Is sg property cheap now?

[Scg8866t]

I think own use property is generally prepaid expense. Value of pre-paid expense going up means cost of living going up, and a comparable switch to other dwelling may not be beneficial unless one switches between pte -HDB L99. Expense is actually still expense, just that the annual rate is locked in when you purchase the HDB.

https://www.valuebuddies.com/thread-4574...#pid149062

Probably only FH can be considered Asset per se, though I know many argue on the gazette possibility.

There is a difference between HDB 99 years and Private Condo 99 years. 

For Private Condo, you own the strata title which means u own a percentage of the land the condo is on. This also means any private entitle can come in to enbloc. Not only that, anyone in this world can buy ur unit(more demand). Because it has amenities and ample carpark, expats would prefer renting a condo unit. There is no rental restriction and soon the rental tenure may get shortened even more from the existing 3 months(air bnb).

For HDB, you dont own any strata title, means you dont own the land underneath(hence its cheaper). Which means no private entity can enbloc ur area and even if gov comes in the sers, the common area will not be included and the premium will very likely be thin. For HDB only PR and Sgreans can buy(much less demand), there is also a quota for race when you rent(numerous restrictions). HDB is subsidies affordable housing, gov will do all they can to keep the price down and affordable(decoupled from private market)

If we are talking about the diff kinds of condo rental assets. My view is freehold near mrt is better than leasehold near mrt is better than freehold far from mrt is better than leasehold far from mrt. Ultimately for condo, if your location is good, maintenance fee will creep up after 20 years to an amount that is hard to swallow, then developers will come in to enbloc. So depreciation of land value for a private condo is not a big problem if its an investment asset.

Own view

[specuvestor]

Just to clarify my context is own-use property. Capital value means little in terms of actual expense, it is more the location, convenience etc that is more important. You "make money" in one property just to pay heightened expense in another property (assuming similar). If one is thinking of selling, enbloc etc there is an investment component in the decision making. It's like some people buying (say similar) sedans using the residual value of their older car as deposit and constantly taking more loans and feeling good about it.

To paraphrase Buffett if we consume burgers we rather burger price stay low, unless we sell burgers for a living. Property/ land is a factor of production which adds to the costing of the goods and service. That's the problem when you have asset inflation (post 2009) but not corresponding real economic output increase.

[corydorus]

It is unwise to consider the home we live in as an asset.

It might be useful to know its market value, just for knowledge.
In any circumstance, we need shelter. Selling our home for a gain will
very likely cost a similar amount to replace.

Unless the replacement home is in an area that has low values.
It would also very likely have poorer amenities and further away from
central areas. School ( if there are kids ) will be further away too.


Or a smaller home in the same area. Which means discarding furnishings and
coping with a smaller home.

I consider a home to be a personal sanctuary. Having the home being sold
as en bloc or SERS can be a bonus but the process of getting a replacement can be
very tiring, with anxieties. It may also come at a time when we are much older and
loans may not be so easy.

An asset is an asset. Whether is a personal sanctuary or not. Not one expecting it to be sold because it is classified as such.
Is just a measure of what you have.

For example, if you just need a lifestyle of 5K monthly worth property, having a home that can command a rental value say 10K is expensive and do not makes financial sense. Having it as an asset gives you a good view on how to manage all your asset. It doesn't mean you have to touch it. Some may says there is personal attachment to the property of 10K worth. Then we need to be aware we are "spending" 10k monthly for it. Is perfectly fine that we can afford it. Is just an irreplaceable asset for those who can afford but nevertheless an asset.

[lilvestor]

It is unwise to consider the home we live in as an asset.

It might be useful to know its market value, just for knowledge.
In any circumstance, we need shelter. Selling our home for a gain will
very likely cost a similar amount to replace.

Unless the replacement home is in an area that has low values.
It would also very likely have poorer amenities and further away from
central areas. School ( if there are kids ) will be further away too.


Or a smaller home in the same area. Which means discarding furnishings and
coping with a smaller home.

I consider a home to be a personal sanctuary. Having the home being sold
as en bloc or SERS can be a bonus but the process of getting a replacement can be
very tiring, with anxieties. It may also come at a time when we are much older and
loans may not be so easy.

An asset is an asset. Whether is a personal sanctuary or not. Not one expecting it to be sold because it is classified as such.
Is just a measure of what you have.

For example, if you just need a lifestyle of 5K monthly worth property, having a home that can command a rental value say 10K is expensive and do not makes financial sense. Having it as an asset gives you a good view on how to manage all your asset. It doesn't mean you have to touch it. Some may says there is personal attachment to the property of 10K worth. Then we need to be aware we are "spending" 10k monthly for it. Is perfectly fine that we can afford it. Is just an irreplaceable asset for those who can afford but nevertheless an asset.

Yep this concept is known as imputed rent in Economics, whether people realise it or not there is a cost attached to staying in your own owner occupied home and that cost is the market rent.

[specuvestor]

It is unwise to consider the home we live in as an asset.

It might be useful to know its market value, just for knowledge.
In any circumstance, we need shelter. Selling our home for a gain will
very likely cost a similar amount to replace.

Unless the replacement home is in an area that has low values.
It would also very likely have poorer amenities and further away from
central areas. School ( if there are kids ) will be further away too.


Or a smaller home in the same area. Which means discarding furnishings and
coping with a smaller home.

I consider a home to be a personal sanctuary. Having the home being sold
as en bloc or SERS can be a bonus but the process of getting a replacement can be
very tiring, with anxieties. It may also come at a time when we are much older and
loans may not be so easy.

An asset is an asset. Whether is a personal sanctuary or not. Not one expecting it to be sold because it is classified as such.
Is just a measure of what you have.

For example, if you just need a lifestyle of 5K monthly worth property, having a home that can command a rental value say 10K is expensive and do not makes financial sense. Having it as an asset gives you a good view on how to manage all your asset. It doesn't mean you have to touch it. Some may says there is personal attachment to the property of 10K worth. Then we need to be aware we are "spending" 10k monthly for it. Is perfectly fine that we can afford it. Is just an irreplaceable asset for those who can afford but nevertheless an asset.

Actually I’ve mentioned this in other posts. An asset can be just an accounting asset like say diamond or car or renovation. The concept is what we call expense capitalisation and spread over a period of time rather than one off expense, which some dodgy companies made full use of including Worldcom. Usually it’s sunk cost and not meant to be profitable asset per se. Appreciation is incidental if it happens.

Another type of “asset” is price appreciation like gold (generally) or say bitcoin. It’s value is only realised when it’s sold. That’s what Buffett means when he compared gold to US crop land

The assets that value investors look for are cash generative assets, your standard cash flow assets. Suffice to say that even the first 2 types can become cash flow assets for example using cars for sales job rather than leisure, or rental income for investment properties

So when we look at Asset-Business-Structure we have to identify what “asset” we are talking about: an oil field that is probable or possible reserve? Bre-X gold? Land bank in oil sand Canada? Railway or power station land that is valuable but actually public goods? Huge cash with equally high debt but net cash? Good will asset that represent little moat except the premium management paid? Etc etc

[karlmarx]

If a study of an individual's balance sheet can be conceptualised as a study of a company's balance sheet, then everything that an individual owns -- regardless of whether it is income-producing and/or held-for-trading, is an asset on his/her balance sheet.

While a house does not produce income, it is necessary for the survival of an individual, thereby allowing him/her to produce income. Just as a manufacturing business cannot only have machines and operate them without a factory floor. So the next question is, how much 'factory floor' does an individual need?

If the individual allocates a higher proportion of assets to, say housing (than is 'necessary'), then he'she will have a lower proportion of assets available for more of the 'income-producing' assets, such as production lines and so on. For an individual, this could mean having more stocks and bonds which generate a return. The effect of having a higher proportion of housing on your balance sheet is a lower ROA. It is the same if a company spends too much on a factory which it does not utilize efficiently.

Of course, things are seldom so straight forward. A high-earning professional may justify his need for higher housing spending; that the (in)tangible qualities of the more expensive house helps to maintain/motivate their high earning. They may be able to earn a (more than) satisfactory ROA in spite of a higher housing spending.

Just to be clear, I am not promoting the adoption of such parochial views of the individual. But if wealth accumulation is your thing, you might want to think of the kind of company you want to model after. The one that shows book value gain on revaluation of assets, but does not monetise its valuation, or the one that grows both book value and dividend payouts.

[Porkbelly]

I learn new perspectives each time...

Having categorised the home as an asset in
the realm of accounting, and able to add to cost..
in what other instances would it be useful?
 

[Temperament]

Is my residence an asset?

Of course it is.

It is usually the most valuable asset i have.

Have U heard or come across someone is so sure of his success in starting his business that he mortgages his million dollars residence to the banks.

Nah, i live in HDB.

[Scg8866t]

Even the asset u live in can be counted as an income producing asset if u want it to be. Private more so. You can rent out one of your rooms or even draw out a secured overdraft from ur house to invest. Local residential asset is a niche that is not covered in reits or stocks on sgx. It has lower vacancy rate compared to office or retail and is currently “affordable”(median asset price to income ratio) due to gov cooling measures and waiver of gst.

Own view

[Temperament]

Alamak!

My HDB's spare rooms from 1 to 2 never have been rent out even once, after 12 years then we have our only son.

Relatives and cousins from China can short stay FOC lol.

i think in Singapore many families can afford to do this compare to HK.

We are indeed "Blessed" in a way.