Private home prices to stay fairly flat

[Musicwhiz]

Oct 23, 2010
Private home prices to stay fairly flat

TWO months after the introduction of property market cooling measures, consultants are sure of one thing - Singapore private home prices are likely to be fairly flat until the end of the year.

The chief executive of consultancy PropNex, Mr Mohamed Ismail, expects the Urban Redevelopment Authority's price index to reach a plateau in the current fourth quarter, with another 2 per cent growth at most.

'(This is) simply because buyers are not coming in big numbers,' Mr Ismail told The Straits Times.

He said August's market cooling measures had weakened demand for mass market homes.

Buyers were becoming more price-sensitive, partially owing to tighter lending rules, he added.

Buyers are also carefully considering purchases given the restrictions on dual ownership, said director of research and advisory at Colliers International, Ms Tay Huey Ying.

'Buyers are really standing on the sidelines and watching,' Ms Tay said.

Another consultancy, Colliers, also expects the price index to increase by 2 per cent, at most, in the current quarter.

Consultants have differing views on the outlook for the popular mass market segment.

Mr Ismail expects prices of these homes to fall 5 per cent to 10 per cent in the first half of next year as developers respond to price-sensitive buyers.

However, Mr Ong Kah Seng, senior manager for Asia-Pacific research at Cushman & Wakefield, believes that prices are likely to remain flat.

'Buying interest will improve,' said Mr Ong, as buyers adjust to the measures by next year. However, better sentiment laced with some caution is likely to keep prices muted, he said.

Experts agree though that prices of high-end condominiums and landed properties will continue to rise, albeit at a slower pace.

High-end residential prices will rise 2 per cent to 3 per cent per quarter in the first half of next year, they believe.

HARSHA JETHNANI

[Ben]

I am thinking of investing in a private property and would like to get opinion from experts in this forum, such as Koh_52. If I go ahead, it will be my first dip into property investment as I don't own any property other than my HDB flat.

I realised that the cheapest FH property in Spore are those located in Geyland and its surrounding. For obvious reasons, we know why the price is low, but low price does not means value buy, just like in share prices. However, since it is a FH property, I reckon that it should be quite a safe bet, am I right? I actually wanted to buy one of these FH condo in D14 and rent it out. Other that the stigma of red light district, the location, which is a city fringe, is actually quite good.

Do you think it is a good investment to buy a unit in this area? What other factors that I need to consider?

Thank you.

[koh_52]

Ah Ha, u ask the right person..me the geylang king, relative of Torie and Wing Fong Devlopment, joking lar.

Buy an investment property in Dist 14, pro & con.
Pros:
1. Cheapest FH price ($PSF)in S'pore, hence giving good yield.
2. Good location, near City area, direct access from Nicoll highway.
3. Cash rich Chinaman and Malaysian, due to low price $PSF and a Chinatown environment, may be interested in the area, hence good chance of sellable.
4. Can use rental to pay for loan, hehe provided the next 3-4 yrs interest rate like now at all time low.
Cons:
1. Banks might not approve the loan, except Hong Leong or Singapore finance; small size loan might have chance.
2. Tenant quality might not be that good, try not to lease out to S'porean to avoid sub-lease.
3. Remember you need at least 30% cash hor, make sure u have sufficient cash in your pocket first.
4. Property investment is illiquid and need a longer term to realize capital gain

Last year this time, those who make a bet and bought a FH apt of 1300 sq ft at a price of a 5 room HDB flat ($550K) now laughing with profit of 20%. Why not ? good bargain paying a HDB flat price for a FH property, but now mostly likely you missed the boat liao.

Anyway, look like US is going all out the implement full scale QE's policy, plenty of paper money going to flood the market in this region. In order to hedge QE, best things to do is to invest in stocks and hard assets (property).

My 1 cent personal view.

[Ben]

Thank you Koh_52 san for your valuable advice, it is definitely worth a lot more than 1 cent to me.

You said I need to pay 30% cash, do u mean it must be all cash? I am okay to pay 30% using 10% cash and 20% CPF, but if it must be all cash, then don't need to explore further liao, money not enough. I just visited M bank yesterday and they told me I can use a combination of cash + CPF for the downpayment.

My intention is to buy and rent it out. I don't think my wife will agree to me staying there, just in case I got lost in one of the lorongs The asking rent in that area is about $2.5 to $3 psf, which means for a 1200 sqft apartment, the rent is about $3K to $3.6K. This is sufficient to service the monthly loan installment, assuming current interest rate. Do you think the asking rent is realistic? Do you know how difficult it is to rent out an apartment in that area?

[koh_52]

Ben san,
buying private property for uncompleted project and completed project are different paying mode:
Uncompleted:
1.Option to Purchase: Down-payment 5% of the purchase price Cash
2. Within 8 weeks from the date of the Option to purchase : 15% (Cash/CPF)
4. Stamp duty 3% of purchase price minus $5400.(Cash)
3. Thereafter progress payment according to work completed

Completed or Resale
1. Option to purchase : 1% of purchase price (cash)
2. Within 2 weeks exercise option : 4% (cash)
3. Within 10-12 week S&P completion : 95% (cash/cpf) or loan from bank subject to approval
4. Stamp duty same: 3% of purchase price less $5400

(assuming legal fee and valuation subsidy by the bank u took the loan from)
Loan amount must satisfy the DSR (debt service ratio) rule depending on your salary income and up to 70 yrs old.
If u earn say $3k per mth, loan period of 40 yrs , i think for 80% loan u can only loan upto aro $500k, if for 70% loan maybe the loan size will be aro $700...well check with the mortgage specialist from any banks or dat ex-wallstrait forumer dennis ng, sunday business times there is a writeout from him.....this joker his property knowledge quite good but abit boostful..ok off track liao....

Oops! where is my property kaki Serial Entrepreneur san...he must be huat big big oreli..using rental & re-mortgage to snowball his multiple properties, good calculated risk taker.

[pianist]

what about 虹桥区 in shanghai? is it a good buy?
is a SOHO type

[Ben]

Thank u Koh_52 san for your advice. I just ring up an agent to make enquiry. Wow, her attitude damn yaya papaya lei. I told her URA caveat prices are much lower than what she is asking for, she says URA prices outdated by 3 months liao. Her asking is the most accurate one and prices will go up very soon. What happen to garment cooling measures??

[Musicwhiz]

Thank u Koh_52 san for your advice. I just ring up an agent to make enquiry. Wow, her attitude damn yaya papaya lei. I told her URA caveat prices are much lower than what she is asking for, she says URA prices outdated by 3 months liao. Her asking is the most accurate one and prices will go up very soon. What happen to garment cooling measures??

Haha, don't believe everything you hear from property agents! Which agent will honestly tell you that prices are about to FALL? And remember you are a BUYER. They are probably telling the seller that! Remember agents are human beings too and they can play both sides very well in order to get their commission (which is their overriding concern, after all).

[Ben]

Haha, don't believe everything you hear from property agents! Which agent will honestly tell you that prices are about to FALL? And remember you are a BUYER. They are probably telling the seller that! Remember agents are human beings too and they can play both sides very well in order to get their commission (which is their overriding concern, after all).

Ya, I know they are trying to make it sound like prices is going to shoot for the moon. Anyway, just call another agent, that chap don't even bother to pick up my call. Business so good meh

[Jon-san]

Haha, don't believe everything you hear from property agents! Which agent will honestly tell you that prices are about to FALL? And remember you are a BUYER. They are probably telling the seller that! Remember agents are human beings too and they can play both sides very well in order to get their commission (which is their overriding concern, after all).

Ya, I know they are trying to make it sound like prices is going to shoot for the moon. Anyway, just call another agent, that chap don't even bother to pick up my call. Business so good meh

either business is too good or this agent no longer eligible coz new measures in place to curb number of housing agents... and yes, i agree with MW that agents will tell you everything that their seller wants to hear... coz theoretically, agents only earn commissions from sellers and not buyers (private properties, i mean). so it is in their interest to give you the most optimistic views of the markets in order to jack up selling prices... URA provides a more accurate outlook of REAL selling prices, + or - a little. it's up to you how urgently you want to spend that money. my 2cents worth as usual