Friday, December 26, 2008

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Rising HDB Price will support private property price?

FYI,i have been waiting since 2002 but the price of both HDB & private condo had risen almost every year. Recently,i am eyeing a three room HDB flat in clementi, Queentown or even marine parade but all these almost 30yrs old public housing are asking more than 200k. Do you think think if i have to wait for another one or two yrs will the price of these flats will drop by 30%.

Don't bluff lah. Condo prices in 2004 and 2005 were so low - I bought one myself from a seller who made 30% loss. I think you are Mr Lan Lan, throwing red herrings to mislead people again.

Mislead people????Any HDB three room flat more than 25yrs in Ang Mio Yio ,Clementi,Queentown or marine parade which are selling below 200k.Please let me know.Merry X'mas.

HDB price has been going up steadily only from 2007. It's true that 25 yr old 3-rm HDB are selling above $200K now. Private property also recover only in 2007 but has dropped since Q3 2008, and data continues to show falling prices. These are facts.

You can't use rising HDB price to justify that private property price will also rise. Reason? Though there is real demand for housing, private property price has become unaffordable esp in the years to come as economy gets worse, and even the recovery is expected to be slow and spore will be having years of low growth. Income will drop and affordability will drop further. Plus difficulty in getting bank loans with the credit crunch. What will people with real housing needs do? Go for cheaper, smaller HDB flats! So smaller HDB flats will benefit most, that's why govt is building more of such flats. They have foresight and the data to know that people will be downgrading. As people downgrade, private property price will suffer even more..

Extracted from the Singapore Property Forum

May also want to read:
99 Leasehold Property: Calculation of Depreciation Rate based on Singapore Land Authority Data
Spore Property History 1960-2008
Property Investment Tip: Don't put all your eggs in one basket
HDB Resale Price Index 1990-2008: Graph & Chart


Phantasia said...

Hi Smartbuyer,

Its been awhile since i last posted here. :) Hope you're doing well. Would just like to seek your opinion and views, for a property mainly as an investment, do you think its better to go for small high-end property (500-600sqft) in the good districts (eg d10). Or a 2-3 bedroom (1000sqft) mass market condo in the suburbs.

I would think in terms of rental, a mass-market condo would likely be easier to rent out and less prone to economic downturns. But high-end property would likely have better capital appreciation in the long term? Or can mass-market condos even be considered worthwhile investments in the long run?

Thanks once again!

Smart Property said...

Welcome back Phantasia,
For investment purpose, I favour the first option - d10 property. Ultimately, whether a property will be a good investment (vs the risk) will depend largely on what your entry price is; be it high-end or mass market.

Hope to hear from you again.

Anonymous said...

Hi, what is the situation for HDB flats that are over 30 yrs old when it comes to securing a bank loan. Hear that there is difficulty, is it true?

Smart Buyer said...

Hi, I'm not aware of that. Given that banks are a lot more cautious these days, it's possible that they'll consider the age of a property. It's best that you confirm with the banks. A few phone calls to the banks should do the jobs.

Best wishes

Getty Goh said...

Hi Smart Buyer,

I chanced upon your site and I found it very interesting. I have been following the property market since 2002 and here are my humble opinions on the questions above.

1. I think the question of profitability is a very interesting one. Many of us would think that D9 and D10 are 'sure wins'. From our studies, we have found that in the last 5 years, the cheapest property to have made a net profit of more than S$1 millions is in a non-prime district. The property was bought for $350,000 and later sold for $1.35mil all within the last 5 years. This really puts a lot of things into perspective. :)

2. There will be some difficulty to apply for bank loans for properties with short lease. For example, someone who want to take out a 30 years loan to buy a property that has only 20 years lease left will not be successful. The bank may instead grant a 20 years loan, which will in turn increase the monthly instalment. In the end, they buyer may not be able to afford the property as the monthly instalment is too high.

Just my 5 cents worth :)

Best Regards,
Getty Goh

Anonymous said...

To Getty Goh,

It is interesting to note from your studies that the highest capital gain comes from non-prime district. Is the example an one-off case? Can you give a prospective on the scale of this happening?


Getty Goh said...

Hi Anonymous,

Based on our research, we have found that it is not really a one off case. We have research data to back our claim.

Of course, this research is based on data from the last couple of years. Those who have been investing will know that past performance is not an indication of future performance. Nonetheless, it shows that there is more to the property market than what we expect.


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