I REFER to a recent newspaper report on homes which were bought on deferred payment.
The article raised concerns of a further downward pressure on home prices next year should buyers who will have problems securing loans sell their properties at low prices. The report cited the Urban Redevelopment Authority as saying 10,450 homes were sold under the deferred payment scheme.
These units were sold during a boom period in the property market, before the economic downturn.
It was believed that quite a number of buyers sold their secured property units for a profit during the boom.
Owning a home is a necessity, and living in an affordable home is everyone's dream. However, if a home is out of one's financial reach, hoping to buy one by relying solely on bank loans is a very risky thing to do.
The Government made the right move in withdrawing the deferred payment scheme on Oct 26 last year. The move was aimed at curbing speculation in the private-housing market.
For genuine homebuyers who can afford their properties, they will not be affected much.
However, speculators who are still holding on tight to their secured flats might find it hard to get sufficient bank loans during this difficult period, as most banks here are very cautious, and make stringent eligibility checks and tighten credit controls when it comes to loan applications. In this economic climate, construction costs will be relatively low.
Hence, a downward pressure will be placed on the prices of new homes.
In this respect, homebuyers or investors who bought their properties when the market was at its peak will inevitably suffer a loss, as they entered the market at the wrong time.
Nevertheless, potential property buyers must do their homework and make the correct calculations, and take many factors into consideration, such as global and local economic conditions.
This way, they can make prudent decisions about their investments in the property market.
