Writing on the wall – early list of home prices

Published 17 March 2011
The Business Times
By Emilyn Yap

Developers may have to disclose prices before launch

Developers may soon have to disclose home prices at least two days before launching their projects, if new rules proposed by the Urban Redevelopment Authority (URA) pass.

The potential changes – which also include stricter requirements for showflats and project plans – have come about as the government tries to make timely and accurate information available to home seekers before they sign on the dotted line.

Proposed rules for developers

Proposed rules for developers

URA is putting the proposals up for public consultation and changes could kick in by the third quarter, affecting developers of private residential projects, executive condominiums and design, build and sell scheme sites.

Developers may have to publish prices early and more frequently; build accurate showflats; provide drawn-to-scale plans for a project’s location, site and units; share track records; obtain buyers’ consent for changes which would affect their units; and abide by controls for online advertisements. Price disclosure could be a hairy issue. URA has suggested that developers make available a price list for units they are putting up for sale, at least two days before they launch the projects. If there are subsequent sales phases, they have to provide the price lists on the day units are launched.

A project is considered launched once the developer grants options-to-purchase (OTPs), regardless of whether sales happen during a ‘VIP preview’ or an ‘official launch’.

URA told BT separately that the price list has to be displayed prominently at the developer’s sales office or the project’s showflat.

Developers may adjust prices after units have been launched for sale. For instance, they can vary the discount offered to the listed prices, in response to changes in market conditions, a URA spokesman said. A few industry watchers BT spoke to felt that this rule could be hard to adjust to, as developers have so far enjoyed flexibility in pricing units.

There are times when prices are set only on the day of the launch, especially when the market is hot, said Cushman & Wakefield Singapore vice-chairman Donald Han.

A developer who declined to be named was also concerned about disclosing ‘sensitive’ price information, as competitors would be able to study the firm’s pricing strategy.

Roxy-Pacific chief executive Teo Hong Lim was more circumspect, saying that his firm already hands out price lists to agents ahead of launches so they can market the projects. In fact, some developers publish asking prices, he said.

For instance, Far East Organization has on its website pre-discount price lists for units available at its projects. BT understands, though, the lists are published after official launches. Apart from making sale prices known early, developers may also have to report transacted prices weekly, and URA will publish these prices on its website. Currently, developers lodge transacted prices with the agency every month.

Other proposed changes elicited milder responses from market watchers. Developers have to make sure that showflats depict actual units accurately. Guidelines may require showflats to feature all external and load-bearing walls of the actual units, walls of the same thickness as those of the units and door frames.

Developers may have to engage a Qualified Person to verify that the showflat is in order, and individuals with complaints can approach URA. The proposed changes are pre-emptive in nature – URA has received very few complaints on showflats in the past three years, its spokesman said.

There are seven key changes in all, and several others relating to the sale and purchase agreement and OTP. URA came up with the various proposals in consultation with the Real Estate Developers Association of Singapore (Redas). ‘Redas supports the government’s efforts to take steps to help purchasers make more informed decisions,’ said the association’s president Wong Heang Fine.

The proposed tweaks fall under the Housing Developers (Control & Licensing) Act (HDCLA) and the Housing Developers Rules (HDR). Public consultation starts today and goes on until April 18. URA will publish a summary of the feedback two months after the consultation exercise.

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