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Private Property: Good time now to buy or sell?


Kelfinity
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Bought my place during SARS and just sold it. About 60% profit.

Just bought another one for own stay.

The market is flooded with unprecedented levels of transactions. Supply over demand? Yet to see. Another crash? The world is too cautious to let it happen again. But it shld take a breather, I feel.

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my personal take is probably to sell now if the price is reasonable, not so far down the road we will probably see the GE coming( i have a feeling after that more "efficient" policies will be implemented to further "cool" down the market), also general interest rate could rise. .that time have to depend on your holding power leow.

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Govt may logically try and reduce the HDB pricing to make homes more affordable to the general voting public. I heard that one of the possible measures include making landed properties readily available to PRs.

 

Lastly bubble in 96, according to the seasoned folks, caused by affluent HK pple who snapped up local properties before the handover, despite the high interest rate environment, and it "was crazier than now". Hence factoring in the 14 year gap, inflation and present sentiment/interest rates, i'd say we have a full year (or two) to go before the bubble (if any) will burst.

 

We're still lagging in terms of landed property prices VS 1996. We are also in a low interest rate environment - in fact SIBOR and SOR have both fallen, housing loans at 1.1% onwards.

 

Despite seemingly draconian measures (to me) from the Chinese Govt (70% financing 1st prop, 50% financing 2nd prop and no financing for 3rd prop), i was told by Singaporeans who actually work there:

- the top 10% are the ones really snapping up properties

- these very affluent may own anywhere from 3 to 10 properties

- bank financing is not crucial for this echelon

 

The mega-rich go overseas and buy properties based on 0% to 50% financing. At 50% financing, any bank in SG will lend you any amount of money, cos the security more than covers the outstanding loan.

 

My personal take is that the bubble will truly form and peak when:

- effective home loan interest rates soar (probably 3% at least)

- China decouples (marked fall in China real estate valuations) and dragging down the world

 

I personally also think that in the land-scarce Singapore, property valuations are relatively low and set to appreciate in the long term. So any correction in the absence of the above two may prove to be a minor blip for more cash rich locals/foreigners to enter the market and sustain the valuations.

 

Lastly, let's not under-estimate the effect of the high rollers. It may not be common knowledge, but junket operators have not hit SG, as MBS had not opened until 2 days back. Junkets bring with them the high rollers. In Macau, these guys contributed to up to a 400% increase in property prices from 2002 to 2007, when Stanley Ho lost the monopoly of the gaming industry.

 

Our gambling tax is 60-70% of that of Macau's, and our property valuations by far lower. We do not have capital gains tax. If i were high roller or junket, certainly hard to miss SG. I believe that this may prove to be a major boost in local private property valuations. Net effect of MBS + RWS is that private property prices go mad.

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Opinions only:

 

Almost definitely sell. But depends on how much you can make, of course. If you're having a place that's still developing, I'd say to rent out and wait.

 

Hey bro, so what's your take on S'porean Singles getting a resale HDB?

I know many, whom are very unhappy because they can't buy new, hence have to get resale.

Now with the high "COV" being asked, i foresee it's more worthwhile to get a Pte Property?

Of course the above is applicable to singles who can't buy new flats..

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Govt may logically try and reduce the HDB pricing to make homes more affordable to the general voting public. I heard that one of the possible measures include making landed properties readily available to PRs.

 

Lastly bubble in 96, according to the seasoned folks, caused by affluent HK pple who snapped up local properties before the handover, despite the high interest rate environment, and it "was crazier than now". Hence factoring in the 14 year gap, inflation and present sentiment/interest rates, i'd say we have a full year (or two) to go before the bubble (if any) will burst.

 

We're still lagging in terms of landed property prices VS 1996. We are also in a low interest rate environment - in fact SIBOR and SOR have both fallen, housing loans at 1.1% onwards.

 

Despite seemingly draconian measures (to me) from the Chinese Govt (70% financing 1st prop, 50% financing 2nd prop and no financing for 3rd prop), i was told by Singaporeans who actually work there:

- the top 10% are the ones really snapping up properties

- these very affluent may own anywhere from 3 to 10 properties

- bank financing is not crucial for this echelon

 

The mega-rich go overseas and buy properties based on 0% to 50% financing. At 50% financing, any bank in SG will lend you any amount of money, cos the security more than covers the outstanding loan.

 

My personal take is that the bubble will truly form and peak when:

- effective home loan interest rates soar (probably 3% at least)

- China decouples (marked fall in China real estate valuations) and dragging down the world

 

I personally also think that in the land-scarce Singapore, property valuations are relatively low and set to appreciate in the long term. So any correction in the absence of the above two may prove to be a minor blip for more cash rich locals/foreigners to enter the market and sustain the valuations.

 

Lastly, let's not under-estimate the effect of the high rollers. It may not be common knowledge, but junket operators have not hit SG, as MBS had not opened until 2 days back. Junkets bring with them the high rollers. In Macau, these guys contributed to up to a 400% increase in property prices from 2002 to 2007, when Stanley Ho lost the monopoly of the gaming industry.

 

Our gambling tax is 60-70% of that of Macau's, and our property valuations by far lower. We do not have capital gains tax. If i were high roller or junket, certainly hard to miss SG. I believe that this may prove to be a major boost in local private property valuations. Net effect of MBS + RWS is that private property prices go mad.

 

Just to clarify a few points since I stumbled across this posting :

 

1) Statistics and historical trending are for understanding and not for determination. This is very misleading and common mistake for most. Events during all material times must be taken into account.

 

2) Disparity between real income increase vs property price appreciation has widened. In 1995, fresh grad gets $1700 per month, in 2009 $2300 per month. In 1995, Ardmore Park and Four Seasons commanded $1600 psf. In 2009, you do not see anything lower than $2900 psf. Figure out the percentile on real income. Absolute value wise its horrific [knife]

 

3) Land may be scarce? : that's where you are mistaken and that's what "they" want you to think. Singapore has a high rate of urban renewal comparable to Hong Kong. Old buildings either torn down quickly to build new ones or alteration done to enhance plot density and change of use for more built-in area. I have come across a barely 5 year old condo development sold en-bloc to make way for a newer condo (quite shocking to me actually :blink: )

 

4) High rollers will not come. Government effectively killed it with the Junket Regulatory Act. Two killers : No credit to be extended by casino and all VIPs' particulars are to be submitted to authorities before arrival even if stay is within 12 hours. Most of these guests would want anonymity when gaming and travel incognito because of money trail and personal identity. Such guests also rely heavily on credit terms extended by junkets and casino back to back as payments mostly are done via discreet means.

 

5) Government wants casinos to cultivate mass market patronage and avoid hot money migration and possible laundering activities. They are not experienced enough to know this will not work.

 

If you do have a property and has since appreciated, try to sell and realize gains within this year. 1% nominal interest increase has a multiplier effect on your effective mortgage terms and if you stagnate on yearly earnings, your discretionary and disposable income goes south. Sounds morbid.... just to feed a perception (greed).

 

I pity those who bought last 3 quarters. High mortgage. A repeat of 1998-1999 property owners who still barely break-even despite current prices. Truly negative equity region... I have personally come across portfolios of 312 properties in such conditions [bigcry]

 

Don't believe the hype reported in newspapers :excl: Tread carefully, defaults will be coming in by 2nd quarter 2011.

Edited by Smhomie
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Hey bro, so what's your take on S'porean Singles getting a resale HDB?

I know many, whom are very unhappy because they can't buy new, hence have to get resale.

Now with the high "COV" being asked, i foresee it's more worthwhile to get a Pte Property?

Of course the above is applicable to singles who can't buy new flats..

 

Wah. Hmmm. A cursory glance shows that studio apartments are ~450k at least. Only the pretty well off singles can think about getting one of these, so I'll guess that you're one of those.

 

Quite a few more things to consider in this case.

I assume that this is for personal use.

I also assume that you're 35 already, so can choose to buy HDB right now if you want to.

 

Private price fluctuations always much greater than HDB. Assuming that this is the peak, I'll still advice on getting an HDB first. Because when the market starts going down, you'll make much less paper loss and you'll still have some cash lying around. Who knows, maybe it's enough for you to get a studio then. Then you'll have a private + HDB, can choose which to stay in and rent out. Always a nice setup like this.

 

Unless you want to be able to use the facilities. But if you're single, I'll say toughen it out, the market will come down eventually.

 

By the way, I'm not familiar with the HDB regulations for singles buying. I know you have to get resale, but do you get any subsidy? If yes, bigger reason to get HDB first.

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so the current logic would be to wait ?

 

from the point of view of one who is still renting, have the capability to buy THAT landed property but think it's really too expensive to waste the money on it, i am in 2 minds whether to continuing waiting or plonk down the cash for that CT/SD and to hell with it ...

 

[knife]

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Buy any FREEHOLD property for long term gain.

 

Guys, don't worry about the market. It will not crash if the economy stays positive, crash is too strong a word. Consolidation is possible in the distant future but it's too far to think for now and in no time it will be the next property boom.

 

What sibor? You think the gov is stupid? The gov is smarter than most of us here and I'm not propagating for them. The key is, interested rates and property market (land supplies) are both controlled by them and they will balance up both factors to prevent a crash from happening. The gov got you covered.

 

The real money makers take advantage of corrections but even if you don't, can't or don't know how, holding on to your property in SG is a sure win way to make money (just a matter of more or less). That's why property is considered as an asset in SG but in other countries like US where hurricane can blow the heck of your wooden hut, it's not so.

 

Why do you think the foreigners are interested in snapping up properties in SG? Rich people are smart and smart people don't do things for nothing. If you think buying property in SG is just like buying stocks, then you are better off investing in stocks.

 

In some way, I agree with jilrx (singapore condo forum) that property will always go up in tandem with the economy after factoring in the inflation rate. However, I don't believe in not selling since it's the only way to take advantage of consolidations.

 

With that all said, watch for the next property boom instead of praying that the market would not crash. It's just a matter of time that SG property market will break through the ceilings and soar above the skies.

 

NOTE: I'M NOT TALKING ABOUT CHINA OR US OR EUROPE, THESE PLACES DON'T APPLY

Edited by Pmet
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I have some investment properties and I am very happy with the crazy price movements and wish that they would go higher . But my gut feel is that prices have gone overboard. If they continue rising till end of the year, the govt will definitely come in with additional measures that will bring it down to its knees. 1-2% interest rate increases is not going to dampen demand much and neither will there be noticeable defaults. But govt actions which will gradually have more bite will do the trick.

 

Long term outlook for properties is very good but short term it might be a bit too late to get in now. Then again prices may not fall much - maybe 10-15% max . Timing a purchase is going to be very tricky. Easy to get played out as seen in the last bear market where most were expecting prices to fall further but instead it made an aggressive recovery overnight catching most offguard. So property investments should be for long term. Look at the long term trend and not try to make extra from short term trends where you will likely find yourself stuck with no property or end up chasing and paying more than what you sold for.

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Wah. Hmmm. A cursory glance shows that studio apartments are ~450k at least. Only the pretty well off singles can think about getting one of these, so I'll guess that you're one of those.

 

Quite a few more things to consider in this case.

I assume that this is for personal use.

I also assume that you're 35 already, so can choose to buy HDB right now if you want to.

 

Private price fluctuations always much greater than HDB. Assuming that this is the peak, I'll still advice on getting an HDB first. Because when the market starts going down, you'll make much less paper loss and you'll still have some cash lying around. Who knows, maybe it's enough for you to get a studio then. Then you'll have a private + HDB, can choose which to stay in and rent out. Always a nice setup like this.

 

Unless you want to be able to use the facilities. But if you're single, I'll say toughen it out, the market will come down eventually.

 

By the way, I'm not familiar with the HDB regulations for singles buying. I know you have to get resale, but do you get any subsidy? If yes, bigger reason to get HDB first.

 

Hi Bro Chewbacca,

Wow, thanks for the great piece of advice, really appreciate it very much!

Not 35 as yet, but coming soon, that's why asking u for advice since u are already in the market...

Singles will get a grant of 11k if i am not mistaken

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Only if I have more than one ivestment property... I will surely sell one and hold the rest for long term appreciation. [laugh]

 

You may still regret selling that one property. Don't be too greedy. Slow and steady.

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You may still regret selling that one property. Don't be too greedy. Slow and steady.

 

 

bro, u seem really confident of the local pty mkt. how high can it really go? Why not sell some on the way up?

 

BTW, can anyone tell me which is a better option when it comes to selling? thru multiple agents or exclusive agent? Thanks.

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Hi Bro Chewbacca,

Wow, thanks for the great piece of advice, really appreciate it very much!

Not 35 as yet, but coming soon, that's why asking u for advice since u are already in the market...

Singles will get a grant of 11k if i am not mistaken

 

11k!?

 

Definitely go for the HDB first. The minute you purchase a private, you can kiss your subsidy goodbye. The only time you want to do this is when there's a very clear uptrend and you only have money for either HDB or private but not both. 11k, when you're purchasing something 200-450k is quite sizeable.

 

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Hmm, think for my case can only make 10% after factoring in all the comms, stamp duties, bank penalties. The place is in Balestier and just next to the developing Zhong Shan Park.

 

zhong shan park = tiong sua park [laugh][laugh][laugh]

 

if i were you, i would sell. but buy back right away in another area.

 

balestier is an area where the downside, in the event of a property slump, is higher in terms of % than other parts of the central region.

 

why not try some older developments, as in 5 to 10 years old, in novena or newton? i believe they should fit your budget. newton euro asia, gloucester mansion, thomson euro asia, birmingham mansion, etc even those older ones in river valley can also consider: euro asia, kim yam heights, etc Can even try river place, 99 years, well maintained and quite popular all along, mainly because of the strong expat rental market there. for very good locations, 99 years leasehold is not a big concern.

 

granted they may not look as nice as those glitzy new condos coming up everywhere, but as you know, buildings grow old and depreciate. location does not and nothing can take location away from you. and there is always the option of renovating the old apartment into something you really like.

 

not housing agent, just giving my 2c to the boss of mercedes fans

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bro, u seem really confident of the local pty mkt. how high can it really go? Why not sell some on the way up?

 

BTW, can anyone tell me which is a better option when it comes to selling? thru multiple agents or exclusive agent? Thanks.

 

across the board (averaging the entire island), it is nearing the previous peak in 2008

 

however there are still some good deals and what i think are undervalued gems out there that for some reason aren't played up as much. resale condo prices are still lagging behind the brand new launches by developers.

 

for some reason, many people don't feel good when paying another person for their house as it implies giving that person a bloody property windfall. those people feel better when they pay above the odds to the developer.

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