(For the Sunday copy, could we have an image of seniors with their arms crossed and not looking too happy at some flats, like Harmony Village?)
Harmony Village @ Bukit Batok, the first Community Care Apartments (CCA) project, received 706 applications for its 169 units. That’s an oversubscription rate of 4.2 applicants per unit. Nice start.
The next CCA project in Queenstown was still oversubscribed, but by then the application rate fell to 1.6, and we have to consider that it’s Queenstown – the appeal location did a lot of the work to drum up the application interest. Three subsequent CCA projects were all undersubscribed, with the last project at Fernvale Plains receiving only 152 applications for its 207 units (or 0.7 applicants per unit).
Now to be fair, location does play a pivotal role here: we don’t know the exact demographics by age, so towns with a lower population of seniors may see less demand and so forth. But one increasingly obvious issue behind the lacklustre demand for CCA units is cost.
I’m not referring to the price of the CCAs, but of the compulsory Basic Service Package. A recent Straits Times article has numbers that reveal the problem:
When Harmony Village was launched in February 2021, buyers taking a 15-year lease were given two payment options: they could pay $22,000 upfront, or pay $13,000 upfront followed by an estimated $50 a month.
At the time, it had also been stated that, while the $50 monthly fee could be reviewed, increases would be capped at 5% every five years. So why then, in the linked article, do the two residents interviewed by The Straits Times say they pay about $180 a month?
For those who were considering CCAs, the realisation that the amount is three times above the initially mentioned “$50” is bound to be alarming.
News pieces like this explain what’s happening in the market. Our consultations are designed to help you understand what it means for your own property decisions.
If you’re considering buying, selling or upgrading, we’d be happy to help you work through your options.
Let’s start by explaining how $50 became $180.
The original $50 monthly payment assumed an upfront payment between $13,000 and $42,000 upfront. However, the payment model subsequently changed.
By the time Queensway Canopy – the second CCA – was announced in October 2022, new buyers were no longer offered the original payment method. Instead of the bigger upfront payment, they could make a refundable deposit of just one year in fees and subsequently pay it on a monthly basis.
This option started at $164 per month. So it was cheaper upfront, but involved bigger monthly repayments. As an alternative, residents could also choose to pay $6,200 for every three-year period.
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