Tuesday, February 19, 2008

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How to Calculate Rental Yield

The following formula shows how to calculate rental yield accurately by taking into all costs that are often overlooked:

Rental yield in %=
(Net Annual Rent Collected / Total Cost of Property) x 100 %

(Net Annual Rent Collected = Total Rent Collected - maintainence cost, property tax, property agent cost, income tax, vacant cost etc)

( Total Cost of Property = Price of Property + Stamp Duty + Legal fees + Renovation + furnishing)

Example (assuming no mortgage):
If you bought a property for $600,000 (inclusive of all costs), you rent it for $2000/month and your monthly maintainence is $200, agent fee is 1 month's rent, amortised furnishing cost is $500/year (i.e. you spend $5k on furnishing and expect it to last for 10 Years so amortised cost = $5000/10 years), property tax (10% of annual value) is $2400, and assuming other costs to be negligible, we have:

Net Annual Rent Collected in $ = $2000x12 - ($200x12 + $2000 + $500 +$2400) = $16,700

Rental Yield = ($16,700/$600,000) x 100 = 2.78% ~ 3%

If the mortgage rate is 3%, then rental yield will just be about enough to pay for your mortgage interest (only).

May also want to read:
How to Calculate Property Tax for Singapore Property
Singapore Property History
How to calculate Stamp Duty for Singapore Property

Friday, February 15, 2008

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Smart Buyers Collection is a collection of words of wisdom by various Singapore property watchers.

By: Anonymous
Posted: 14-2-2008

So as to bring you up to speed on what's happening in the real world ........ and its possible effect on us , ..the following that is happening may affect the financial health of the banking systems in the US (but like the proverbial frog in the well, all is still blue skies to you).

They are now talking of SOLVENCY, not just LIQUIDITY issue .......it's really quite serious now.

This is not meant to frighten but be a voice of caution ........ so as to mitigate potential losses!


Gross applied the historical average default rate of 1.25 percent to the $45.5 trillion of notional swaps and assumed a 50 percent recovery rate for holders of the defaulted debt. Under that all-too-plausible scenario, Gross calculated that the default-swap market has the potential to generate losses of $250 billion in coming years.


Wednesday, February 13, 2008

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Property Buyers Guide : 7 tips for Property Investors

There are still pockets of new developments in Singapore that are priced below $1,000 per sq ft, writes PETER OW

HOUSE hunting can be challenging at a time when sellers are holding firm despite a quieter property market while buyers are expecting a steeper discount based on weaker sentiment from the US sub-prime woes. Those on a strict budget should note, however, that the record prices were achieved mainly by new launches in the first 10 months of 2007. This is also true in suburban locations as buyers pay more for new developments under construction. Nonetheless, there are still pockets of new developments in selected parts of Singapore that are priced below $1,000 per sq ft such as Bedok and Jurong.

Well, it may be the right time to start looking for a second home as an investment. Given the more cautious economic climate and rising inflation, price naturally becomes the most significant factor for a property purchase as that would have an impact on initial cash outlay and the long-term mortgage financing of the property. Here are seven key tips to note when shopping for a second residential property for investment. Before buying, ask yourself the following questions:

1. Is the price reasonable?
2. What are the prospects of getting a tenant?
3. Can you possibly stay there yourself?
4. Can you get financing and service the monthly instalments?
5. What is the expected return on the investment?
6. How long will you hold your investment?
7. Is the tenure important?

Price: While price is a key consideration, nobody can predict when prices will hit rock bottom. Thoroughly research the locations you are interested in, walk around the area and check out the resale values. This is probably the best time to negotiate when nobody is interested in buying as there will be less competition.
Location: Location, location, location, that’s what property is all about. We have to ask ourselves: Is this a location where expatriates like to stay? Districts 9, 10 and 11 will readily satisfy the criteria of convenience and proximity to the CBD. Outside these districts, a development near an MRT station, suburban shopping centre, or good views of the sea or waterway have great potential. For such locations, regardless of good times or bad, one will be able to find a tenant. Getting the wrong location might result in vacant periods when the economy is not doing well.

Returns: When buying primarily for investment, yield or return on investment is the key thing to consider. If the financing cost is low and the returns are much higher, then the second residential property purchase will, indeed, be an asset and a financial nest egg. A savvy investor might find that investing in equities offers higher returns. But equities are also riskier. Any property that gives you a gross return of 4-5 per cent is considered fair, while 6-7 per cent is good. Rentals are usually fixed for two years which gives you security of tenure.

Under current conditions, an investment in property will be better than putting money into bonds or fixed deposits, where yields are relatively low. However, when shopping around do not get the notion that high-end or luxury properties always give better returns. Keep in mind that not many expatriates have a rental budget of $30,000 to $40,000 a month. You may be surprised to find that an HDB flat near an MRT station will give you a higher return (possibly 10 per cent) than most private properties.

Financing: Look for a financing package that suits your needs. Most banks offer packages without a lock-in period at higher interest rates while those with lock-ins have a lower rate. However, early redemption or refinancing can be costly. If you are an investor with a long-term view, go for a package that offers the lower interest rate so as to reduce your costs as much as possible.

You must also consider how affordable your monthly repayments are. As a guide, they should not exceed 30 per cent of your disposable income. Most of us use our CPF to pay part of the purchase price or the monthly instalments. The prudent approach is not to do that. One should keep enough money in the CPF to pay instalments for a one-year period. This is a defensive strategy so that should you be out of work for a year, the loan can still be serviced.

Time frame: Property is an illiquid asset - it takes time to get in as well as to sell out. Thus, we should look at a longer time frame for property investment, preferably a three- to five-year holding period. Property prices go up and down, but if you look back over 30 years, the new peak has always been higher than the previous one. This leads us to the next consideration.

Can you stay in the property?: It is good to take this into consideration because if there is a need you can move into the property, be it for downgrading or upgrading. So if you have a family of four, it is advisable to buy a three or four-bedroom apartment. You will also have a choice of which property to rent out and which to occupy. You may want to rent out the unit that gives you the better return.

Tenure: Is a freehold property better than a 99-year leasehold? The answer is no because the rentals of both will be the same since the tenant will not bother about the tenure. Leasehold properties, being cheaper, will give a comparatively higher yield. Every investor has his own criteria for investment, thus a property suitable for one might not be suitable for another. However, bear in mind that the less risky the investment, the lower the likely return. Also, with any property investment, it is best to take the long-term view.

Peter Ow is executive director (residential) at Knight Frank

Source: Business Times - Property 2008 Special (Published March 27, 2008)

Saturday, February 9, 2008

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Rent or Buy ? A Financial Analysis

The conventional wisdom goes like that: Surely paying rent can’t help to make you rich?! If you buy a flat, the mortgage is for your own property. It’s like paying to yourself. However, with soaring property price, home searchers are beginning to ask otherwise. Here we'll do a financial analysis.

As an illustration, let's consider the example given below:

In the example, we assume a property of price $500,000 with mortgage at 6% (average over a loan period of 30 years), rent at 3%, the property appreciates at 4% and the return from your alternative investment at 10%. At the end of 30 years, the property is worthed $1,599,326 and the alternative investment yields $2,632,193. In this scenario, we should therefore rent and invest our money.

As a simple illustration, we shall vary only the rate of property appreciation and keep all other factors unchanged. We now change the property appreciation to 5% and the result is as shown below:

The analysis shows that property is now worthed $2,058,068 at the end of 30 years and the alternative investment yields $2,206,782. In this scenario, the alternative investment continues to give a higher gain but the amount is far less significant than before. In which case, you may want to consider other non-financial factors instead.

Finally, we increaste the rate of property appreciation to 6%.

In this case, the property value far exceeds the alternative investment, and you should therefore buy.

You may do your own custom analysis using the excel file given here: Rent or Buy? A financial analysis. Replace the figures for mortgage rate, rent, alternative investment etc. at the top of the excel sheet with whatever figures that you consider realistic for your own situation.
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Chronology of Major events that impact the Singapore property market from (III): 2003 to 2008

Outbreak of SARS & Gulf War - The gloomiest year in the history of the Singapore property market.
2003 (Feb) Budget 2003 - e.g. Defer restoration of CPF employer contribution rate for 2 years; lower CPF salary ceiling over 2 years;
new property tax rebate for commercial and industrial properties for 2H03.
2003 (Apr) $230 million on SARS Relief Package e.g. Additional property tax rebates for commercial properties; higher property tax
& 100% rebate of TV licence fees rebates for gazetted tourist hotels; cess rebate
2003 (Apr) Single Purpose Company Requirement for GLS sites lifted
2003 (July) Formation of HDB Corp and announcement on the public housing building programme. Programme would be opened up
to the private sector – starting with 10% in July 2006 and reaching 50% in July 2008.

Graph shows the Property Price Index from 1960 (Click on the image to view details.)
Major events that impact the Singapore property market from 1960 to 2007

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2004 (Jun) Continued Suspension of Confirmed List. BFC Site for Sale on Reserve List
2004 (Aug) Government of Singapore - New Cabinet
2004 (Aug) Government’s invitation to foreigners to buy land in Sentosa Cove
2004 (Dec) GLS : No Confirmed List in 1H 2005
2004 (Dec) Tsunami Tragedy
2005 (Feb) Budget 2005 - REITs Incentives ; $40 mil Orchard Road Investment Enhancement Plan by STB
2005 (Apr) Government Announced Plans to Build 2 Integrated Resorts
2005 (July) Changes to the Residential Property Act - all existing and new QC applicants will be granted project completion period of 6
years from date of QC issuance (current 3-4 years); Bankers' Guarantee for QC application reduced from current 50% to 10% w.e.f. Mar 2006
2005 (July) MND Announcement on Policy Changes Affecting the Property Market - Loan-to-Value Limit raised from 80% to 90%;
Cash payment for residential properties reduced from 10% to 5%; non-related singles allowed to use their CPF to jointly but private residential properties; phase out of the Non-Residential Properties Scheme in July 2006; Restriction on the use of CPF savings for multiple properties
2005 (Nov) GLS Programme – 1 commercial site at Collyer Quay in the Confirmed List
2005 (Nov) Waiver of security requirement for developers offering Deferred Payment Scheme after the Issue of TOP

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Budget 2006 (Feb) - tax incentives to broaden capital markets like tax exemption on foreign-sourced interest and trust
distribution received by REITs expansion; lift property tax surcharge; review of the administrative conditions for Industrial
Building Allowances; Progress Package give-out.
2006 (June) GLS Programme - 1 commercial site at Beach Road/Middle Road in the Confirmed List; further extended for reassignment
of GLS Sites by successful tenderers and private land by foreign housing developers by one year to 30 June 2007
2006 (Oct) The First Public Housing Project under the Design, Build & Sell Scheme (DBSS) was launched for sale
2006 ( 15 Dec) Stamp duty concession withdrawn – all property buyers to pay stamp duty (at up to 3% for properties worth over $360k)
within 14 days of the date of acceptance of an Option. As transitional measure, buyers who accept an Option or sign S&P
between 15-30 Dec 2006 will have until 14 March 2007 to pay the stamp duty.

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2007(Aug)Increase in Development Charge. Based on the announced rates, the jump is estimated to be about 55 percent.
2007(Oct)Withdraw the deferred payment scheme for the sale of uncompleted private residential and commercial properties with effect from 26 Oct 2007.
These policies (together with the increasingly uncertain global economic outlook) put a brake on enbloc sales and practically purged the market of speculators.
2008(March)Saw the Singapore property market sank into a doldrum, with just about 2 property sales/day.

Some thoughts:
1. A quick glance at the graph above shows that property price escalated relentlessly from 1993 to 1996. The events that fuelled the property price were in great part due to the relaxation of using CPF monies for property investment.

Question: Is this likely to repeat itself in the years to come? given that the Singapore government is increasingly concerned about the aging population and the lack of CPF for retirement.

2. Another reason for the soaring property price in the 1990s was the years of double digit economic growth.

Question: Is Singapore still likely to enjoy years of double digit economic growth in the years ahead?

3.Property price plummeted in 1997 due to the Asian Financial Crisis, and again in 2003 due to Gulf War and SARS. It took up to 2005 for the market to show sign of recovery, and in fact, up to 2007 for the recovery to reach the mass market.

Question: What are the risks of similar events taking place in the years ahead? Looking at the past cycle, what is your assessment on the impact on the Singapore property market if such events should recur?

Return to:
Major events that impact the Singapore property market from 1960 to 2007(I).

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Chronology of Major events that impact the Singapore property market (II): 1997 to 2003

The Asian financial crisis. Property price plunged.
Reversal of Anti-speculation policy implemented in 1996:
Removal of $30,000 cap
HDB owners allowed to book a new private property only after occupying the flat for 5years.
Government sale sites deferred and project completion period (PCP) extended for up to 8 yearsl.
Stamp duty for sellers was suspended.

Graph shows the Property Price Index (Click on the image to view details.)

More Property policy reversal:
Land sales were suspended; 15% property tax rebate for commercial and industrial properties commencing July 1998; Property tax exemption for land under development reinstated; exemption will be for a period of up to 5 years,
and will apply from the time construction begins to the time the TOP is granted
1998 (Jun) Off-Budget measures implemented including more property policy revisions. Land sales were suspended and more tax
exemptions granted; stamp duty deferred for buyer of uncompleted properties until TOP or subsequent sale.
1998 (Nov) 10% CPF housing grant cut; more tax rebates

1999 (Feb) Budget 1999 -The 55% property tax rebate on industrial and commercial properties, first announced in the June 1998 off budget
measures, will be extended by another year to 30 June 2000 ( 99)
1999 (May) Second CPF housing grant cut.
1999 (Sep) Government to resume land sales in 2000

2000 (Feb) Budget 2000 - Tax exemption on land under development withdrawn; change will only affect new projects; Projects which
have been granted tax exemption will continue to enjoy the concession for a maximum period of 5 years or upon
completion, whichever is earlier; DC rates revised - increased by 27% on average for residential land (Feb 00); Property
tax rebate extended up to June 2001, at reduced rate of 25% (from 55%); estate duty exemption for Singapore residential
property used for business activity;
2000 (June) HDB owners required to seek approval before booking private property even if they have fulfilled the 5-year time bar.
Global oil price hike

2001 Collapse of dotCom bubble
2001 (June) GLS - Introduction of Reserve List System for 2H 2001
2001 (Aug) MND announced that less than 8,000 new public flats will be built in 2001
2001 (Sept) 11th Sep 01 attack on the World Trade Centre in New York
2001 (Oct) Off-Budget 2001- Capital gains tax was lifted, foreigners were allowed to use SingDollar for housing loan, GLS
(Confirmed List ) was suspended. Sites would only be made available through the Reserve List. Property tax was exempted for a period of 2 years for land under development.

2002 (Apr) Recommendations by ERC sub-committee on taxation, CPF, wages and land.
2002 (May) Budget 2002 - Loss-transfer system of group relief; GST increased from 3% to 5% from 1 Jan 2003
2002 (July ) Refocusing the CPF System - Minimum Sum will be raised to $80,000 on 1 July 2003, of which $40,000 can be in
property; limit CPF withdrawals for housing to 150% of the value of property and bring the limit down to 120% in equal
steps over 5 years
2002 (Sep) For purchase of ECs, a minimum 10% of the downpayment will have to be paid in cash, while the remaining 10% can be
paid out using CPF funds
2002 (Dec) Extension of 2001 Off-Budget Measures - Fixed rebate of up to $8,000 per year for all commercial and industrial
properties; also, 30% rebate for the remaining property tax payable; 2 years property tax exemption for all land under
development with immediate effect; stamp duty rates reduced by 30% on all instruments.
2002 (Dec) GLS Confirmed List suspension extended to 1H2003. Defer the release of BFC site for sale in 1H2003

Outbreak of SARS & Gulf War

To be continued:
Chronology of major events that impact the Singapore property market(III): 2003 to 2008
We shall look at the gloomiest decade in the Singapore property market, its subsequent recovery and finally, conduct an analysis of the lessons learned through these historical events.
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Chronology of Major events that impact the Singapore property market (I): 1960 to 1997

A study of major events that impact the Singapore property market will better help one to predict the market trends, e.g. like which part of history is likely repeat itself etc. This topic covers events from 1960 to 2008. It reflects some perculiarities in the Singapore property market, largely the result of government policies. The topic concludes with an analysis of the implications of these events for predicting future trends.

HDB formed to provide subsidised, high rise housing for Singaporeans.
12,000 flats built between 1960-70;
Property Tax introduced

CPF implements Public Housing Schemes for home ownership (which sees 90% of Singaporeans owning their homes today).

Inflow of foreign funds and the beginning of Singapore's golden years.

Property curbs introduced: foreigners not allowed to buy residential properties; property tax surcharge w.e.f. 1974
Oil Crisis which afflicted the US economy of which Singapore was very dependant on. The year saw a plunge in Singapore property price and Singaporeans learned how their home price has every thing to do with the US economy.
Introduction of Residential Property Act: Foreigners allowed to purchase flats in buildings of 6 levels or higher.

Graph shows the Property Price Index (Click on the image to view details.)

CPF implements Residential Properties Scheme for private home ownership which allowed Singaporeans to use up to 80% of their CPF ordinary account savings for property purchase. Property price rose 3 to 4 times e.g. HDB flats bought in the 1970s were in the range of $10K but in the 1980s, HDB flats typically cost $40K-$100K. (Note from the graph that the property price index rose from ~10 in the 1970s to ~50 in the 1980s)

Economic recession. (Note from the graph that the property price index fell from ~50 in the 1983's peak to ~30 in the 1986)

CPF implements Minimum Sum Scheme to ensure that Singaporeans have enough CPF for their retirement.

Total CPF withdrawal for the purchase of private housing increased to 100% of the value of the property (Nov 1988). Property price escalated.

1989 (Aug)
PRs allowed to buy HDB flats and HDB owners allowed to invest in private property.

1990 (Aug)
Gulf War - which saw a small dip in property price that lasted as quickly as US declared victory. Property price continued to escalate after that.

1991 (Oct)
HDB allowed single citizens above 35 to buy three-room flats

1993 (Oct)
CPF rules relaxed and home buyers allowed to withdraw larger CPF amounts and HDB flat buyers allowed to take higher mortgages. Property price started to soar.

1995 (Aug)
Government introduced Executive Condominium which were sold for about 10% less than 99-year lease condoniniums. The launches were heavily oversubscribed, typically with 10 applicants to 1 unit.

1996 (Feb)
The hottest period in the history of the Singapore property market. The year saw property price soared to its historical peak that's yet to be surpassed.

Exemption limit for owner-occupied property increased to the first $150,000 (previously $75,000) of its NAV; Exemption limits on estate duty for residential properties and movable assets, including CPF balances, raised to $9 million and $600,000 respectively. CPF balances in excess of $600,000 will continue to be exempt; property tax rate from 13% to 12%; Stamp duty adjustment on property transfers; reduction on stamp duty rates on property leases.

1996 (May)
Anti-speculation measures implemented - 80% financing restriction for property purchase; 7,000-8,000 residential units to be released in 1997; 30-month project completion period (PCP) for private developments under QC scheme; 5% p.a. penalty imposition for PCP extension; stamp duty extended to buyers of all sales and sub-sales of uncompleted properties; new stamp duty on those who sell properties within years; tax on gains from properties sold within 3 years of purchase. Property price fell for the first time after 10 long years of relentless up trend.

1997 (Feb) Budget 1997
The most turbulent year in the history of the Singapore property market.
Concessionary property tax rate of 4% on the annual value of the residential house for home owners who rebuild their houses for their own subsequent occupation during the period when their houses are undergoing reconstruction

Measures to curb abuse of HDB subsidised mortgage e.g. HDB mortgage pegged to bank rate.
The Asian financial crisis. Property price plunged.
Reversal of Anti-speculation policy implemented in 1996.

To be continued ....
Chronology of major events that impact the Singapore property market(II): 1997 to 2003

May also want to read:

How to Calculate Rental Yield for Singapore Property
How to Calculate Property Tax for Singapore Property
Inland Revenue Authority of Singapore(IRAS): Stamp Duty Calculator
How to calculate Stamp Duty for Singapore Property
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Singapore Property Investment: Bad investments are made in Good Times

Bad investments are made in Good Times

By: km
Posted: 10-10-2007

In 1993, my partner and I bot 2 commercial properties in shenton way at the average px of $810psf. 2 yrs later in 1995, (the peak), an agt called to offer me $1600 psf, my partner told him $1700 psf as we need to pay the capital gain tax, guess what happen?, we finally sold the property through the same agent at $1510 psf...in 2006, some 11 years later.

Why didnt we sell at $1600 in 1995??, because we were collecting very good rental, enough to pay the bank and still have money to spare, it make sense to keep for long term. Mistake !!!. because rental fell, interest went up. The following years saw the rental falling yr by yr, interest went up and during the currencies crisis, it went to some 8-9%, hence the rental wasnt enough to cover the bank installment.
Dont worry, we have a contigent plan, sell one unit to repay the loan for the second unit. Wrong!!, there was no buyer, even at $1200psf, then we try $1,000 psf, no takers. we did a refinance, which mean that we extend our payment tenure, in other word, we just ensalve ourselve for another few more years. Tenants were hard to get, meanwhile, the rental wasnt enough to cover the installment and we have to top up abt 4k per month. we pray that the unit remain tenanted and when there is any vacant period, we need to top up $8K per month. In 2005, or early 2006, we put out our property for sale at $1,000psf, no reponse, no taker. Only in late 2006, the same agt got a buyer for us at $1510 psf, we let go one unit, "As planned ", use the proceed to repay the other loan.

You guys may think that we still make money, Yes, we do. But imagine, your offer px of $1600 drop to at one time, $850 psf. When I reflect on this experience, I feel that one should unload property during the good times, where rental are high. The rental may not stay high for long as our govt will keep watch on it. It is during the high rental period that sellers are able to get the price they want. Property is an illiquid asset, it takes time to sell and when the mkt is bad, you will be struck with it for as long time.

Many of my friends are jumping in now, thinking that property px will keep going up at this pace, 40% per yr. I have tried my best to warn them, but if overdone will make me sound like a sour grape. Waki, Waki... Yes, the prospect of the spore economy may be good, or very good, but the current prices have already factored in all the possible beautiful stuff abt spore happenings. So what if those happenings come true?, it has been factored in already. BUT if, anything happen and derail the beautiful dreams of future spore, good luck to the buyers who jump in.

Looking at the subprime problem, it is definitely a bad news that will take time to filter down. The falling US$ is another problem that will hit the US economy. China and HK property and share mkt are 2 big bubbles.. Beware !!

"Bad investments are made in Good Times"

Join Singapore Property Forum to discuss Smart Buying Tips here.
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Impact of Inflation on Singapore Property

By: Be cool
Posted: 30-12-2007

Even though the economy is doing well in Singapore, inflation is up. Most of the Singaporean is spending wisely and they are going for more affordable HDB and EC. The cars are also at it lowest at this point of time. Expensive Private housing is for the rich. However, if they are really rich, then they should look for landed housing. Many of these foreign buyers are also speculators and with some of the measure enforce by government, it will definitely frightens them away. The downward transactions for the past 2 quarters are a good sign. Singapore government is good for their control and law enforcement.
Government has assured that the housing will stay affordable. The announcement is to make sure that people who call Singapore their home is able to get their house at a reasonable price.
Most speculators are using greed and fear to swindle people to buy. Be aware! Good news of affordable housing will continue to come......

Join Singapore Property Forum to discuss Smart Buying Tips here.
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Smart Buyers Collection:Having a house which has a big loan is a liability at this global trouble time.

Smart Buyers Collection is a collection of words of wisdom by various Singapore property watchers.

By: Anonymous
Posted: 30-12-2007

Government has already started to supply more HDBs and ECs to the market. They have also given more sites for private housing development. The price has gone too high and I am sure there are many who can't support the loan when their apartments are ready. The buyers are hearing more news and they now do their math before buying. The banks also do their assessment before they approve the loan. There are condos that have their TOP and units are still available. They Singaporean income has not changed much and the dreams of owning a private apartment will be put aside now that they have woken up. Many of the foreign companies will be laying off staffs next year especially the banking sector. Integrated resort might not be able to bring in the crowd and can become a liability rather then profitability. There are choices for a Casino in countries like Malaysia and Macau. Hong Kong Disneyland is also making a loss. Terrorism is back to the people thoughts and Terrorist in Pakistan can become more active because of the government there is distracted. US Sub prime is affecting the stock market and STI index follows US market. Many countries suffer inflation and that’s including Singapore. Next year, people will be more cautious of their spending. All these factors are real and it will continue to grow in people heads. It’s just a matter of how faster it moves downward. So far the market is still moving down slow due to the reason that many of the countries are injecting funds to buy part of the share of the banking market. The negative news continues to rise. The money is better leave in CPF and local banks to grow interests.

Having a house which has a big loan is a liability at this global trouble time. Unless you have a fully paid house then you are then safe. However, always remember to buy insurance as there different kind of disasters that many countries are facing, Particular Natural disaster like Earthquake (Singapore have tremour) and Flood or Terrorism. Singapore government is well aware and has done many exercises to get ready if it occurs.

The government has promised to make housing affordable so there is no need to fear and commit on your dream house at crazy price that might become your bad dreams later.

Just remember not to buy anything you can't afford.
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Smart Buyers Collection: Big Boys CARNIBALISE on the weak and common people

Smart Buyers Collection is a collection of words of wisdom by various Singapore property watchers.

By: Wee Liang
Posted: 28-12-2007

If everyone were to be as intelligent, and yet kind enough to give logical advice, there certainly will be less casualties. I was in the property industry, we have datas and informations that ppl on the street do not have. We know the game that BB is playing, ya to be direct...Quek, Ng you name a few, ...are selling properties, gov want to look good for the IR ...so is a GAME...and SPH reported wat is in line with gov policies...Is the BB CARNIBALISE on the weak and common ppl....of course, is also not the duty of property agent to tell you WAT is the Happen, we need to earn the commission for a living!!!

Take these pointers seriously please...I have been selling properties 80% of whom CPF wiped out, ...I must also admit that my families are the miserable few who benifitted from the en block sale at bedok res (1st owner never shift)...most of our neighbour DIE...owe bank cpf wiped out, mostly 2nd and 3rd owners, some shifted to bigger properties also DIE...and the few who benifitted in property like to BOOST LOUD LOUD to mislead other fellow singaporean...ya SPH support them

Good Luck for those who do not take this logical advise...
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Smart Buyers Collection:I foresee a correction of 20% from here.

Smart Buyers Collection is a collection of words of wisdom by various Singapore property watchers.

By: dell
Posted: 28-10-2007

The sharp rise in the property market during the last 12 months was partly fuel by the enbloc sales, speculators and of course there are the geniune buyers who are worried abt missing the boat.

It is beyong doubt that the DPS plays a impt role in the developer's sales as buyers only need to pay up 3 yrs later. With this remove, it is just like stocks, when the brokers removes the T+4, just like the recent UniAsia, the buyers will have to pay upfront when buying, the prices will fall, if not collapse.

When the developers offer DPS, they are indeed paying for the interest incurred and hence build the cost into the prices. At 4% per yr, for 3 years, the interest playable by the developer would come up to 12%.
Without DPS, the developers, with the saving of some 12%, can afford to give a discount of that amt . It would be very logical to see Prices of the new development without DPS dropped by at least 10%, if not 15%.

The developers business is to buy land, build them and sell at a Profit. Buy low sell high, buy high sell higher.. they do not mind buying land at high prices IF they can sell their properties at higher prices.. as long as they can make money.

Now, with the removal of DFS, the govt is sending out a Strong signal that they are serious abt stabilising the property mkt. Minister has mentioned that there may be more measures to come. Capital gain tax, reduction of the loan quantum to 70%, extra stamp duty if sold within the few 1-2 years, etc..

Now, being a developer, one would be worry abt the Future demand and hence more willingly to lower their prices to dispose of the remaining units. Visit a showroom this weekend and next, you will believe it. When the developers start cutting their prices, it will more or less bring down the avrage px of the property.

Next, the resale mkt will be affected with the lowering of prices by the developers. Lets say, developer A cut their prices by 10%, it would be logically to presume that the resale properties at the nearby developement will also fall by 10% if not more, otherwise buyers would buy directly from developers who may throw in more freebie.
Currently, there are many speculators who are caught with many units, waiting to unload. When they see the developers reducing their prices, they will start to panic and unload theirs. One thing for sure, until these speculators or Spec-vestors clear their holdings, they will Not commit more units. Some of my speculators friends have voice concren and will be sellling their units, even at breakeven prices. These were the 'Wholesales" buyers for the developers, they come in and grab 5-10 units without a blink. with these group of "Wholesalers" gone, the developers may find sales dropped as they are dealing more with "retail" customer who come in and buy 1 unit at a time.

When the sales at the new development is slow, the confidence will drop, buyers who are worry abt missing the boat will now hold and wait. When the developrs cant sell their units as fast they have done so in the last 2 years, they will consider abt their Bidding of land or enbloc properties. They will now bid at lower prices than before and may stay out completely until they sold out their current stock.

Without the high prices offered by the keen developers, the enbloc craz will die down. some enbloc may have to reduce their expectation in order to secure a buyer. The hugh capital gain reaped by the enbloc will be reduced, hence the enblocer will not be willing to pay high price for their replacment property.

There will be a Domino Fall just like the spiral up in the last 24 months. Now, it is just the beginning of the Domino Fall...

Worst is that more supplies are coming out in the next 24 months and the promise by the govt to introduce more measures if required to curb the sharp rise in property prices.

I foresee a correction of 20% from here.
About this Blog

Smart Buyers Collection: In every bubble market, there is always a reason or beautiful picture that lead people to "Over-paying" for the assets.

Smart Buyers Collection is a collection of words of wisdom by various Singapore property watchers.

By: Sotong
Posted: 19-10-2007

In every bubble mkt, there is always a reason or beautiful picture that lead people to "Over-paying" for the assets.

In the 1990's, our govt forecast gowth of 10%, economy was doing much greater than now. Ask the businessmen and they will tell you that the mkt conditions are getting tougher than before. You may nopt believe it, our govt was so optimitic abt the mkt that even propose to link up our MRT to JB, malaysia. A crazy now but then at that time, everything was so bullish.

One of my friend who is in insurance told me that his client was doing very well in his business and bot a land to build a factory with a cold room. He went bust before the factory was ready, victim of the property downturn.
About this Blog

Smart Buyers Collection: This market is definitely driven by greed & liquidity..

Smart Buyers Collection is a collection of words of wisdom by various Singapore property watchers.

By: rob_502
Posted: 18-10-2007

I think the goverment is doing all that they can do relieve the short term supply crunch. What I am worried is that they may over do it and there will be an oversupply in a couple of years. I am sure they are controlling the media, notice that it is not so much hyped up as 6 months ago. The hyped up it is, the more people will panic.

Market is everywhere is too hot to touch, property, stocks, china, you name it. However the ELEPHANT (US) is definitely going to slow down. Let's see how this will affect the EASTERN superpower.

I have never seen anything like it in my lifetime. Property prices goes up as fast a the stock market. This market is definitely driven by greed & liquidity in the asian market. What goes up must come down!

I am waiting on the sideline definitely, happy renting for a while as long as my landlord don't KETUK me in 2 years time
About this Blog

Smart Buyers Collection: During the 1995 -1998 period, the same scenerio arise. Many people cant get the HDB flat...

Smart Buyers Collection is a collection of words of wisdom by various Singapore property watchers.

By: Anonymous
Posted: 18-10-2007

During the 1995 -1998 period, the same scenerio arise. Many people cant get the HDB flat. There was the ballot system and it is just like "ti-kam", 1 out of 8 can get to buy. Due to this flocked system, many people, including those who are not so keen buyer also join the Q, paying $10 as a ballot fee, when they get balloted, then they decide whether to buy or not. At that time, similar to now, many people were worried that they can get their flat, rushing in to buy. Govt see good demand, built even more flats, thus causing the mkt to change from over demand to over supply. Many were convinced that HDB prices will not fall, at that time, it has never fallen before. There were influx of hongkongers, indoesian, etc . then when the mkt adjusted itself with supplies from govt and developers, the price collapse.
About this Blog

Smart Buyers Collection: main cause of today's boom is the massive rate of enbloc dislocation..

Smart Buyers Collection is a collection of words of wisdom by various Singapore property watchers.

By: Oct10
Posted: 12-10-2007

I recently sold my suburban investment property in July 2007 just after it crossed the 1996's peak value for similar property types.

I took the 96 peak as a benchmark that while there may still be some upside in today's property boom, it's not going to be very much more.

In my mind the 1996 frenzy was greater than the current one, even without the IRs, F1, 6m population, etc. Back then, Hong Kong was priming for its return to Communist China in 1997, and many Hongkongers were buying up properties in Singapore and taking up residency here and elsewhere in their bid to secure external homes. Singapore was one of the four roaring economic tigers, the sense of job security was much higher than now, employer's CPF contribution was at its highest, bank loans were easy to obtain, expats here had very generous housing package (unlike now), every IPO was many times oversubscribed, people were queueing up for property launches DAYS in advance, and practically one out of four sales was a subsale ...

No, today's frenzy is nowhere like that in the mid 90s. To me, the main cause of today's boom is the massive rate of enbloc dislocation over a very short period of time, something we didn't have in the mid-90s. The IR factor is puny compared to the other forces at play in the mid-90s. Yes, there may be more enbloc-induced wealth this time, but the appetite for speculation was stronger last time.

Once the enbloc pace slows down, I think we may not see any huge upside anymore now that we have largely surpassed the 90s' peak.