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