Below is a letter I wrote to the editor of The Straits Times three weeks ago. Unfortunately, it was not picked up and has never been published in the Straits Times Forum.
After the hectic election week, things are back to normal now. Let me share the content of the letter in my personal blog.
P.S. The two new home sales tactics of re-issuing OTPs and buyer kickbacks mentioned in my letter are originally shared by the writer of the newspaper article “Fear of missing out? Beware agents’ hype on new home sales and prices” (The Business Times, June 25, 2020).
June 25, 2020
Dear Editor,
I refer to the article “Fear of missing out? Beware agents’ hype on new home sales and prices” (The Business Times, June 25). (https://www.businesstimes.com.sg/companies-markets/fear-of-missing-out-beware-agents-hype-on-new-home-sales-and-prices)
Recently, the tactic to continue re-issuing options to purchase to buyers upon expiry has been widely adopted by developers and their marketing agents in newly-launched condominium projects. This is meant to jerk up monthly sales numbers. No wonder new private home sales jumped 75 percent in May despite the closing of sales galleries during circuit breaker.
In February 2019, after a Credit Suisse report pointed out the discrepancies between the reported and actual number of new units sold, the Urban Redevelopment Authority (URA) promised the public to adjust the monthly sales figures submitted by the developers based on the number of returned units. (https://www.businesstimes.com.sg/real-estate/developers-re-issuing-options-amid-cooling-market-launch-bonanza) However, according to the monthly data published by URA, there continues to be a high number of returned units happening every month for these “best-selling” new projects.
Under the Covid-19 crisis, the Ministry of Trade and Industry forecast Singapore’s economy to shrink by 4 to 7 percent. The country is heading for a deep recession with significant job losses, especially for mid-career workers. The middle-age PMETs with school-going children will be most hard-hit by the economic downturn. This is the time to be prudent and exercise caution for home upgrade or new property purchase. It is irresponsible of developers and agencies to mislead the general public into believing that the property market is still thriving while the truth tells the opposite. We hope that the Ministry of Finance can monitor the private residential property market closely and caution home buyers to be prudent in their property purchase at this critical time.
Some agents are misleading their clients into believing that developers are raising prices. They make use of the FOMO mentality of the buyers to rush them into making a rash decision. With higher commission of 3 to 5 percent from developers’ new launches, agents are giving kickbacks to buyers or the buyers’ relatives or friends to entice them to commit to the purchase, while successfully inflating the transaction prices.
There are two loopholes in this malpractice: 1) False reporting of transaction prices is a breach in the developer’s loan agreement with the bank. So far there is no whistle-blower from any party involved in the process. 2) Kickback is against the Code of Ethics and Professional Client Care of the Council for Estate Agencies. There should be disciplinary action by CEA on agents with such misconduct.
Regards,
Vina
Name: Vina IP
Address: xxxxxxxxxxxx
Contact No: xxxx xxxx
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Thank you for warning us. Much appreciated
Don’t mention. They can’t expect us to keep quiet, then fool the public by repeating the same old trick every month.
Thank you for sharing 🙏. Very vital information
My pleasure. The same issue was highlighted by The Business Times journalist in the article published end June. But not many read it and the relevant authorities did nothing about this.
Thank you. What a good reminder.
We cannot continue having expectations of never-ending growth and rising property prices. Need to conserve capital as nothing can be taken for granted.
And how convincing it is to continue reporting good new home sales numbers when we are bombarded by news of recession, job loss, pay cut and bankruptcy every single day now? It is not a rocket science to see something must be wrong here.
This will only continue to fool the masses who are still not aware of local controlled media not telling the truth despite authorities knowing it. That is why our transparency in media is ranked amongst the lowest in the world. Me and my wife are sincerely grateful to you for your in depth analysis on property and industry malpractices in Singapore.
Thanks for your message. The industry stakeholders, including the media, tell lies because of their vested interests. This is a vicious cycle because they are losing the trust of the public and also losing business and revenue. Singaporeans may be trusting and gullible, but we are not fools. They forget the fact that we home buyers and property investors are the ones footing the bill of the industry.
I do not see anything wrong with your letter. On the contrary, it contains important facts that members of the public should know. I do not know why they have not published your letter.
Never mind. At least I can post it up in my personal blog here. Interestingly, the original idea of starting this blog is to find like-minded property investors who believe in value investing for sharing of knowledge and experience. Now it turns out to be a platform to warn fellow homebuyers of questionable practices in the industry.
serious matter?
For readers who are wondering why is this thorn among the roses so displeased with this article, a simple Google search will show you that he is a property agent.
A property agent’s earnings are commission-based, depending on the number and value of transactions that he closes. Naturally, it would never be in a property agent’s favour to advise you not to purchase properties. Therefore, you should always do your own research and analysis instead of blindly listening to a property agent’s pitch.
To the author of this blog, thank you for sharing these valuable information. Most of the online articles and videos about the real estate market are posted by property agents themselves, who obviously have a vested interests in creating more demand and sales. The information that you provide are essential in ensuring that the public considers both sides of the coin before committing to a purchase this large.
Thank you for your comments and for speaking for the consumers. The Singapore property market is an unhealthy one-sided industry that only the industry stakeholders with vested interests have a voice. The ones who are footing the bills are forever silenced. I really hope that more homebuyers and property owners can come up to share their views and speak up for themselves. If we can comment on any product or service as past or potential customers, why can’t we comment on a big ticket item like a private home?
the accusations are of serious matters, why dont make a police report and let the law run it course?
unless , is only a hearsay and not of any truth?
The two problems are nothing new in the new sales market. They have been in the industry for long. They were recently highlighted again by a journalist of The Business Times published in an article. So it is almost impossible for the authorities not heard of them. But like many problems around us, knowing it is one thing, taking action is another thing. The most important thing is to warn the vulnerable to prevent them from falling into the trap.
I think the position of the authorities should be fairly neutral — they do not want the market to heat up (again), neither do they want it crash; and they have more than enough COVID-related problems to keep them busy and this is probably not a priority for now.
Of course, people selling properties won’t like what you say, since you have no stake in their business and dare to speak the truth. But what surprised me is the journalist of The Business Times, it must have taken a lot out of the person to publish that article. Who would be so silly to put his/her career on the line just to publish something untrue?
Yes, you are right. To the public, what the journalist disclosed in the article may be something new. But for many people in this industry, these are nothing new. There is a boiling frog effect here and they are already used to seeing the same old tricks playing again and again.
I was told 2 days ago by an agent that a condo launch is raising its units’ prices and many are rushing are buy before the price hike. Guess this marketing hype can cause long term stress to middle income buyers should prices go down after September. Thanks for your warnings.
Raising prices in this market? What a joke! It is more interesting to do your own research on URA’s recent property transactions to see how developers are giving away discounts to offload their unsold stock. Your agent should share with you some good offers with big discounts from past transactions in order to close some deals.
👍🏻 Very well written.
Thanks for your support!
Do appreciate your insights into this ‘loop-hole’; I am encouraged by your persistence that finally URA can’t turn a blind eye to this. Our society needs more people like you, keep it up!
Thank you. I am sure that many fellow homebuyers and property investors have the same doubt. It just happens I have a personal property blog that can use as a platform to voice it out.
Hi dear property soul,
I would like to ask humbly what do u think of Sentosa Properties at near record Low.
You think it is good to buy for investments now?
Thank you!
We have recently discussed about investing in Sentosa properties in my FB page. You can check at this link -> https://business.facebook.com/propertysoulblog/posts/1339071693102954?__tn__=-R