Four ways to bring down flat prices

[Joseph22]

by subsidized, most people would be expecting the flats to be sold at below cost. That's clearly not the case with new HDB flats

 

New HDB flats are already subsidized leh... unless you are mentioning HUDC. but it is a condo in nature, how much do you want to subsidize??

[Joseph22]

From 4th Quarter 2006 till 3rd quarter 2009

HDB resale price up 33.5% (estimated)

Salary up 15.775% (estimated)

 

Anyone else please feel free to do your own calculation and analysis and show in this thread, as in no way do I claim the figures above to be accurate.

 

Sources:

 

HDB resale price

-------------------

 

From 4th Quarter 2006 till 2nd quarter 2009, price of HDB resale price have gone up 32%. Now is almost end of 3rd quarter and still rising due to buying frenzy, so let's make it 33.5% now (just my estimate) at this point 19-Sept-09.

 

http://www.hdb.gov.sg/fi10/fi10201p.nsf/WP...ex?OpenDocument

 

A $300K flat in 4Q/2006 will now be $400.5K

 

$400K flat is now $534K

 

 

Let's compare to wages in Singapore

--------------------------------------------

 

From 4Q/2006-3Q/2009, wage increase can be estimated to be (4.5/4=1.25)+5.9+4.2+(5.9/4x3=4.425) = 15.775% increase

 

 

2009 Jan to current date

No report yet but lets say this year is another damn good year for wages (like 2007). Let's take it as another +5.9% for full year till end 2009 (which i highly doubt due to recent newspaper reports on expecting low to no bonuses).

 

2008

With the economic downturn and increased business costs in 2008, employers were more restrained in granting salary increases. Total wages comprising basic wages and bonuses in the private sector rose by 4.2% in 2008, down from the growth of 5.9% in 2007. The moderation in total wage increase in 2008 stemmed from the drop in bonus payout from 2.36 months in 2007 to 2.31 months in 2008 (-2.1% as opposed to an increase of 8.3% in 2007). The basic wage increase (4.4%) was broadly unchanged from 2007 (4.3%).

 

http://www.mom.gov.sg/publish/momportal/en...0630-Wages.html

 

2007

Amid the strong economic performance and tight labour market, total wages rose by a 7-year high of 5.9% in 2007, up from 4.5% in 2006. The total wage increase of 5.9% resulted from a basic wage gain of 4.3% and an increase in bonus payout (also known as annual variable component) from 2.18 months in 2006 to 2.36 months in 2007. The rise in annual variable component accounted for 2.3% point of the 5.9% total wage increase. The remaining 3.6% point came from the increase in basic wages, which accounted for 61% of the total wage gain in 2007, lower than 69% in 2006.

http://www.mom.gov.sg/publish/momportal/en...0630-wages.html

 

2006

Up 4.5%.

http://www.mom.gov.sg/publish/momportal/en...n_Wages_06.html

 

I will say the figure you get is misleading.

 

what you see is resale price which is not all sold at 33.5% higher. there are some that are sold below the average resale price. but are you willing to Buy?? (flat is far from MRT, low floor, house very dirty) you see, quoting the price of re-sale and salary is easy. but it is hard to compare re-sale flat to Salary, salary can be measure. but resale cannot.

 

Why resale flat cannot be measure?? simple, not everyone is selling, 2ndly not all flat got buyer want to buy. normally those that are sold high are either because they got good view, near school, high floor, near shopping center or MRT. those are the one that are constantly being sold. but the problem here is that those that are not in that catergory might not be sold at all or if not moved very slowly. since that those less desire places are moving slowly, they create a false sense of HDB price is going up sharply.

 

Where else in salary, you are getting everyone salary including those odd job labour. they might not get any increment at all (like some of the less desire HDB flat dont increase in value at all.) and also, there are those whose salary are so high that increasing SGD200 to their salary does not even affect more than 5% of their salary(however, every Sgd 200 increase per year will aloow them to finance a HDB that is 20K ~50K more expensive.). i will not elabrate further cause nobody like wall of words.

 

So in conclusion, the figure you plug might be right, but they are both independent and irrelevant report.

[Sgnick]

Thanks for sharing your insight Joseph22. Very interesting analysis, but some points I cannot agree on.

 

Do you know how HDB valuations are calculated? Assuming you do.

 

A lousy location low floor unrenovated unit, if you do valuation for that unit in 4Q/2006, and then you do valuation for that same unit today 3Q/2009, will there be an increase in the valuation? I am quite confident the valuation has gone up quite abit since 2006, given the way valuation is actually calculated. So even the least desirable units are worth more today isnt it? And even if the owner sells it at no COV or even below COV because it is a lousy unit, is still sold at a price more then 2006 price. That's what one of my friend did, she sold her resale she bought 2 years ago, she sold it below value -$17K (where can u find 2 digit below value today?) and still makes $$$ as compared to 2 years ago, just because the valuation gone up >$60K.

Edited September 22, 2009 by Sgnick

[Joseph22]

Thanks for sharing your insight Joseph22. Very interesting analysis, but some points I cannot agree on.

 

Do you know how HDB valuations are calculated? Assuming you do.

 

A lousy location low floor unrenovated unit, if you do valuation for that unit in 4Q/2006, and then you do valuation for that same unit today 3Q/2009, will there be an increase in the valuation? I am quite confident the valuation has gone up quite abit since 2006, given the way valuation is actually calculated. So even the least desirable units are worth more today isnt it? And even if the owner sells it at no COV or even below COV because it is a lousy unit, is still sold at a price more then 2006 price. That's what one of my friend did, she sold her resale she bought 2 years ago, she sold it below value -$17K (where can u find 2 digit below value today?) and still makes $$$ as compared to 2 years ago, just because the valuation gone up >$60K.

 

 

Yes, it is true that the valuation had gone out. but the problem is, we are only looking at the sum and not on why the valuation had gone up. inflation is one thing. but the improvement in facility around the area is another. Hence the extension of the West bound Train, the starting of the circle line all contribute to a sharp increase in HDB flat.

 

Let me quote to you an example, the flat valuation of a 4 room flat (3bed room +1 living just in case some mistook it for 5rm) around pioneer MRT before any plan for MRT is proposed is about say 240K. but after the Plan was up and building completion, the same flat is valuated at SGD 300K or more. while a flat that were further down (say near NTU or city harvest area) the valuation have a humble increase in valuation that is more or less coincide with the increase of income or inflation of the nation.from this, we know that the improvement to the surounding facility can and will improve the valuation of the flat. and the increase was Great too.

 

Looking at the above 2 example, we can actually see that the inflation of the flat is not very high but on where is the location of the flat. Now after saying all this, my question to you is which is a easier place to sell a flat? and which one will be able to fetch a high COV.

 

Btw i am curious, how did your friend sold her flat which she bought 2 years ago?? also, what is the lousy place?? and btw do you know that 2006 is during the period where HDB flat is at the lowest in recent years? it is also during those period that HDB have a lot of unwanted new flat everywhere. i bought my 5 Room new flat at 150K during those time. the same region now cost about 250K. And do you know why does the government allow the price of HDB to raised so sharply?? the reason is simple, when the price is low, no body want to live in the outskirt of the town.

 

Anyway, valuation of the flat is not just the following

 

Valuation = flat floor + reno.

 

but Valuation of the flat is base on

 

Valuation = flat floor + reno + surrounding facility + many other.

 

Edited September 22, 2009 by Joseph22

[Joseph22]

Having said all this, i myself do find the price of mature estate in singapore is overrated. but then again, if ppl are still willing to paid for the flat around the area, it say something about the market of singapore.

[Rickster]

Having said all this, i myself do find the price of mature estate in singapore is overrated. but then again, if ppl are still willing to paid for the flat around the area, it say something about the market of singapore.

 

Yes, the root cause of why flat prices are spiralling out of control is becos there are still ALOT of pple dying to pay high prices for flats located in central areas.

[Rickster]

And to top it all off: HBD flats are NOT subsidised!!!

 

The garment alrdy say its subsidised from the "market rate" alrdy.

 

Actually, the expensive ones are those that are located near central areas.

 

Flats in woodlands, yishun, jurong west, choa chu kang, sembawang etc are all significantly cheaper than those central areas.

[Biang]

Agreed that flat price does cheaper in the area mentioned. Just exercise OTP recently on a 4 room flat near to Admiralty MRT for 298k +21k of COV (due to high floor, unblock from bedroom, and relatively good condition flooring which save quite a bit of money in renovation). Having said that, both the toilets and kitchen has to be hacked, and quite fairly a bit of fengsui thingy is to be considered as well.

 

Me and my wife has been searching for flats for quite sometime (viewed about 50+ flats), and decided to sign for this one. And yes, the price is at the high side but, is still better than any others areas in singapore. Jurong West is the most craziest place for COV where a high floor flat which not in the MRT radius is asking for 30k COV minimum. Gave and look else where after all the crazy bidding war.

[Joseph22]

Me and my wife has been searching for flats for quite sometime (viewed about 50+ flats), and decided to sign for this one. And yes, the price is at the high side but, is still better than any others areas in singapore. Jurong West is the most craziest place for COV where a high floor flat which not in the MRT radius is asking for 30k COV minimum. Gave and look else where after all the crazy bidding war.

 

the reason is because of the Lake side plan that the governement had show mah... Actually flat is jurong have more value when you rent out then sell. can easily earn around 20+k a year. 10 years you can pay off a 4 room liao...

[Biang]

yeah, thats definitely is the pusher as well. Anyway, already said good bye to west side. And saying hello to north side haha... the rental part sure is tempting. Unless i am so lucky to afford another property, then the rental part make more sense

[Joseph22]

anyway, do you know that most will post high COV? all you have to do is to quote as the price you desire, they might relent. afterall, if they place at valuate price, singaporean will just cut the price. hence the mentallity is place a high price for you to quote downward. then got bagaining space mah... like what i did for my dad flat when we wanted to rent out. looking at 1.8K but i told agent to put as 2K.

[Gendut]

Four ways to bring down flat prices

 

I think there is only one way and Singaporeans know it.

 

KICK OUT THE INCUMBENT!

 

But alas Singaporeans only know how to whine and complain and when time to take action, their balls shrink. Well they deserve what the sow.

[Joseph22]

Four ways to bring down flat prices

 

I think there is only one way and Singaporeans know it.

 

KICK OUT THE INCUMBENT!

 

But alas Singaporeans only know how to whine and complain and when time to take action, their balls shrink. Well they deserve what the sow.

yeah will really drop.. hope that it will not drop until even the MNC all drop out... slowly vote them out is okay.. but not when you intend to vote them out in one go...

[Joseph22]

yeah, thats definitely is the pusher as well. Anyway, already said good bye to west side. And saying hello to north side haha... the rental part sure is tempting. Unless i am so lucky to afford another property, then the rental part make more sense

 

hehe.. you can gamble mah.. buy a condo and pray that your hse rental can pay for it lor... haha....

[Biang]

yupe, noted that too. And the thing is normally happend in this way

Seller Agent: COV is 30k. Any offer around 28k will deal straight away.

Me: (thought and discussed with wife) I will offer ..... (yet to finish my word)

Seller agent: Already got an offer at 30k

Me: (frustated) Okay, lets move on.

After sometime, my agent told me that this particular flat sold at 35k above valuation price.

 

This is not happend once, but everytime being outbidded and peoples are willing to pay higher than asking COV.

 

 

[Biang]

dont want lah, i have a weak heart. Dont dare to take this roller coaster ride (merlion style)

[Joseph22]

yupe, noted that too. And the thing is normally happend in this way

Seller Agent: COV is 30k. Any offer around 28k will deal straight away.

Me: (thought and discussed with wife) I will offer ..... (yet to finish my word)

Seller agent: Already got an offer at 30k

Me: (frustated) Okay, lets move on.

After sometime, my agent told me that this particular flat sold at 35k above valuation price.

 

This is not happend once, but everytime being outbidded and peoples are willing to pay higher than asking COV.

 

Wah.. that is very suay leh... what was your requirement?? actually hor.. that agent also a bit foolish... he should still take your bidding and tell owner... like that owner sure wavier one as time go by if they seriously want to sell... but of couse there are some seller that are just trying to test their luck lah... they are those that dont really want to sell one... so you weight and see lah..

[Joseph22]

dont want lah, i have a weak heart. Dont dare to take this roller coaster ride (merlion style)

hehe... yeah.. that is why i still staying in one hdb flat.. haha...