian investor.

The investor paid $1,806 per sq ft (psf) for the freehold apartments, which were bought in June 2007. The units were bought under the deferred payment scheme. This means the buyer made a downpayment of 20 per cent of the purchase price and then deferred the rest of the payments until the apartments were completed.

Two other buyers, both Singaporeans, also missed the payment deadline, Keppel said. One had bought two apartments in the fully-sold project; the other had bought three. The Suites is a 157-unit project. The average price of apartments at the project has fallen to about $1,470 psf, according to five caveats lodged for units that have been sold so far this year.


RiverGate - CapitaLand : about 2 per cent of buyers have missed payments since the project was completed in March.


More buyers with payment problems could surface in the coming months, as the property slump coincides with the fallout from the deferred payment scheme, which was scrapped in October 2007. Some 29,250 homes planned for completion between last year and 2013 were offered with the deferred payment scheme, the URA revealed last year. Analysts have estimated that about 14,000 were actually sold under the scheme.

Next year will be the time of reckoning, as many projects that were sold during the height of the market - in the second half of 2007 and early last year - will be completed then, with the bulk of their payments due.


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