Posted By flipper on 05 Mar 2010 06:09 PM
personally I don't think the prices would drop a lot. And hope that it doesn't drop a lot. else, my money would go down the drain.

In singapore, most residents are asset-rich, cash poor (or moderate..haha), so if prices drop a lot, the net worth of each individual would tumble.

This one we have to turned to Newton's 3rd law

Action and reaction forces.

Posted By DarthRevan on 05 Mar 2010 07:56 PM

Posted By flipper on 05 Mar 2010 06:09 PM
personally I don't think the prices would drop a lot. And hope that it doesn't drop a lot. else, my money would go down the drain.

In singapore, most residents are asset-rich, cash poor (or moderate..haha), so if prices drop a lot, the net worth of each individual would tumble.

Actually the prices tumble or not don't matter if the home owner don't sell. Unless they're speculators, then it's a different story. Most pple buy HDB flats to stay, at least majority of the population, not for investment.

In the first place, the flat you buy is already very ex. I wonder how much left in the cpf when one reach 50. Will it come to a point of time that a 99 year loeasehold flat will require 2-3 generation to pay?

all in all, it comes back to the same question: are you over-stretching your self financially for the roof over your head?

if you need to take 30 years to repay off your loan, then its extremely not prudent. If prices tumble, you are screwed. If prices keep on going up, you may be able to retire, but ur next generation would be super screwed.

either way, no ideal outcome. The most and best outcome is for prices to increase very slowly over time, just enough to cover inflation to preserve the asset value.

Posted By henny on 06 Mar 2010 01:53 PM

DarthRaven,

 

Please do not forget that your flat is bought with your CPF money, which is essentially your pension fund or retirement money.

 

Most people have $0 left in their CPF ordinary account upon retirement after taking a hefty 30 year housing loan from HDB.

 

If prices do tumble and your flat is worth little, it is as good as loosing your CPF retirement fund.

 

Even worse than losing money in the Lehman Brothers collapse whereby you are still compensated for your losses.

 

How are you going to live your retirement years without money, or do you intend to work till death?

 

From the way i read it, it is just another excuse for some unprofessional property agents trying to make their job easier.

It's like: "Mr. Lee, your block PR quotas full, not much choice u have so better accept this sg couple offer now". But hey thats a agent problem, your agent are suppose to source the best deal in the best interests for the party they represent. Therefore, make your agent work hard for their money not the other way.
At the end of the day, you have to decide whats the best offer around and not being too greedy to ask for more than what you suppose have.

In fact, things have became harder for PR's after all these measures and i doubt few singaporeans would complain about it.

Posted By DarthRevan on 07 Mar 2010 01:53 AM

Posted By henny on 06 Mar 2010 01:53 PM

DarthRaven,

 

Please do not forget that your flat is bought with your CPF money, which is essentially your pension fund or retirement money.

 

Most people have $0 left in their CPF ordinary account upon retirement after taking a hefty 30 year housing loan from HDB.

 

If prices do tumble and your flat is worth little, it is as good as loosing your CPF retirement fund.

 

Even worse than losing money in the Lehman Brothers collapse whereby you are still compensated for your losses.

 

How are you going to live your retirement years without money, or do you intend to work till death?

 

I do see where you are coming from.

If a person have $0 left in his/her CPF after 30 years, that only means that he/she is overcommitting. eg. buying a bigger flat than he should.

If price tumbles, it's only a "paper loss". The loss/profit is not realised if the flat is not sold.

After paying for my flat using cpf from me & wife, there's still a portion left for both of us. Over time, it will become a substantial amount if we continue working. There's still insurance/unit trusts/share dividends/savings to supplement our retirement funds. Of course all these are just plans, and we have to carry it through.

Paper loss (or gain) - as the term implies, it is nothing concrete and depends when you are assessing your property.
As long as you are not cashing out, it will not affect you, thus, don't stress (or toast) yourself over it.
Importantly, make sure it is 'home sweet home'.

I don't agree with letting PRs buy HDB flats easily, some of them might be buying to rent it out or to sell for profit after a short period..and then to return to their homeland. This will only serve to jack up the prices for our fellow countrymen.

With the sale and leaseback option, the price of flats would serve an important role as it determines your retirement fund.

i can foresee many taking up that option simply becos they would have NIL in their CPF for retirement. To really crush the bubble, they can set an upper limit as to the amount of withdrawal you can make from your CPF account to pay for the mortgage. That will really send prices tumbling down. But of cos, they will not do something so drastic.

PRs buy flats because of high rental rates. The rental keeps on rising until they are frustrated and decide to just plunge in to buy the flat, knowing well that prices would hold reasonably well. To them, buying makes more sense than renting. Restrict them from buying would mean more people buying HDB to rent out as rental rates keep rising.

HDB would never be able to crack down on illegal subletting as there are simply too many flats to go around. They need to employ tons of people to check, to chase after the owners, to listen to their appeals and sob story and then decide whether to fine then or to take back their flats...etc. This would eat up too much of their resources and at the end of the day, HDB will only be playing the bad guy and all they end up with is a poor financial performance. So who in the right mind in HDB would go all out to enforce? I am sure the answer is clear.

Posted By rosylooks on 08 Mar 2010 01:59 PM
Paper loss (or gain) - as the term implies, it is nothing concrete and depends when you are assessing your property.
As long as you are not cashing out, it will not affect you, thus, don't stress (or toast) yourself over it.
Importantly, make sure it is 'home sweet home'.

Posted By henny on 07 Mar 2010 10:34 AM

 

David Poh, senior group district director, PropNex, explained: "If a certain estate has reached its maximum PR quota, then Singaporeans can only choose to sell to Singaporeans. So they cannot be so choosy about it, because if a PR wants to buy their house, they cannot sell it to them. So they probably cannot ask for too high a price.

"Whereas if you are a PR living in an estate with a full PR quota, then you can choose to sell to both Singaporeans and PRs. In this case, you probably can ask for a slightly higher price."

 

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

 

 

 

Why is the Government coming up with a new policy favouring PRs (Permanent Residents) and putting Singaporeans at a disadvantage?
 

I am puzzled !!!

 

It's like your own government back stabbing you!

I guess this is to curb the resale market. sigh...

From http://lushhomemedia.com/2010/03/07/property-agents-call-for-curbs-on-subletting/,

Property agents call for curbs on subletting

The slew of new measures announced by the Government last Friday to curb speculative buying and selling of Housing Board flats does not address one issue – subletting – said property experts.

Under current rules, buyers of resale HDB flats can sublet the entire flat after three years if they did not take a government grant or HDB loan.

If they bought the flat with the grant and HDB loan, the minimum stay-in period is five years.

‘If you want to stop prices from rising and people from speculating, control the rental market too,’ said Mr Raymond Quah, president of Dennis Wee Properties.

The rental market indirectly influences the price of resale flats, said agents.

Home owners, realising that they can make money from rentals, are unlikely to sell their flats should they go on to buy private property.

This may lead to a dip in the supply of resale flats in the market, resulting in resale flat prices going up, said Mr Steven Tan, executive director of OrangeTee’s residential division.

There are also other factors that influence resale flat prices. One is the reselling of flats as soon as the minimum occupation period is up – one year for those who bought a resale flat without government subsidies or loans.

That is why the Government unveiled new rules last Friday to curb speculative buying and selling of public housing.

Among these new rules is one that states that the minimum occupation period for resale flats with and without subsidy is now three years.

The current rules on subletting were laid down in 2007 – after earlier rule changes in 2005 and 2003 – to allow more people to earn cash from leasing out their property.

Before 2003, owners were not allowed to rent out their flats unless they were working abroad, for example.

That year, HDB relaxed the rule to allow home owners to rent out their flats after 10 years if they had paid up the loan, and 15 years if they had not. In 2005, this was cut to five and 10 years respectively.

‘But the circumstances are different now – prices have spiked – and it is time to go back to the old rules,’ said Mr Quah.

There had been spikes in HDB resale prices in the three months following every rental rule change, suggesting there may be a connection between resale prices and subletting.

For instance, in the second quarter of 2003 following the February 2003 HDB rental rule change, resale prices went up by 2.13 per cent from first-quarter prices, according to HDB’s resale price index. This compared with only a 0.2 per cent increase in the same period a year ago.

More recently, after further easing of subletting rules in March 2007, the three months that followed saw resale prices jump 2.95 per cent. This compares with a 0.98 per cent increase during the same period in 2006.

Ms Jarina Shamsudeen, an agent with property firm PropNex, also felt the Government should revert to the old subletting rules to control property prices.

Based on anecdotal evidence, more Singaporeans approaching 35 years old are buying and subletting their flats for income. ‘Permanent residents are doing that too,’ she said.

Ms Jarina suggested that only Singaporeans posted overseas should be allowed to sublet their flats, and that private home owners should also be barred from subletting.

According to OrangeTee’s Mr Tan, tweaking subletting rules is necessary because ‘no matter how small the contributing factors are, they do add up’.

He was responding to a comment from National Development Minister Mah Bow Tan that only 3 per cent – or 20,460 flats – of eligible homes are sublet.

Mr Mah suggested that most flat owners are buying their flats for occupation and not rental.

‘If private property owners can buy HDB flats or keep their existing flat to earn money from rentals, the supply of resale HDB flats will dip,’ Mr Tan said. This will push up the prices of resale flats.

Illegal subletting may have indirectly contributed to rising HDB prices, said Knight Frank consultant Peter Ow.

It is known that some people lock up a room in the flat but lease out the entire unit, exploiting a loophole in the law.

‘This is not an issue of policy but policing,’ Mr Ow said.

Unless rules are enforced rigorously, having them will not deter people from doing things behind the backs of the authorities.

‘Even if there are rules to control subletting, people will still break them. So the rules – tighter or not – would not have much of an impact,’ said an ERA agent who did not want to be named.

But not all home owners who rent out their flats are speculators.

Retiree Christine Chan, 65, rents out two rooms in her five-room flat in Choa Chu Kang as this is her only source of income.

‘I cannot find employment anymore due to my age, so I rely on the $1,000 I make from renting out two rooms for retirement,’ she said.

‘I am not looking to make a quick buck. I feel that if the Government were to tighten the rules, it should make some exceptions.’

Source : Sunday Times – 7 Mar 2010

From http://lushhomemedia.com/2010/03/17/pr-quota-reached-in-some-hdb-areas/,

PR quota reached in some HDB areas

PERMANENT residents looking to buy an HDB flat may have to widen their search beyond popular areas as some parts of the island have already reached the limits set out in the new quota system.

PRs will not be able to buy flats in certain areas in Jurong West, Choa Chu Kang, Sembawang, Sengkang or Bukit Batok unless they are prepared to pay a premium over the asking price in the hope of enticing other PRs to sell.

The areas have long been popular with PRs but some neighbourhoods and blocks are at the limit outlined by the Singapore Permanent Resident (SPR) quota introduced earlier this month.

It sets a cap for PR households of 8 per cent in each block and 5 per cent within each neighbourhood to prevent enclaves of foreigners forming in the heartlands.

The HDB’s website showed that certain addresses in these areas have reached their PR quota. The addresses include Admiralty Drive and Canberra Road in Sembawang, Anchorvale Link in Sengkang, Choa Chu Kang Avenue 5, Bukit Batok East Avenue 3, Woodlands Avenue 6 and Jurong West Central 1.

A non-Malaysian PR, for example, is eligible to buy a flat from any seller in Clementi Avenue 6. But he can buy only from a fellow non-Malaysian PR at Bukit Batok East Avenue 3 because the quota for the proportion of non-Malaysian PRs in that area has already been reached.

In some blocks, the market is even tighter after throwing the ethnic quota into the mix. For example, if an Indian non-Malaysian PR wants to buy a unit at 313C Anchorvale Road, he would have to buy a unit from an Indian non-Malaysian PR seller to maintain the balance.

PRs comprise about 14 per cent of the population in HDB flats, according to 2009 figures.

Property experts say the quota system might cause greater disparities in prices, not just among neighbourhoods, but within a block as well.

The Ethnic Integration Policy – which sets ratios for ethnic groups to ensure a balanced mix in housing estates – has also had a similar effect.

PropNex chief executive Mohamed Ismail said that PRs selling HDB flats in neighbourhoods or blocks that have reached their quota will be able to quote a higher price when selling to other PRs.

‘Assuming PRs can afford it, they might be willing to pay for a flat that might be nearer to good schools or the MRT, or to get a good view. But if the quota is reached they won’t be able to buy unless they offer a higher price.’

However, this effect is not expected to be big enough to affect general market trends, said Chesterton Suntec International’s research and consultancy director, Mr Colin Tan. ‘Some people will be willing to pay more to live with those from their country, but how much more is very subjective,’ he said.

Property agents say being near others of the same nationality is not a major pull factor for PRs. Cost and distance from their workplace weigh more heavily.

PRs from Myanmar like Jurong West because they work in nearby shipyards, offices and factories while Filipinos choose Jurong West, Simei and Bukit Panjang for the relatively cheaper prices.

PRs from Malaysia and China are scattered islandwide. Their key considerations are mainly cost and proximity to work, transport options like an MRT station or bus interchange and facilities such as schools and supermarkets.

Mr Jeffrey Hong, HSR International Realtors’ executive director of agency, said some PRs might consider moving elsewhere if the asking price over valuation is too high.

The Jurong estate, for example, has seen a 15 per cent rise in HDB prices over the past nine months, he said.

Chinese PRs might move from Jurong to areas like Yishun and Woodlands while Indian PRs might move from Serangoon to nearby Hougang and Lorong Ah Soo if quotas were soon to be reached.

‘These places are less pricey and also not that far from their ideal location,’ Mr Hong said.

Source : Straits Times – 17 Mar 2010

Mass market home prices have surpassed the previous 2008 peak.

But because home loan interest rates remain at an all-time low, these homes are still seen as affordable, property consultancy DTZ said.

Its head of South-east Asia research, Ms Chua Chor Hoon, said its mass market affordability index shows that such homes at the end of the first quarter of this year were more affordable, compared with the period between the first quarter of 2006 and the third quarter of 2008.

But this does not mean that home buyers in this segment – which includes public flat owners upgrading to private property – will continue to find such homes affordable for long, if prices or interest rates move up.

It is only a matter of time before the low interest rates head north, said DTZ.

The questions are when that will happen and how much the rise will be, said Mr Alvin Liew, an economist with Standard Chartered Bank.

He said that the three-month Singapore Interbank Offered Rate – now at 0.65 per cent – is expected to be ‘very benign in 2010′.

Many home loans are pegged to Sibor, which is the rate at which banks lend to one another.

‘We see rates picking up slightly by 5 to 10 basis points from the first half of 2011, in anticipation of the United States Federal Reserve hiking its rates,’ he said.

‘By the tail-end of 2011, it could rise to 0.8 per cent. The year 2012 is when we expect to see a rapid hike.’

The three-month Sibor rate will likely rise to 3 per cent that year, Mr Liew said.

Ms Chua said mass market housing could become generally less affordable if the interest rate rises by one percentage point with no change in prices.

This will be the case too if prices rise by 5 per cent with a 0.5 percentage point increase in interest rates, or if prices rise by more than 10 per cent this year, she said.

For the first quarter of this year, the Urban Redevelopment Authority’s flash estimate showed that private home prices have continued their climb, moving up 5.1 per cent, compared with 7.4 per cent in the previous quarter.

Ms Chua advised potential buyers to look beyond the current interest rates to assess their ability to repay the monthly mortgage payments over the next 20 to 30 years, as interest rates will go up.

‘Buyers also have to be cautious as there’s still a lot of economic uncertainty now, unlike in 2005 and 2006, when the outlook was very clear.

‘If the recovery is not as strong as expected, any anticipated capital appreciation may not materialise,’ she added.

Mr Justin Chiu, executive director of Hong Kong’s Cheung Kong (Holdings), told The Sunday Times that interest rates are one key risk factor here.

‘If the rates rise, they may rise very quickly,’ he said.

He was in town for the launch of his company’s well-received West Coast project, The Vision.

Buyers should make sure they can still afford to pay their loans even if interest rates go up to 3 per cent to 4 per cent, he said. If not, they could be overstretched.

Source: Sunday Times, 4 Apr 2010