Saturday, May 31, 2008
Knight Frank director, research and consultancy, Nicholas Mak said ‘If the local economy were to slip into a recession in 2008, overall prices of HDB resale flats could vary between a 2 per cent contraction and a 3 per cent growth for the year.’
Mr Mak expects that median COV of all resale flats, which fell to $21,000 in Q1′08 from $22,000 in Q4′08, to fall further this year.
In January, City View @ Boon Keng, under HDB’s Design, Build and Sell Scheme (DBSS), pushed prices to $727,000 for a five-room unit. While the launch generated a lot of buzz, at end March 2008, 250 of the 714 flats were still unsold.
‘The issue that arises is the validity of the pricing of such DBSS flats. Keeping in mind that there are more of such developments proposed in places like Ang Mo Kio, Bishan, Toa Payoh, Simei and Bedok, and given that they are still bound by public housing rules such as the income ceiling of buyers, one could begin to wonder about the intrinsic affordability of public housing initiatives,’ Mr Mak said.
Labels: 4. HDB Market Outlook
According to the Conference Board Consumer Confidence Survey released on May 27, Americans' expectations for the economy over the next six months hit their lowest point since the dark days of December, 1973—during a long recession triggered by an Arab oil embargo. Businesses aren't feeling exuberant, either. New orders for durable goods fell half a percent in April, the third decline in four months. Michael S. Hanson, senior U.S. economist at Lehman Brothers (LEH), expects the U.S. economy to grow at a slow 1.2% in 2008 and an even weaker 0.6% in 2009 as the headwinds from oil, housing, and the credit crunch continue.
It seems the Americans are now downright depressed.
Dear American friends, when you are down and out, just think about the people who are even more unfortunate.
Mynamar 31 May 2008 : Junta said cyclone survivors can eat frogs.
"RENTAL must come down first, then property. But if the property price down means rental already down, who still want to buy investment property to rent it out. If property price start comming down, it will down and down...no body want to buy because they cant rent it out. When the RENTAL market start comming down ?
Very unlikely that RENTAL will come down as hundred of thousand of jobs here need foreigner to fill in. Unless for some reason they are not comming any more, but what reason? No body know.
Enblokers still renting as they cant buy lower price property than they selled, so rental market remain strong.
Foreigner still renting as they are keep comming in Singapore to fill the jobs, so rental market remain strong.
Waiting for Singapore property to come down, no way. Although it have peaked. "
"Has peaked means no sense to buy now anymore.. + so many bad news .. so no buyers but developers still have 60% unsold units and some more coming .. HOW???
Don't know if foreigners are still coming leh but vacancy rate has increased ... means got units not able to rent anymore .. one month vacant means 10% off return already .. even if rental doesn't drop as much .. landlords' earnings have dropped with the vacant period in the calculation ... lower return means lower holding power, also means not attractive to buy unless price drop loh .. "
Thursday, May 29, 2008
Local analysts said "Muted property market situation is temporary ... Bullish property market forecast for next 2 years"; but banks like Barclay and Credit Sussie have forecasted a 40% dip in Singapore property price.
Amidst all these conflicting forecasts and outlooks, one buyer expressed his confusion in a forum post, "Some say up, some say down. I'm having a headache .. buy or not buy?"
"Show me the future ....."
Buy or not buy? Let's face it, either way, it's a gamble.
But always remember that you're placing a bet with your hard-earned money, and perhaps, unearned money; you cannot afford to just skim the headlines and come to a decision.
This is the way I'd go about filtering out the noise.
NUMBER ONE : Don't assume that the experts know better than you.
A lack of confidence in your own judgement and an over-reliance on the so-called expert opinions can be a grave mistake.
Ask yourselves: Did the experts tell you to buy Singapore properties in 2005 or 2006 because they foresaw that property price would double in the following year? If they didn't know better than you did then, why would they now?
According to my own observations, the experts are more often than not to shout "BUY" when price is already sky-high. Then indeed price continues to rocket making it looks like their expert opinions are to be held with high regards, when in fact it is the classic self-fulfilling prophecy playing out itself. A speculative bubble like that is destined to burst. Will you be one of the victims then?
No one else would lose more sleep over your hard-earned money than you. So do your homework and make your own judgement.
NUMBER TWO : When someone says something about the property market, check who's saying it.
In particular, check if the party concerned has a vested interest in the property market.
Let's have a little practical lesson. Read this article from CNA :
Bullish property market forecast for next 2 years; speculators cautioned.
What's the occassion ? (Singapore Press Club talk) Who are making the statements ? (Ku Swee Yong, director of Marketing & Business Development of Savills Singapore, the Prestige Homes & International Marketing team; Tan Tiong Cheng, MD of Knight Frank Singapore; and Winston Liew, a senior investment analyst on Properties at OCBC Investment Research who stands to differ.)Well ?? ?
NUMBER THREE : Check what the neutral party says
Frankly, I'm not sure if there is really a neutral party. The government is probably closest to it. From MM Lee to Minister Mah, the word is already spelt out for us: P-R-U-D-E-N-C-E. Hey, don't expect them to join the market crash talk like the one we're having here. They have a more important mission of building investors' confidence than teaching naive Singaporeans about the property cycles.
NUMBER FOUR : Know your friends from your foes
A reader of this blog made this comment: "I do see the high prices but somehow don't feel deterred". I must confessed I was like that too when I was young and foolish, until the reality of paying for the mortgage choked me like an iron chain.
There are no good guys and bad guys in the property market, only winners and losers. Join hands with the like-minded people, they'll keep you vigilant when you snooze from the fatigue of what seems like an endless, sometimes even hopeless, wait.
(Just a digression: If we can have collective sales, can we not also have collective purchases ?)
MOST IMPORTANT : Study the economic fundamentals
The most threatening one now is the sustained, high oil price. If oil price stays at this high level for a prolonged period, it will eventually cripple the world's economy. It has already sent prices of commodities and even food, sky-rocketing. This also comes in a time when the global economy is wobbling on the US subprime problem. Though Singapore's economy has shown a great deal of resilience thus far, don't ever be deceived into believing that we have developed an immunity to all global ailments. If there is anything closest to the truth, Singapore as a small city state with no natural resources and has to import everything it needs, Singapore's economy is really more vulnerable than any other countries.
Wednesday, May 28, 2008
Advice on Buying Indian Real Estate: Ask your builder for the CIDC-CQRA Certificate before booking a flatI'm the Smart Buyer from Singapore and fumbled upon this smart buyer from India:
Ravi Karandeekar's Pune Real Estate Market News Blog: Be a smart property buyer.. ask your builder for the CIDC-CQRA Certificate before booking a flat: "While visiting the site if you ever asked about CIDC-CQRA Certificate or any kind of quality assurance, please, share the answers and reactions of the salesman in the comments! You can also share your first hand experience about the quality of construction of your flat and your project in the comments. Would you like to express your opinion and observations? Go ahead, feel free!"
May also want to read:
History of Singapore Property 1960 to 2008
When to Buy, When Not to by
Once a frog that lived in a well bragged to a turtle that lived in the Sea.
I am so happy!" cried the frog, "When I go out, I jump about on the railing around the edge of the well. When I come home, I rest in the holes inside the wall of the well. "If I jump into the water, it comes all the way up to my armpits and I can float on my belly. If I walk in the mud, it covers up my flippered feet.
I look around at the wriggly worms, crabs, and tadpoles, and none of them can compare with me. I am lord of this well and I stand tall here. My happiness is great. My dear sir, why don't you come more often and look around my place?"
Before the turtle from the Sea could get its left foot in the well, its right knee got stuck. It hesitated and retreated. The turtle told the frog about the Sea.
"Even a distance of a thousand miles cannot give you an idea of the sea's width; even a height of a thousand meters cannot give you an idea of its depth. In the time of the great floods, the waters in the sea did not increase. During the terrible droughts, the waters in the sea did not decrease. The sea does not change along with the passage of time and its level does not rise or fall according to the amount of rain that falls. The greatest happiness is to live in the Sea."
After listening to these words, the frog of the shallow well was shocked into realization of his own insignificance and became very ill at ease.
Extracted from: http://allaboutfrogs.org/stories/fables.html
Some analysts point to the Kuwaiti fund pulling the plug on the deal as indicative of a market where asset prices are falling, especially in the high-end segment.
Hence, a number of brokers' upgrade of the sector and a string of "buy" calls for the big property developers was a welcome sight for investors looking for a pick-up amidst the downcast on the property front.
Upon issuing 'buy' ratings for CapitaLand and City Developments at a target price of $7.27 and $16.30, respectively, Merrill Lynch noted that "not only do these companies have the strength to ride through a weak cycle; they will also be in the best position to reap the benefits should the property market pick up again."
Unquestionably, these developers have a healthy balance sheet owing to strong property sales and rental inflow. But the slow residential home market does put a question mark on whether the recent run on properties is sustainable in the foreseeable term.
A weak market
Truth be told, sentiment in the residential property market has deteriorated at an amazingly rapid rate. While expectations were rampant for capital growth in 2007, the market is now weighed down by increased new supply and lower transaction volumes.
Though March saw property developers launching 642 units ? 57 per cent more than the 410 in January and the highest in seven months ? only 50 per cent of the units in March were sold compared to 80 per cent in January. The figure reflects the current market situation with buyers remaining on the sidelines, seemingly justifying the decision of most developers to hold back property launches.
Nonetheless, in a somewhat surprising revelation, the 1Q08 flash estimate released by the Urban Redevelopment Authority (URA) last month showed a 4.2 per cent rise quarter-on-quarter (q-oq) in the property price index (PPI).
However, most analysts believe that the price growth registered were largely due to higher benchmark prices achieved for a handful of projects and is hardly evidence of strength in the sector.
"We believe that the figure is skewed by selected projects and that generally, residential prices in Singapore have
started to fall," said UBS Investment Research in its report dated April 16.
Further, the anemic demand for private property in the first quarter of this year saw only 795 uncompleted units
sold, a far cry from the quarterly take up of 1,397 units in 4Q07 and 3,367 units in 3Q07. It represents the lowest
number of new units sold in a single quarter since 1Q03 ? when 322 units were sold during the worst of the SARS
crisis ? and even failed to surpass the 890 units transacted at the onset of the Asian Financial Crisis in 4Q07.
Asset prices to fall in luxury segment
The luxury residential segment is set to bear the brunt of weak market conditions with rents likely to have peaked
before the year's end, coupled with a general slowdown in sub-sale activity (units re-sold prior to completion). In
a recent report on the residential property market, Nomura Equity Research predicted a correction in the value of
"We envisage average asset prices in this segment falling 32.3 per cent from the 2007 peak over (the period of)
2008-2010 ? by 16.9 per cent in 2008, 10.3 per cent in 2009 and 9.3 per cent in 2010, as rental growth slows and
yields are re-appraised."
It added that while this would be a major correction, it is not an outright crash as the estimated 2010 average of $1,847 per square foot (psf) is slightly higher than the $1,811/psf in the 1996 peak and 22.4 per cent above the
2001 peak of $1,508/psf.
The key to capital value outlook is the forecast for rentals and hence yields, which is the income from a property measured as a percentage of its value. Luxury yields are at a historical low of 2.77 per cent, though mass market yields have risen on the back of strong rental growth.
Nomura's analyst Tony Darwell expects average rentals for high-end property to peak this year ? rising 5 per cent year-on year (y-o-y) to $3.64/psf. But as supply inthe luxury segment begins to enter the market, rents are expected to come off by 0.3 per cent y-o-y in 2009 and 15.7 per cent y-o-y in 2010.
During the boom of 2007, high-end properties were deemed by many foreign investors as being relatively cheap compared to Asia's other developed markets such as Hong Kong and Tokyo. As developers outdid themselves in setting record prices for prime properties here, the huge increase in capital value has since closed the price gap so much so that Singapore properties are no longer perceived to be "cheap".
In fact, figures compiled by real estate consultancy Jones Lang LaSalle showed that capital values of luxury homes in Singapore is now only 2.1 per cent lower than those in Hong Kong, compared to 24.6 per cent just a year ago. Indeed, bargain-hunting for luxury properties in Singapore has a much hollow ring to it than in the past.
The URA's 1Q08 flash estimate pointed to decent q-o-q growth in property prices but while analysts contend that the thin volume of property transactions points to a market on the wane, it is worth noting that mass market properties led the way in home prices.
While it consistently trailed prime regions during the boom period, properties in the mass market segment posted a 4.8 per cent growth q-o-q compared to the 4.4 per cent in the core central region. Compared to the anticipated decline in prices in the high-end segment from here on, some believe that the mass market will continue to grow in 2008.
"While overall PPI appears to be approaching peak, we estimate that prices in the mass markets are still below the previous peak of 1996. We see further upside potential in asset prices to come from this segment this year," noted
CIMB-GK property analyst Donald Chua.
The mass-market has been boosted primarily by demand from en-bloc sellers and HDB upgraders. DBS Group research noted that the strong demand in the HDB resale market, arising from insufficient supply of new HDB flats available for immediate occupancy, may further prompt HDB owners to cash in and upgrade to private property in the mass
"I don't know whether it will strengthen but looking at the overall market, the fundamentals currently appear good in the middle and mass market," affirms Dr Chua Yang Liang, head of research for Southeast Asia for real estate consultants Jones Lang LaSalle.
Mass market yields have also risen on strong rental growth as the tight vacancy in the luxury segment saw demand redirected to the mass market segment. But with fresh supply due over the next two years, 63 per cent of which are focused in the prime districts of 9,10 and 11, those displaced to the mass-market would likely return to the prime locations and thus soften mass-market rental and asset prices.
Nomura Equity Research anticipates mass residential prices to peak this year before falling 10.3 per cent in 2009 and 10.1 per cent in 2010.
Supply side to dominate henceforth
The specter of an oversupply in the property market in the medium term looms as project completions are expected to be significant in 2009 and 2010. The URA estimates that 56,516 units are scheduled for completion over 2008 to 2011
; 8,364 units in 2008, 12,867 in 2009, 13,493 in 2010 and 18,509 in 2011.
Over the past decade or so, the average annual increase in occupied units has been at around the 8,000 mark. Most analysts are expecting the figure to remain firm, with demand slightly skewed to 2010 when the Integrated Resorts (IR) and the Marina Bay Financial Centre (MBFC) open.
While demand seems to be exceeding vacancy at the moment, it is difficult to assume that the take-up rate will increase sharply to meet supply given the uncertainty of the extent of the global slowdown and the fall-out in the financial services sector. Experts have estimated that the tight vacancy rate of about 5 per cent in 2008 would
ease considerably in the range of 8 to 9 percent by 2010.
Dr Chua feels that while the majority of the units to be built have already been acquired, home-owners may have to contend with a weaker rental market.
"Actually, most of these units due in 2010 have already been pre-sold but I think the new supply will affect the
leasing market where owners could find a problem when looking to lease their properties."
Macro-environment a major factor
By nature, the property market is mainly sentiment driven and the bearish prognosis of the state of affairs in the US and a weakened financial market has not helped lift sagging spirits.
While some commentators have cited domestic factors such as strong income growth and low interest rates as potential demand drivers for the property market, they may not be enough to allay immediate worries of a global slowdown led by the US.
Dr Chua believes that the macro-environment needs to improve for the property market to regain its momentum. "I think external factors would be a major catalyst; the feel-good factor has to return to the stock market, to oil
prices and the whole sub-prime crisis."
Kim Eng Securities' property analyst Wilson Liew notes that buyer response at upcoming property launches may provide some indication as to whether sentiment has improved.
"In the short-term, we'll have to see what the take-up rate is like at new launches, especially for marquee projects like the Marina Bay Suites," he says. Others have gone as far to predict that property developers may offer discounts in the second half of the year to stimulate demand. While that may be a possibility with the
smaller players who may forsake price for volume, it might not materialise with the bigger boys who possess stronger balance sheets and thus holding power.
Several question marks are still to be answered with regards to the property sector. While investors wait in anticipation for its comeback, they might yet have to digest a few more bitter pills before the gloom is lifted.
Posted by: rondy
Posted on: Tue May 27, 2008
Tuesday, May 27, 2008
No doubt Singapore's economy has shown a great deal of resilience thus far, we must not deceive ourselves into believing that Singapore economy has developed a sort of immunity to the doom and gloom of the world.
"Singapore does not have earthquakes, tsunamis or typhoons because of the country's favourable geographical location," as MM Lee said, and this insulation from natural catastrophe can sometimes sedate Singaporeans into a contentment bordering complacency.
The simple fact is Singapore imports everything it needs. It's really powerless over inflation. The world has moved into the era of high prices for food and oil, we all know that. But Singapore does not have agriculture, and we know that too. So people have to earn enough money by working hard and smart to pay market prices for food. Most of all, we must now know how to spend our hard earned money wisely, so as not to put our family and ourselves in undue hardship.
We should indeed be more prudent now than ever when committing to big ticket items like buying a property. That rush of adrenalin when you think you finally own that beautiful property won't last for a week, but that mortgage is going to be choking around for a long time, even when your body has become frail with age. Many people don't think much about such thing when they're young.
sleepless in singapore: Trekking Toa Payoh:
"At this point we were starting to enter the outskirts of Toa Payoh, where the streets blur into a maze of similarly-named passages snaking between anonymous HDB blocks... Toa Payoh Lorong 2, Toa Payoh Lorong 4, Toa Payoh Lorong 6. We decided to walk four more bus stops, get something to eat at Toa Payoh Central (at this point, we joked that even a McDonald's would have been welcome) and then board the MRT at Toa Payoh station for the ride home. Of course, we still had no idea where we were at this point -- in the space of two blocks we saw signs to 'Toa Payoh Central' pointing in three different directions."
May also want to read:
History of Singapore Property 1960 to 2008
When to Buy, When Not to by
Manja Cats, Singapore & Us: Living in a HDB Estate:
"Living in a HDB Estate, I love, love, love living in a HDB flat. Today, when I went downstairs to get my lunch, I spotted a mangosteen, sitting by its lonesome self, in the middle of the 11th storey lift lobby. It just seemed so strange, a mangosteen sitting all by itself, with just a piece of tissue paper for company. I contemplated clearing them off, but didn't want to rob someone else of this curious sight, for at the very least, it might just amuse them as it did me."
May also want to read:
History of Singapore Property 1960 to 2008
When to Buy, When Not to by
The following post reflects the little irritations you may have to live with in the opposition wards:
Chiam and Sitoh:
"Just this week, there is a public spat in Potong Pasir over some broken lights. I will start off by recalling the facts of this case.
Six of the eight solar-powered lights (costing a princely $20,00) installed by Mr Sitoh had been vandalised. Those lights are along a concrete footpath leading to the MRT station - thus highly utilised by residents.
Mr Sitoh refused to repair the lights. He had leased the land from the Singapore Land Authority early last year to set up the lights. Lease for the land runs out on Oct 31 this year.
It is illegal for Mr Chaim to use town council funds for the repairs, because the land in question was not under the council's jurisdiction.
No lights leading from MRT to esate, residents suffer."
May also want to read:
History of Singapore Property 1960 to 2008
Buy or Not Buy: How to decide amid mixed market signals
When to Buy, When Not to by
Property Price Index Graph Plotter & Online Property Valuation
Please Park Properly: SGM7802E:
"Please Park Properly: We can make this world a better place by just taking a little bit of extra effort and time to park a vehicle properly. Please e-mail your photos and details (date, time, place, vehicle number) of the incident to"
May also want to read:
History of Singapore Property 1960 to 2008
Buy or Not Buy: How to decide amid mixed market signals
When to Buy, When Not to by
Property Price Index Graph Plotter & Online Property Valuation
Cooler Insights: Neighbourhood Branding: "What if we brand each and every one of our estates in Singapore? In other words, give them a greater individual identity, uniqueness, colour and point of differentiation. After all, Singapore, though tiny, isn't just a homogeneous and uniform mass. It would be awesome, wouldn't it?
This isn't just about slapping on a fancy logo, or creating a visible campaign about cleanliness, civic consciousness or civil defence. It isn't about a fancy schmancy advertisement on TV, newspaper or radio. It also isn't about getting more people to do more of this or more of that.
Rather, it is about identifying the core essence of each town council, each estate, each road and even each block of flats on our island. It is about knowing what makes each and every estate special and different in the eyes of its residents, visitors and other stakeholders. It is also about seeing how these points of distinction can be better articulated using the touchpoints of branding - key messages, taglines, advertising, elevator pitches, websites, blogs, lovemarks and events."
May also want to read:
History of Singapore Property 1960 to 2008
Buy or Not Buy: How to decide amid mixed market signals
When to Buy, When Not to by
Property Price Index Graph Plotter & Online Property Valuation
Monday, May 26, 2008
This piece, entitled "Smart Buyer at a Private Launch", has a moral lesson to it:
The Smart Buyer is neither given into flatteries nor provoked by insults. Like Kwek Leng Beng said, "He acts on his own."
Like it? Come back for more.
Posted by: Guest
Singapore economy faces triple threat
By Nicholas Fang & Alvin Foo, The Straits Times
"SINGAPORE is facing a triple whammy of economic threats in the form of surging inflation, slower-than-expected growth and weaker exports, the Government has warned. ...."
Smart buyers are all aware of all these challenges ahead so every one is cautious about their liabilities. Property cycle is already going down.
"HAPPY IS THE MAN WHO BUY LOW N SELL HIGH"
Sunday, May 25, 2008
I think the goverment's statement (that property price has peaked) is partly to counter CDL Kwek Leng Beng and other developers delaying their launches to limit supply and making comments to prop up prices which is not healthy for property market. Kwek's appeal for resume of deferment scheme was rejected recently. Now developers realising their plans are foiled, are likely to reduce prices as buyers will be more cautious commiting now.
"HOPES that a slowdown in Singapore's property market is temporary are fading, as an uncertain economic outlook and a looming housing glut threaten to plunge the sector into a prolonged downturn. " reported Asia One, 22 May 2008.
1. Impending oversupply with 66,000 new homes expected to be completed over the next four years, against a forecast demand of 50,000
2. Speculators will dispose of about 700 units on the cheap this year, and another 2,000 next year, as the properties obtain TOP and instalments are due.
3. Worsening economic situation which may drag the world into a prolonged, severe stagflation. We are faced with threats of an impending US recession which seems inevitable now, soaring oil price and the worst, food shortage.
Saturday, May 24, 2008
It is a scenario of people with no jobs, no money and no food ... that's scary. It conjures up vivid images of violent protesters hurling stones at police, looting shops, burning down buildings and even outright civil wars.
That'll not happen in Singapore, we comfort ourselves. But we know such political unrest is likely to happen in neighbouring countries, and if it does, can we be completely immuned to the adverse impacts? What would the situation be like then at home?
Most people don't want to think about such scenarios, preferring instead to focus on the rosy master plan, but the way I see, the problem is not going away.
I remember my first Economic lesson vaguely about "Scarcity of goods, and the unlimited wants of people". Oil is a non-renewable resource, so is the land that produces our staple food. But people want more oil and more food, so do we have an answer for that?
Inflation is even more threatening than the US impending recession.
Post subject: Warning !
Now it seems the US government is not going to cut down interest rate anymore. This is very bad news for the property market in Singapore.
It means soon you will witness the US government and then followed by Singapore government increasing interest rates bit by bit to check on inflation. That will be the next move. By increasing interest rate, people will save more money and cut down on their spendings. Thats the only way to combat inflation. Reduced demand and prices will go down.
And guess what will happen to your property mortgage interest rates ?? Up, up and up. And your property prices ? Down, down and down.
Be prepared for the worst to come soon.
MTI says prices have peaked, GIC says property market is being affected, Credit Suisse, Barclays and others have said prices will fall up to 40%...
it all's consistent with the view that now would NOT be the right time to buy.
As for recent announcements regarding building thousands and thousands of new homes both public and private in central and sub-urban districts, that represents massive SUPPLY that will match any increase in population the government intends to import.
The Draft Master Plan 2008 is the most important statutory plan used to determine land use and shape Singapore’s physical development in the next 10 to 15 years. This year’s Master Plan is expected to focus on growth areas, rather than widespread upgrade in densities. THE Urban Redevelopment Authority (URA) will unveil the Draft Master Plan 2008 on Friday, 23 2008. The new Master Plan is expected to make changes in land use, increase plot ratios as well as lay the groundwork for a much larger population of 6.5 million, which could be reached in as short a span of time as 20 years.
Pick East or West?
I've been a "westerner" (live in the western part of Singapore), but friends who've moved from the west to the east will swear by it that the East is so much nearer to town.
I once thought of buying a property in Geylang. Freeholds there were always on discount. But I thought the better of it. Geylang is associated with the red light district on Singapore, not for family people like me.
Well, East or West? Any advice?
Labels: 6. Singapore Master Plan
Friday, May 23, 2008
Mah Bow Tan, Minister of National Development, explained that the figure of 6.5 million is actually a very long-term guide, spanning up to 50 years.
Speculators buying into properties for enbloc potential may need to rethink if the price they're paying for that old, run down property is really worthed that much.
Mr Mah said: "There's really no urgent need for us to drastically change all our plot ratios or up the intensity of all the various parcels of land that we have.
We've been doing this gradually over many years. There has been a review of various plot ratios in every Master Plan and we've gradually and steadily reviewed the intensity and use of each of these plots. It's not something that we need to do across the board at this point in time, based on the reviews that we have done."
The Jurong Lake District is made up of 2 precints: A commercial zone in Jurong East that'll be named Jurong Gateway and a waterfront leisure zone in Lakeside.
Here are my 2-cents worth off from my head:
1. Those people who are looking at investment property should focus more on the Jurong East commercial zone where large number of employments will be found. That will bring good rental housing demand, not only from the International Parks and the commercial areas, but also, from the up and coming New Jurong General Hospital with their healthcare professionals. The development of this zone is also morely likely to happen faster because of the urgency to relieve the commercial property shortage in the CBD areas (That's my guess based on logical deduction).
2. Home buyers looking for waterfront lifestyle would naturally be more attracted to the to the Lakeside zone. Just watch out what you are buying though, cos the lake view you pay for may be no more when the hotels start sprouting aroung the lake.
The Paya Lebar Centre, in comparison, is already an established old town. Its distinct attraction is the proximity to city - just about 10 mins to CBD. But properties around the Paya Lebar MRT, where growth will be intensified, are already rather expensive.
While developers and sellers in these areas will naturally want to hype up the growth potential, buyers must bear in mind that we're talking about 10 - 15 years or longer down the road. It may not make sense to pay a huge premium for such a distance future.
These are just my views. Feel free to share yours.
The new Master Plan 2008 will be put up for public feedback by the middle of next year.
Thursday, May 22, 2008
Posted by: Sean
When major condo developments start to TOP, we will see the ultimate collapse of the property market
When The Sail, RiverGates, Cosmopolitan etc start to TOP, lets witness how successful they will be in getting new tenants to pay a 5% rental returns. If they can't, then be prepared for a major collapse in the property market here. Imagine a 2-bedroom The Sail asking price is S$2.2 million but rental returns can get only $6,500 per month (I am using a benchmark maximum on how much a small 2 bedroom (900 sq.ft) can demand in prime district). That means a pathetic 3.5% rental returns. Lower than the current inflation rate.
Cause the existing asking prices are unrealistic when we ourselves know that rental returns cannot go up anymore to the roof. In fact, rental is going down. No decent investor will even consider purchase anymore when ROI is less than 4% per year. There are so many other countries with much higher ROIs. Only idiots will buy now.
Even if sellers reduce their prices by 10-20%, their condos are still unattractive for buyers. They need to cut it down by 40% to make the genuine buyers come back.
Well i prefer to place my money in FD and earn 1% with no risks rather than buying a home which most certainly end up having a lower value as well as no tenant. I rather earn less than have sleepless nights.
And especially now when property price is expected to crash anytime, no one wants to buy. Unless buyers see a real adjustment in price, no one will come in to buy except of course a few foreigners who are entirely ignorant on Singapore property market altogether.
I have already said long long ago that property price will drop. See how many negative reports we have now on property market from
For details of these banks' forecasts for the Singapore Property Market outlook, ps read this Singapore Property Forum thread.
These are big conglomerates and I prefer to trust them over real estate agencies or developer reports. In fact, I dont need them to tell me property price is heading south. As long as November 2007 last year, I can sense the market is cooling down and heading for an eventual collapse.
Guys what we about to see is a real collapse in Singapore property. Why I said that ? Most of the sellers are still dreaming of selling their units at record prices which are unattainable considering that recession is coming while rental is cooling down and many thousands of units coming into the market soon. So as a result of them still holding on to their units, they will actually bring up the number of available units for sale or rent in the market. And these numbers will blow up like a big bubble waiting to explode.
At times, some sellers will have no choice but to get rid of their units due to financial reasons, but for some who are financially strong, they will try to hold as long as possible only to see the situation getting worst with more and more units for sale including their units...and buyers getting lesser and lesser with the recession and economic slowdown coming. The number of enbloc buyers will also disappear as they will have already bought all their new homes. Speculators will no longer come in cause they dont see the potential of making money from buying Singapore property now. They will not come back until property price is adjusted by 40-50%.
As such, we now only have real genuine buyers in need of a home and these people naturally are not willing to part with their money in a big way. In addition, the government will promise to allocate more lands for B&D HDBs which might make them more attractive for genuine home owners.
Eventually, market collapse will happen. Cause we will have a situation of 20 or more sellers and only 1 buyer. And by then, seller will dig their own graves. Upon seeing the grave situation, major funds will start dumping their units which they buy in blocks, while foreigners will start selling their units here when they realise their units cannot get 5% or more in ROIs. Many of the foreigners and foreign funds have been duped into buying prime units with the hopes of capital appreciation and high rentals. When these do not materialise, see whats their next actions !
(The post has been slightly moderated.)
Wednesday, May 21, 2008
This is true also for the property market. With the current global economic crisis and the acute domestic inflation, home buyers are likely to turn towards the more affordable basic housing provided by HDB, rather than pay steep prices for private condominiums.
Hence we continue to see over-subscription for HDB's BTO queue, while private property sales falls to its lowest volume since the 2003 - SARS period.
Judging from this trends, prices of HDB flats are likely to continue to climb, while that of private condos will fall. It's a trend one would expect to see for a while until the price gap between the two property segments narrows to a more reasonable level.
Tuesday, May 20, 2008
Now that Smart Buyer is a jobless bum, he can finally give this blog the attention it deserves. Let me take this opportunity to salute the wisdom and vision of all those faceless, nameless heroes out there call Smart Buyers.
Looking back at life, if it hasn't been prudence and of course some luck, that my property investment has today contributed to most of my wealth generation, I wouldn't have the luxury of being the worry-free blog-bum that I am now.
For those generation-Y investors out there, take these words seriously:
Your property investment may be the sole determinant of your financial success in life.
So don't take your property investment lightly. One wrong move, and you may have to work another 10 years more or so for your property.
Once, when I was young and foolish, I plunged into property investment after watching friends and more friends making loads of money out of flipping property. This was during the long bull run of the 1990s. By the time I made the plunge, price was already at its peak but I was too inexperienced to know better. I took a substantial home loan and it hung around me like an iron chain. I finally sold it and made a small profit, then came the Asian financial crisis and the property market crashed.By mid 1998 the property price have fallen some 40% to 50%. I was then able to buy a brand new condo, this time without any mortgage, and still kept my first home.
I learned to wait. The cycle goes up, then it comes down. For sure.
In 2006, I bought another property. Today, it's worthed twice the price that I bought it. But, it's the most beautiful home we ever owned and it is not for sale.
I sold my investment properties by end 2007.
That's my gamble: We're heading south again.
Can homeowners therefore expect to see their borrowing costs drop to the low levels of 2003?
Here is an excerpt of an mortgage rate analysis from Business Times - 20 May 2008, by Quak Hiang Whai:
If you call your local bankers, they are likely to tell you that the domestic and global credit situations are quite different from the Sars days when banks had to fight for their home business.
Foreign banks were relying more on the interbank market for their retail funding and when interbank rates fell to near zero, they were able to price their home loans at well below one per cent. Some of the foreign banks had also just gotten their Qualifying Full Bank licences then and were using their home loan platform and price cutting to jump-start their consumer business. Today, they have been allowed to build a wider retail network of branches and ATMs and they depend more on the retail deposits to fund their home loans.
As such, they are not able to use the undercutting strategy too aggressively, having built up some expensive retail deposits. Maybank, for instance, launched a 1.58 per cent package which was limited to a short promotion period. Given the costs of running the retail branches and the limit that deposit rates can be cut, pricing for home loans is also not given much leeway downwards, local bankers argue.
Also, the banks are more disciplined now with their credit pricing, given the global credit crunch and the sub-prime-related problems in the US. Because of their overall tighter credit policy, it is no longer easy for them to build their business based on an underpricing strategy with risks in property loans having gone up worldwide. In the last quarter, banks such as HSBC and Citigroup continued to write off sub-prime and other real estate-related portfolios at alarming levels.
In fact, many bankers reckoned interest rates after the recent spate of cuts may be headed upwards. ‘Given that the sub-prime crisis and the subsequent credit turmoil has not abated with the financial markets remaining volatile, the outlook for interest rates is still uncertain at this point in time with upside bias as the longer-term interbank rates have been on the uptrend over the past one month,’ said Gregory Chan, head of secured lending, OCBC Bank.
Perhaps the biggest difficulty for the consumer has been the expensive refinancing costs. Banks well aware of the possibility of refinancing in a downward trend market have been clever to price in the higher penalty costs should consumers make their switch. For instance, those who borrowed at around 3.2 per cent last year would have to factor in a 1.5 per cent prepayment charge, repayment of legal subsidies and other administrative charges which may work out to well over 2 per cent of total loan size, making it difficult for them to refinance. As such, some of the banks have actually enjoyed some widening in margins as their deposit rates fell while their home loan rates have not been adjusted down as much.
‘Banks still have to make a margin. People forget that at 2-3 per cent, it is historically still very low for home loans, compared to the days of near 10 per cent after the 1997 crisis,’ said one banker. The bottom appears to hold around 1.6-1.7 per cent for the first year for the time being but with heavy prepayment penalties priced in.
In any case, observers noted - unlike the sluggish credit market of 2002 - Singapore, underpinned by projects such as the integrated resorts and ongoing massive private and public building, is undergoing quite a boom on the corporate front. Local banks have been able to repark their surplus funds elsewhere in better-yielding corporate loans and papers instead of the falling interbank market.
Building and construction loans continued to absorb some of the surplus funds. Bankers reported the spreads in Asia for good corporates have widened by 100 basis points or more in the last few months and Asian borrowers long spoilt by the massive liquidity are now finally paying the right price for loans.
In fact, some developers suspect the banks are nearing their regulatory limit themselves for property-related loans with the two casinos and the ongoing condo building sucking up much liquidity. Smaller developers are even being avoided or squeezed with some getting quoted up to even 400 basis points above interbank.
Banking analysts, however, present a slightly different picture.
One foreign analyst reckoned foreign banks have not pulled their punches and didn’t believe that they have been tied down by other global credit issues.
‘Asia has never been more important to the foreigners and they will remain very active in the region,’ he argued, adding that mortgage demand seemed to have dried up and most of the activity is now refinancing. He figured the foreign banks have actually won market share from the local banks, seen from Q1 results.
The other change is the emergence of interbank- pegged home packages. One analyst said these are becoming increasing popular and the fall in the interbank market would automatically adjust some of these home rates. But he conceded tighter credit controls and a more disciplined approach will mean - all else being equal - that rates will fall less than they would have in the past when Sibor fell.
Even if mortgage rates were really to fall back to the levels of 2003, savings from mortgage interest would hardly justify the negative equity that property owners will be holding then because we'd be witnessing yet another property recession.
You may want to read this blog post: Refinancing Home Loans: Pay High Repricing Fee by a Smart Buyer's first hand experience in the difficulty of getting home loan refinancing.
Labels: 5. Mortgage Rate : Home Loans
Worst may be over for US, some economists say
Washington, D.C., U.S.
Saturday, 17 May 2008, U.S. EDT
Fears of US recession overblown: analyst
However, its group chief economist Alan Oster felt that fears of a major US recession is overblown at present and forecast a US GDP growth of 1.2 per cent this year and 1.7 per cent next year.
Then, came the warnings:
No end in sight to market woes say Trichet, Buffett
Monday May 19, 11:36 am ET Fears of US recession overblown: analyst
Pump prices rise to new high as oil stalls
Monday May 19, 2:28 pm ET
By Adam Schreck, AP Business Writer
Oil prices pause as retail gas price sets record; Chicago, Long Island now average $4 a gallon
NEW YORK (AP)
Forecasters see weak economy, higher unemployment
Monday May 19, 12:07 am ET By Jeannine Aversa, AP Economics Writer
Looking over these headlines, Smart Buyers should ask: Trillions of dollars have been lost in the subprime crisis and everything is ok now? Oil price has broken record and record, rising pump price is hurting Singaporeans' pocket already, what does that mean to Singapore's economy? High food price is here to stay, so what problems will come with more hungry people around?
Monday, May 19, 2008
*For the uninformed, Koyok Man is a chinese-medicine-street-salesman in Singapore who sells the infamous, all-cures Koyok, a plaster with sticky black medicine calls koyok on it.
Who really are the Smart Buyers?
Smart Buyers look at the economic fundamentals, the affordability, the foreigners' earnings etc. and decide if there is enough upside to buy at the asking price. If the answer is NO, then Smart Buyers don't buy no matter which way the herd is charging or what the rich and famous are saying in the media.
To quote Kwek Leng Beng,"A shrewd investor will act on his own." I must add, after doing his homework thoroughly.
I think the supply coming in this year and next year will deflate the current prices. Even with the economy doing well, as long as there is adequate or over supply, I do not see why prices would increase much further.
In a market severely distorted by speculation, people buy with over-optimism that their property 'll make money, and less thought is put into whether the property is really worthed that much.
Take for example the enbloc fever. Old HUDC price soared by as much as 80% in a year because people were buying the "enbloc potential". Now that most enbloc potential has vanished, people look at the old and run down HUDC and ask how could it be worthed more than a million.
Now that reality has returned to the market, home buyers will think whether they want to sacrifice so much of their lifestyle just for a roof over their heads. Investors will make their calculations in terms of rental return and the risks of property investment as compared to their other investments.
Displaced enbloc sellers looking for replacement homes may keep the market going for a little longer, but the market will be mostly dominated by rational thinking rather than promises of a rosy dream.
The cooling market has exposed the weaknesses of the many arguments for the continuous climb in property price, like the simplistic view that IRs will bring so many people and therefore so many more housing uints will be needed. People begin to see the reality that it's not just the number of people who will be coming to Singapore but the sort of spending power these people have will eventually determine the sustainable property price.
Small developers already can't wait and started to market their properties. Developers are trying hard to reduce the supply to keep the private properties maintain at the high point. The government has just taken action to supply more BTO for Singaporean. Most of the transactions now are probably by foreigner. However, with the more supply of private properties of rental, the foriegner will definitely go back to rental then purchase.
Price is set to fall further and further. Smart buyers won't waste their effort. Most of us have house to stay, why bother to buy for investment if it is not worth it.
Exciting months ahead.
The best way to keep the speculators big mouths shut is not to buy. Their nonsense is also a reason we should wait or even stop buying private property. The price will definitely fall.
I think this is a case of "the pot calling the kettle black". Out of the group of smart buyers, I believe a large percentage of them are also waiting to go in at low prices to snap up properties. Isn't this a form of speculation too?
Smart Buyer wrote:
If this is speculation, it is called Smart Speculation. Smart Buyers look at the economic fundamentals, the affordability, the foreigners' earnings etc. and decide there is little upside to buy at current prices. This is the spirit of the Smart Buyers.
Speculators follow the herd instinct blindly, often too optimistic. They're like gamblers. When they win a little, they think lady lucky is theirs, so they "start buying bigger and bigger, and mortgage for bigger and bigger amounts". When the day of reckoning comes, ...
Sunday, May 18, 2008
Regional economist Leong Wai Ho of Barclays expects rentals to fall by 5 per cent this year, with a more severe price correction beginning from next year. His justification: Rising vacancy rate. Official data from URA shows that vacancy rate has risen to 6.3 per cent in the first quarter of this year. Mr Leong said: "The vacancy rises are not strong this year, but it will be exceptional next year due to the huge supply hitting the market." Almost 13,000 new homes could be completed next year, rising to 18,000 the year after. All this, at a time when the global economy is slowing.
Some Smart Buyers at this Singapore Property Forum thread have been reporting that rental units are taking much longer time to lease since quarter 1 of 2008.
Here is one such anecdotal evidence provided by a Smart Buyer:
"Personally, I'm observing more "FOR RENT" banners hanging on condos and they are there for a longer time."
Another Smart Buyer predicted:
"High rental comes partly from foreigners, but mainly from 2006-2007 enblokers. If these two factors disappear more or less in the property market, I believe rental will come down. Then follow by property price."
TODAY carried the headline:
Rental rate to fall 25%: Bank - 17 May 2008
The newspaper reported that Barclays Capital's forecast that Singapore rental housing market has peaked, and rent is expected to fall 5% this year and could fall by as much as 25 per cent by 2010.
The koyok man here has been doing investments in property for the past 15 years and so far have never been wrong in his predictions.
Seems like the optimists including the dried cuttlefish seller be needing koyok soon for their severe headaches by the end of this year. My projections are all coming true one by one.
Now, guys you all must be careful of developers this time. They can claim that they break record-prices for their units but the truths are hidden..they can sell their units to previous enbloc sellers, their family members or close friends or company staffs at huge rebates. This is an age old tactic which I am so familiar of since day 1 when I started investment in property. Singapore property market is based on speculation. Its not a stable market. It will be the first alongside HK to crash in Asia cause property demand is actually illusion and not real. Property developers and agents are the actors on stage creating the scenario of a hot market when actually it was not there last year. Just look at Scotts Square, it claimed to break record prices at $4000psf but until now there are 50% units still unsold ? Does this signify a market based on demand.
Singapore property will be crashing end of this year. If it doesnt crash, it will be severe downturn which will bleed owners of existing condos. Either they bleed or they sell their condos at huge discounts...This downturn is going to last for 2-3 years or even longer. Reason why? Oversupply of condos and slump in rentals due to recession. US, China, Japan and Europe will slowdown for sure end of this year..Singapore not slowdown ? It cant be possible unless Singapore is located in another planet.
Its so clear cut...everyone knows whats coming ! Be prepared
Its a game of poker, with Paulson, Bernanke, Bush, and bank chiefs the stake holders. They want, no, need, you to believe all is well, but its a house built on stilts, with a cankerous base. But no one must know, or investors will call their bluff.
These are the same government people and bankers that were declaring all is well even as the sub-prime and ensuing credit crises were starting.
Can the Central Bank single handedly uphold the American economy? Does the money magically appear out of thin air without cost? When will the equation be balanced, and what will happen on the day of reckoning?
The day had actually arrived, but they have postponed it by printing yet more money. You can flog a dying horse with ever greater doses of green adrenaline, but you're just delaying the inevitable.
Well, the party may go on, but just remember to cash out before the music stops, or you'll be the one left holding the baby.
Smart Buyer 2 wrote:
Similarly, housing agents, developers, property punters all want you to believe that prices haven't run ahead of affordability and economic growth, and that they have to resort to crimping supply just to maintain prices, whilst, giving surreptitious discounts and rebates so that the recorded transaction prices don't reflect the true fall in prices.
Don't need to get worked up Mr Speculator at people in this forum who simply don't believe your rosy predictions. If you're so confident in your investment, you wouldn't be banging the pots so loudly. You'd quietly go out and realise that profit and get a life.
Smart Buyer 3 wrote:
That's right. We are just teasing Mr. Speculator for his funny quote.
Saturday, May 17, 2008
Excerpt of Kwek Leng Beng's view:
Property tycoon Kwek Leng Beng has warned that most property investors follow the herd instinct and wait too long in a cautious market - then make a wrong move.
The executive chairman of City Developments (CDL) said he remains upbeat about prospects for the real estate scene in Singapore, despite recent weak sales volumes.
Mr Kwek, who was a panellist at the Financial Times Asia Property Summit held at his St Regis Hotel yesterday, said the property market is just consolidating.
The mood in the Singapore property market is cautious in the wake of the United States sub-prime crisis, with many buyers and sellers preferring to remain on the sidelines.
He said he was waiting for the opportunity to 'go in and buy at the right time, be a bottom fisher'.
But most people will do the opposite, he said. 'You notice (people) will keep on waiting ... until it's too late,' he said.
'It's the herd instinct ... the majority will be wrong.' A shrewd investor will act on his own, he said.
I agree with Kwek Leng Beng: act on your own. So the more he asks you to buy, the more you shouldn't buy. Think for yourself: why he's making all these media appeals recently?
He is desperate lah ... The herd instinct can make him rich, the herd instinct can also make him poor. So now he's trying to use the media to play on the "herd instinct".
I call this the battle of the herd against the rich.
Sorry I am not going to let the biggest conman take my money not even a cent . Let him suffer from last year's greed. Greed is the downfall of man. See how far Singapore prices can go up ? To $5000psf ?? You optimists are really dumb fools.
Market is going down a lot soon. No one is buying. Maybe the only buyers are KLB friends and families. No more speculators left. Please, if KLB still hoping for speculators to come in with the above pathetic article, he must be making a big mistake ! If he is not desperate, he wont post this article in Straits Times. Just leave us buyers alone. Enough of his brainwashing tactics.
bears are worry, panic & tense now.
Kwek LB don't anyhow talk, money don't mean a lot to him now, reputation & respect worth more.
Believe wrong person, take the responsibility to accept the consequence, just like the koyok salesman here.
If govt want 3 parties to work closely, govt, businessman & workers, for the good of Spore, make sure they do the right thing, 1 mistake, they will have to pay heavily for it.
If money dont mean anything to him, then why bother post article on Straits Times ? Just leave us alone to make our own decisions. Apparently, KLB is going to lose millions of dollars if property downturn lasts more than 2-3 years which is very likely. He has a huge landbank as well as units still not sold. And he is apparently getting very nervous now.
Everyone is certain price coming down. Even if next month, price were to go up a bit, it wont convince anyone that property market will be like last year again. No way ! No one now cares about property. People are dying all over the world by the thousands, and another calamity is about to happen, and u talking about property speculation. Just look at Classified Ads...sellers are bringing down their prices by 10-20% and yet still no takers. Except for a handful of prime units, I am also wondering who are these buyers ? Are they reliable sources or just made up by developers like a stage show.
Dude, you better spend your time more wisely ! Dont waste your time here convincing people cause no matter wat u do, we are not convinced.
CDL chief Kwek Leng Beng awaiting right time to buy, mean he is not buying but selling. So do you want to buy now? The 'suckers' rally is over. We are now in the hot potatoes period.
you can keep your money, nobody interested, can bring them to heaven or hell too.
CityDev Q1 result just out, profit up 30% to S$165M. Although transaction down in Q1, but they have many channel of incomes, without you buying, they still make big money from rental, hotel, services, maintenance.....
Why you worry their income for next 2-3 yrs, worry for yourself better, 1% FD in the bank keep till no value lah.
Sporean not interested, CityDev can just move all their money to help to develop other country, Taiwan, VIetnam, China, HK, Japan.....go oversea to help others better than these pathetic sporean, thought they are smart, just a bunch of cheapo.
Hope this can continue for next 20 yrs, then we see 20 yrs later, what is the difference between spore & regional countries.
All big developers should pour all the money to invest oversea since people here are not interested.
Buy & hold for capital appreciation.
Sell to kiasi at 300% of today's price in 2015.
well said, KLB.
We will support you all the way.
He has said he is very confidence in Spore property in long run, so he will buy for capital appreciation, buy, rent & sell at a right time in future.
I think he will make a move before IR readiness, let wait for his push & drive in next round property buying spree.
From wat i know KLB is a major property developer and not a property buyer. As such, he is pushing hard to sell all his condos to naive buyers whom he can con. He is still left with a few thousand units for sales.
If you want to continue to get conned by these billionaires who made money by cheating other people money, go ahead.
Cause property is definitely not a good buy now unless its 40% cheaper than current price. Cause Singapore has the lowest return on investment in the whole world, currently at only 3-4% of purchase price. Its not a good investment.
Funny thing Mr Kwek said nothing in 2007 when the herd instinct was at its senseless bull run.
If he really believes that "'It's the herd instinct ... the majority will be wrong.' he said; Should Mr Kwek have stepped out then, on the ground of doing public justice, like he's doing now, to tell people not to buy property especially CDLs, because like he said, 'It's the herd instinct ... the majority will be wrong.'
whatever happen to US today, US still a great country, who in the world have all the US brand, MS, Coca-cola, Apple, Boeing, Starbuck, Intel, IBM, Dell, Walmart, GE, Exxon, HPQ, Citi.....all the 6 biggest audit company, Morgan Stanley, Disney, Warner, Mcdonald......a whole long list...
You name it they have it & they are the creators of so many technology, internet, telco, semicon, car, theory, nuclear weapon......without them, you are just living in the 60s.
The spirit of in creativity, courage to think out of box, brave to do it, that is human, humanity, civilisation, culture.....
Do Spore have any big brand? product? SQ?....a lot is nothing, no patent, no new idea.....system, process.....can be copied easily.
what we lack of? courage, boldness, brave, balls....power to do thing.
Just kiasi, timid, no risk......
Kiasi are not die-die must buy people .. what for buy when you'll only end up sponsoring foreigners to live in the properties .. better invest the money with better return, less risk and more liquid.
Buyers beware, real life experience .......
Want home loan rate adjusted? Pay $6,000 fee
WHEN I signed up a home loan with Maybank one year ago when Sibor was still at 2.4 per cent, with a view that general interest rates will go down, I decided to take the risk with a floating rate loan pegged at 0.97 per cent below Maybank board rate (3.75 per cent) for the first year.
This was despite the reminder by the loan officer that should interest rates go up, Maybank will correspondingly increase its board rate. While not pegged directly to Sibor, I was told that Sibor will be a good benchmark.
Now, one year down the road when Sibor has dropped almost one per cent to 1.44 per cent, I am still waiting for my floating loan to be adjusted accordingly.
I was told that my loan will be adjusted only if I pay a repricing fee of $6,000. This makes the readjustment completely unviable. What's more, Maybank has been offering new packages at 2.28 per cent for the first year all this while.
Labels: 5. Mortgage Rate : Home Loans
Over the last 30 years the property market has gone up and down. But the macro picture is more up than down. Just a few years back the market was talking about the final days of the rise in property values. All was gloom and doom. Singapore has no future with China in the limelight. It was THE END for Singapore properties. Prices will never, never go back to the 1990's again, we were told by so-called EXPERTS.
Then came the surge again. In a short span of one year property values surpass the previous highs, especially HDB flats and prime properties. Now that it has gone too high, the market is talking down again. Cloudy skies ahead. The market will crash again. This time, the market says, it will be for real. I twill be deep and long. US recession. Sub prime issues. World economic slump ahead. So the whole episode will repeat itself again as I understand it.
A little bit like the stock market it seems.
So how does the small man who needs a roof over this head, stands? Or the big man who cash out stands? Both, it seems, will wait for the next downtime. Buy low and sell high in future. Simple? I am not sure.
Just a few thoughts which I wish to pen here. I don't know whether I am right or not:
1) If one has one house, then the theory does not work very well. At a given time, if one sells low he will be able to buy low. Similarly if he sells high he has to buy high.
2) If one has more than one house, the theory might work for him. So he is a speculator. But if caught during a prolonged downturn, the holding costs are high and he may not profit. So he must be in a perfect timing.
3) If one has no home, like the first timer, he should buy only during the downturn, if he can wait. If not, then his luck counts a lot. If his needs happen during a downturn, he is lucky if he has the money and a job to keep his confidence high. If his needs happen during the peak then he is in for financial burden if he is complacent not to pay up his house asap when he still has a good job.
4) For home owners without the nerve and who has anxiety problems, they should stay out of the market if he don't need to buy a house. Especially if they already has a fully paid-up home and a decent job.
5) The truth is that nobody really knows the future. If we know we will all be rich. We based our decisions on past perfermance and many a times on market sentiments at a given point in time which are substantiated by one economic factor or another by the so-called EXPERTS.
6) The bottom line, I guess, is the question of NEED. If there is not need to sell don't sell. If there is no need to buy don't buy. For the ordinary folks there will be less tears and more smiles, and their heartbeats will not be erratic. IT IS THE QUESTION OF NEED VERSUS GREED.
The following is a checklist to help you plan your property purchase:
Affordability should be the first and overwhelming consideration for any prudent buyer. As a general guide, your total monthly housing loan instalment should not exceed 30 per cent of your monthly income. This will help ensure that you have sufficient money left for fulfilling other objectives such as your childrens' education and saving for retirement. Do your calculations even before you start your property hunt.
It is also prudent to set aside cash and/or sufficient CPF monies to pay for at least six months' monthly instalments to meet loan payment in the event of unforseen circumstances such as lost of employment.
Location of Property
So they say property is all about location, location, location. A well-maintained property in a good location would be better able to sustain its valuation in the long run. However, look beyond the property value today. Study the master plan and identify promising locations that are still sold at prices that are relatively under value.
View the Property more than once
Make arrangements for viewing at least at two different times of the day, such as in the afternoon to check for afternoon sun and at night to check for reasonable peace and quiet.
Inspect Property for Repair-Renovation Costs
Keep an eye on the physical structure to estimate any cost of renovation and repairs that might be necessary. Include this cost in your calculation for the purchase of the property. This is especially important for very old property where extensive re-plumbings may have to be done.
For instance, a large vacant plot of land next to the property may eventually be built up, blocking your view and affecting the value of the property. Check the master plan provided for URA about the sort development that has been planned for in the surrounding areas. Look out for elements such as places of worship which may have substantial impact on the property value.
Verify The Remaining Lease
For any property with a remaining lease of less than 60 years, the maximum CPF withdrawal limit is usually less than property with more than 60 years lease remaining. Check also with your banks to see if you're able to obtain a home loan before making your commitment. It's usually difficult to obtain home loan for property with less than 60 years left.
Obtain bank loan approval prior to purchase
You might risk forfeiting your option money in the event that the bank is unable to meet your financing requirements. If the purchase price of your property is higher than the bank's valuation, any excess would have to be paid in cash. You might also need a higher loan amount than what the bank is willing to lend based on your income.
Consider the following factors when shopping for the right home loan:
Check the maximum loan term that you can get. The normal loan term is 30 to 35 years, or up to when you are 65 or 70 years old, whichever is lower. However, if you plan to retire by age 60, you should not take out a housing loan that stretches to when you are say, 65 years old.
Compare the monthly repayment (based on different interest rate scenarios) from various banks to see if you are comfortable with the amount.
Interest rate comparison
Check to see if the bank offers fixed rate loans and how long the fixed rate period will be. Note that banks typically charge higher interest rates if you want fixed interest rates. Hence, if interest rates are not going up, you might actually be better off choosing a floating rate housing loan instead.
Check if the bank gives free fire insurance and other freebies.
Free loan conversion
If you are buying properties that are still under construction, you might want to check if the bank offers a one-time free loan conversion when the property reaches temporary occupation permit status as you want the flexibility to switch to a better package rather than be stuck with your existing package, which might be a worse option.
Ask to see what fees will be charged if you do a partial or full redemption of your loan. Also check how long the penalty period is. Currently, there are some housing loan packages with zero penalty period, while typically most loans have one to three years of penalty period.
These include legal fees. Banks typically provide a legal subsidy pegged to 0.4 per cent of the loan amount. Thus, if your loan is big enough, the bank might help you pay for the legal fees fully without you having to pay at all.
From time to time, banks might come up with special promotional packages.
May also want to read:
How to Calculate Rental Yield for Singapore Property
Inland Revenue Authority of Singapore(IRAS): Stamp Duty Calculator
Singapore Property History
How to calculate Stamp Duty for Singapore Property
How to calculate Singapore Property Tax
Free Sample Tenancy/Rental Agreement: For HDB and Private Property
Friday, May 16, 2008
(Background info: The Singapore Property market saw an all time peak in price in 1996 but the market crashed by 40% to 50% during the 1997 Asian Financial Crisis. 2007 saw the next peak in property price. For the full forum, ps visit this thread at Singapore Property Forum.)
I think comparing the current property with 1996 is a mistake. The current price holding strong and not going down with any bad news.
1996 should be compared with 2007 when property price was hitting the roof and transaction volume was strong.
2008 should be compared with 1997.. the beginning of the Asian financial crisis (2008 saw the US financial crisis).
2008 looks much more threatening than 1997. In 1997, it's just the Asian financial crisis. Today, it's the world that's threatened by a deep recession with the combination of high oil price, food shortage and the US financial crisis. It's going to be much worse than 1997.
The current price holding strong and not going down with any bad news.
Back then (1997), developers did not drop price significantly until mid 1998 ( a year later after the Asian Financial Crisis erupted) when they could hold no more. Even big boys like Far East and CDL caved in. Similarly, you'd expect developers to hold until next year or so before you can expect them to really drop prices significantly.
The 1996 bull run was much longer starting all the way from the early 1990s. The bull run in 2007 lasted only for just about a year (at least for the mass market). Developers may have made much less profit during this cycle or some may not even have recovered the waiting cost during the long duraction of the market downturn from early 2000s to 2006. We can see that they've trying to gain loss ground dring this upturn but unfortunately, it didn't last. Plus the construction cost and hence, the holding cost of developers is increasing ... go and figure it out,
There are already clear signs that the current price is beginning to melt. Developers have reported drastic drop in earnings, recent launches were like dead towns ...
Reason 1 (for continued uptrend):Govt always "announce" a lot of master plans which mostly prop up property price for long time because most of them are very long term
plan. Including IR, MRT, Jurong E and paya labar etc.
This helps but Singaporeans are more concerned about the coming recession. If they can't hold through the recession, all that rosy master plan is of no good to anyone.
Reason 2 (for continued uptrend): Strong rental market from enblockers and foreigner.
Rental market was also strong back then (1996). But when recession eventually hit (in 1997), expats went home and left property owners with vacant properties and high mortgage to pay. Banks started to ask for top-ups as property valuation fell. Property owners were squeezed from all sides, some didn't survive.
Look carefully around you, we're beginning to see signs of that.
Reason 3 (for continued uptrend): Thousand of cash rich enblokers stay sideline watching property market very closely every day and night. They are real ready buyers waiting to buy even a little drop in price.
Enblokers are probably the only reason why property price hasn't dropped until now. But they're limited in number and if they're not stupid, they'll better opportunities ahead. Anyone the market cannot be sustained by a small number of enblokers for very long.
So, its really different from 1996. Property never go down in Singapore at least another 10-15 years. Only one reason for the property price to drop : NO Job, NO/Less/Unstable Income. Any comments?
That's your guess as much as mine.
Personally, I think we're heading for a prolonged, severe recession of a scale we've not yet seen before.
"Read a few analyst report on Spore banks and got to know banks are generally turning cautious on giving out home loan.
Recently, I happen to talk to a housing agent on in investment property. She wanted to know whether I've got my financing approved by the bank
before talking to the owner to lower the asking price. I also spoke to a DBS loan officer.. he too would like me to file an application b4 committing to a property. I find it very strange 'cause this was not the case when I purchased another property few years ago. Are buyers are finding it hard to get loans approve from banks? If this is the case, it will definitely affect the market."
"Interesting point. In my case, the agent keeps hounding me to make an offer. Maybe the seller is facing problems with financing. "
Another Anonymous replied:
"Then you should really wait.
Smart buyers shouldn't even bother to go viewing now. Why tempt yourself when you know that downturn hasn't even started? Why not spend the time with your family or reading about what's really happening around the world. With so much money lost during the recent financail turmoil, surely it must translate into huge losses in personal wealth. Read about the soaring inflation, is it really a passing matter or is it here to stay? Find out for yourself how bad things can be in the few years ahead. Then ask yourself if the worst should happen, are you prepared? "
"Intersting point raised. I went to some showflats to view. Really felt tempted to make a purchase. But deep inside I know property price will fall soon as the market is generally quiet as compared to last year. This is really a sign that property price will fall soon or later. I am prepared to wait so there is much more potential for downside and upside."
Posted by: Anonymous
Property right now is:
If you own it, just look out for a time to off-load. If you are tempted to buy, beware of the pitfalls, especially the illiquidity.
Smart people know where to make money - by investing and divesting in other businesses.
Whether or not the property uptrend continues in the next one year really depends on the recovery that can take place in the US. Personally I feel that the US Federal Reserve and government is ready to go all out to buffer the financial sector against massive losses due to the risk of bank runs and subsequent systematic economic collapses. This being the case, the likelihood of further falls in the stock markets worldwide is very much reduced.
The property prices in Singapore hinge on whether property developers are able to hold out in the next few months. The larger ones should not have any problem maintaining their prices (and composure) while the smaller ones may have to let go off their positions soon because of cashflow and weaker financials.
Therefore we are looking at a few variables:
I. how long the subprime crisis effects will last
II. how long before small property developers cave in
III. how long before large property developers cave in
IV. how long before prices start falling
V. how long before the majority of property buyers start buying in
If II and III exceed I, then there should not be any major price corrections from last year's peaks. However, if item I turns out to be a prolonged duration and exceeds II and III, then the prices from last year will start to fall for as long as V does not come in soon.
Item I is beyond anyone's control.
Items II and III are manageable.
IV is a direct consequence of II and III.
V can be manipulated through shrewd marketing and also what the mass media paints of the potential of property in Singapore.