View Full Version : Why new launches attract more buying compared to resale
Secretariat
18-10-12, 16:46
Let's look at the possible rationale behind this behavior, and then attempt to understand the implication of CM6.
(This essay explores the subject in simplistic term, for a forum discussion. It assumes that the current property price rally is genuine, and the cause of it is outside the scope)
When looking all the CMs before CM6, the real test came in CM4, specifically the additional stamp duty liability of (16% if owner sells one year after purchase. 12% after 2 years. 8% after 3 years and 4% after 4 years).
CM4 came in January 2011.
In order to mitigate this liability risk, a rationale investor will then find the way to pass this risk to another party, failure of which, he will analyze the potential downside risk. The situation in which the risk becoming real is mainly should he loses his source of income.
Two ways where the risk is mitigated:
- CM4 effectively eliminated flippers. Every investor buying a property post-CM4 buys with a clear intention to hold until at least the 5th year, to avoid the SSD liability. But how to minimize the purchase cash-flow requirement. Here he finds it in the payment schedule of new launches, which spreads typically over 4 or 5 years until the construction TOP,
- And what if he loses his source of income within this SSD liability period? The outcome depends on the project he invested on. If the project has been sold-out, then he can be more assured that every investor there is undergoing the locked-in, and more likely than not there is a waiting-list as well. So his risk is more or less the SSD liability, and not a fire-sale devaluation of his purchase price.
It is not the same level of risk when we look at resale:
- SSD similarly applied when he buys a resale, plus a 100% drawdown of his housing loan, if any,
- in the situation that he loses his source of income, he faces a very real risk of fire-sale, as there are also other units being put on sale.
Now, does the latest CM6 changes the attractiveness of buying new launches over resale? Obviously it does, because a larger upfront sum is required for an investment.
Investors with capacity to come up with 60% without financing in particularly will now weigh the risk of buying new launches viz-a-viz resale. But what kind of resale will be attractive. I will venture that resale of projects that just received the TOPs being the top draw.
When looking at it this way, CM6 has a beneficial effect to the lifespan of the current price rally. It allows projects that have been launched in 2009-10, the investors then a greater chance of realizing the paper-gains (as prices have since gone up). An opportunity for the market to consolidate, so to speak.
Whether MAS intended CM6 to have this effect is not too important for us to think about.
CM or no CM, singaporeans love new, that's the reason why resale trades at a 20-25% discount as compared to new sale.
Secretariat
18-10-12, 19:30
CM or no CM, singaporeans love new, that's the reason why resale trades at a 20-25% discount as compared to new sale.
Love new?
A real new house, or a virtual house? :doh:
For those who can only get 60% loan, buy new BUC only need to pay 20% + stamp duty. The other 10 + 10% will only pay later depending on how fast the construction is.
At least like that cash flow not so tight compared to resale, instant 40% gone. :scared-3:
agree with above reasoning for purchases of new launches.
the opposite is also true - less competition for subsales and resales.
in fact the asking for my friends purchases of subsales actually moved down post cm cf pre cm.
The remaining 10+10% is only over a span of at most a couple of years ... very often it is much less than that.
I am wondering how a person who buys a $1m property cannot raise $400k all at once but can raise $200k initially followed by another $200k over the next year or so. Surely he would already have in hand the $200k, otherwise it would be dicy to make a property purchase.
If he already has the $200k, how much interest can he gain by leaving it in the bank? Would he instead use the $200k to punt the stock market? Would that be prudent, knowing that this money would be called upon soon by the developer.
I am really curious how it can be beneficial.
Well, I have been saying all along that CM4 has the unintended/intended effected of pushing property buyers to favour new launch vs resale so that they can minimize cash outlay. All those lower LTVs CMs etc also have additionally aggravated such effects. No wonder people are willing to pay $1500 psf for new launch like in Bedok but yet unwilling to pay $1100 psf for resale nearby (and that is >36% premium over resale)!
Let's look at the possible rationale behind this behavior, and then attempt to understand the implication of CM6.
(This essay explores the subject in simplistic term, for a forum discussion. It assumes that the current property price rally is genuine, and the cause of it is outside the scope)
When looking all the CMs before CM6, the real test came in CM4, specifically the additional stamp duty liability of (16% if owner sells one year after purchase. 12% after 2 years. 8% after 3 years and 4% after 4 years).
CM4 came in January 2011.
In order to mitigate this liability risk, a rationale investor will then find the way to pass this risk to another party, failure of which, he will analyze the potential downside risk. The situation in which the risk becoming real is mainly should he loses his source of income.
Two ways where the risk is mitigated:
- CM4 effectively eliminated flippers. Every investor buying a property post-CM4 buys with a clear intention to hold until at least the 5th year, to avoid the SSD liability. But how to minimize the purchase cash-flow requirement. Here he finds it in the payment schedule of new launches, which spreads typically over 4 or 5 years until the construction TOP,
- And what if he loses his source of income within this SSD liability period? The outcome depends on the project he invested on. If the project has been sold-out, then he can be more assured that every investor there is undergoing the locked-in, and more likely than not there is a waiting-list as well. So his risk is more or less the SSD liability, and not a fire-sale devaluation of his purchase price.
It is not the same level of risk when we look at resale:
- SSD similarly applied when he buys a resale, plus a 100% drawdown of his housing loan, if any,
- in the situation that he loses his source of income, he faces a very real risk of fire-sale, as there are also other units being put on sale.
Now, does the latest CM6 changes the attractiveness of buying new launches over resale? Obviously it does, because a larger upfront sum is required for an investment.
Investors with capacity to come up with 60% without financing in particularly will now weigh the risk of buying new launches viz-a-viz resale. But what kind of resale will be attractive. I will venture that resale of projects that just received the TOPs being the top draw.
When looking at it this way, CM6 has a beneficial effect to the lifespan of the current price rally. It allows projects that have been launched in 2009-10, the investors then a greater chance of realizing the paper-gains (as prices have since gone up). An opportunity for the market to consolidate, so to speak.
Whether MAS intended CM6 to have this effect is not too important for us to think about.
My personal opinion is that it has little to do with CM4.
I believe there is some truth to what @kane said.... ie. people like new.
In addition, people are taken in by the whole marketing ploy by the developers. Attractive agents, designer decor showflats, ready tie-up with financing, pre-launch "discounts".... etc.
Basically anybody who pays 20-25% (even 36%!) premium over a resale cannot be doing it for financial reasons... it simply cannot be. It does not make sense if that person owns a calculator. The reason has to be something else... I suspect a psychological one.
How many people would buy regardless of new launch or resale if he does not have the 40% at the point of purchase? Yes .. there will be some... but I am very sure it is not the case for the majority. The "benefit" if any is very minimal.
Well, I talked to many of these new launch buyers, and their reason is: "Only need to come out with 20% only without taking any loan, the rest can wait 3-4 years! By then SSD almost over and can flip for profit!" :doh:
So that is why then I understand that by buying new launch:
1) they are not really affected by SSD
2) they are not affected by lower LTV (since even if LTV is 40%, they still pay 20% upfront only right? The rest can wait 3-4 years! However, resale property buyers are immediately hit as they need to come up with 60% upfront!)
3) they are not affected by the max 35 years tenure loan regulation and 30 years LTV 40% regulation (i.e. CM6 has no effect on new launch buyers!)
So CM3-CM6 all no effect on new launch buyers. Is it any wonder that they die die must buy new launch?
If their intention is to flip for a profit, they won't care how much they pay as long as they sell at a higher price to the next "greater fool" they are "hoping" to sell to right? :scared-2:
This is no difference from many stock buyers. They only buy when the stock prices are very high because they thought stock prices high means more demand and more buyers to sell to mah?! :banghead:
My personal opinion is that it has little to do with CM4.
I believe there is some truth to what @kane said.... ie. people like new.
In addition, people are taken in by the whole marketing ploy by the developers. Attractive agents, designer decor showflats, ready tie-up with financing, pre-launch "discounts".... etc.
Basically anybody who pays 20-25% (even 36%!) premium over a resale cannot be doing it for financial reasons... the CM4 does not make it very much more onerous.
How many people would buy regardless of new launch or resale if he does not have the 40% at the point of purchase? Yes .. there will be some... but I am very sure it is not the case for the majority. The "benefit" if any is very minimal.
Based on the normal progress payment of a new launch, the 40% comes up pretty fast... I don't think it is 3-5 years
http://www.ura.gov.sg/lad/HBG/progressPayments.htm#standard
But I am still puzzled with people paying about $1000++psf for new units that have not one but two large balconies withi area larger than living room and two large airconditioned ledges which only requires one. All these people bought with eyes open. They will feel cheated when they move in two years later.:beats-me-man:
For sure, the first 10% of the 10+10% drawdown will happen very fast... less than a year bcoz that is the completion of the foundation. the next 10% will vary but definitely not 3-5years.
How to flip like that?
The tendency to favour new over resale has already been them all along. The CM merely cemented that preference even further. In 2009, during the low, resale was going for 25-30% discount within the same vicinity. Fast forward a few years later. The gulf still persist. But there's probably more new sale as compared to resale than before.
Many are fooled by designer decor of showflat. Dazzled by the showmanship of the sales team.
At showflats, periodic announcements are made to keep the potential buyers abreast of the available and sold units. This creates an atmosphere "desirability" and also "anxiety".
I was at ECO and was discussing one particular unit with an agent when over the loudspeakers we heard it announced that it was sold. The agent behaved like it was like such a great pity and loss... if I had been very serious about buying I would have felt great remorse and anxious to grab the next one that I am eyeing
But I am still puzzled with people paying about $1000++psf for new units that have not one but two large balconies withi area larger than living room and two large airconditioned ledges which only requires one. All these people bought with eyes open. They will feel cheated when they move in two years later.:beats-me-man:
All else being equal, new should always command a premium over old. This applies to everything other than antiques.
But at the quantum we are talking about in Singapore, 25-30% premium is just plain silly.
IMHO.
Many are fooled by designer decor of showflat. Dazzled by the showmanship of the sales team.
At showflats, periodic announcements are made to keep the potential buyers abreast of the available and sold units. This creates an atmosphere "desirability" and also "anxiety".
I was at ECO and was discussing one particular unit with an agent when over the loudspeakers we heard it announced that it was sold. The agent behaved like it was like such a great pity and loss... if I had been very serious about buying I would have felt great remorse and anxious to grab the next one that I am eyeing
Yes, agree. The psychological impact is immense when one by one announcements are made for each successful purchase.
This has been used in time share schemes, in USA the good thing is that buyers can return within a few weeks without penalty if buyers change their minds
One of those ridiculous "discounts" at ECO was the "proximity" discount of 1%. Even if you stayed at Hougang it was considered within proximity... but as sales heated up they slowly removed it.
Basically ,this is a ploy. It was priced lower under the guise of a "proximity discount" but since sales was was good they decided to remove it. But before they removed it, they informed potential buyers that they are going to do so causing more anxiety to make their purchases.
Had the sales gone the other way, the "proximity discount" could have been increased to 2%.
Basically... we as buyers have ourselves to blame for chasing up the prices.
No they won't feel cheated because many don't have intention of moving in anyway! So they don't care! :scared-2:
But I am still puzzled with people paying about $1000++psf for new units that have not one but two large balconies withi area larger than living room and two large airconditioned ledges which only requires one. All these people bought with eyes open. They will feel cheated when they move in two years later.:beats-me-man:
The tendency to favour new over resale has already been them all along. The CM merely cemented that preference even further.
Clearly.
CMs do favor new sales. Your 1mil example, what if this buyer has only 350k? For resale he cannot do it at all, for new sale he can. Even if someone does have 400k, chances are they are on other assets, buying new sale gives you time to optimize the timing to unwind your other positions. SSD clearly benefits new sales, as they are largely not applicable when it TOPs. Plus, look, buyers are generally myopic, sentimental, and herd following. Developer's marketing tactics work very well in a crowd.
The developers are making good use of Singaporeans' kiasu attitude:
- If everyone is talking about it, that must be the right thing to do.
- If I am not taking action now, I am sure that I will be the one to lose out.
- After I buy, I can come back, reinforce this is the right thing to do, and compliment each other on the great thing we have done.
Clearly.
CMs do favor new sales. Your 1mil example, what if this buyer has only 350k? For resale he cannot do it at all, for new sale he can. Even if someone does have 400k, chances are they are on other assets, buying new sale gives you time to optimize the timing to unwind your other positions. SSD clearly benefits new sales, as they are largely not applicable when it TOPs. Plus, look, buyers are generally myopic, sentimental, and herd following. Developer's marketing tactics work very well in a crowd.
i always find those people who need the extra year to amass the next 20% is walking on thin ice. especially when we're talking about sums in the few hundreds of thousand.
yes, the other people grab i better grab euphoria tends to kick in when you're in one of those crowded showroom. the best test is just to walk out of the showroom, breathe some fresh air, take in some sun, look around. do you like what you see. if you do, then go back in and get ready to do battle. if not, get in the car, drive and don't look back.
i always find those people who need the extra year to amass the next 20% is walking on thin ice. especially when we're talking about sums in the few hundreds of thousand.
yes, the other people grab i better grab euphoria tends to kick in when you're in one of those crowded showroom. the best test is just to walk out of the showroom, breathe some fresh air, take in some sun, look around. do you like what you see. if you do, then go back in and get ready to do battle. if not, get in the car, drive and don't look back.
Bro, there will always be such people. Even in the purchase of cars, u will be surprised at the salaries of some of the drivers who bot BM or Merc. Some are just staying afloat after paying the installments.
Coming back to the housing thingy. Those who were in were in that state of position in 2007 and bot. Guess wat, they were rewarded. The same group of people, transport them back in time to 1996, in 1998, they were forced to sell the house.
So, it is flip of the coin for them. But if the economy is flattish and they still have a job w 5% increase per year. 4 years late, they will be ok. So they are taking a so-called calculated risk and they have faith in their capabilities. This people are ok.
On the hind sight, everything seems easy. Look forward to the future, you need capabilities, knowledge and understanding of your own salary potential. 80% of us are employees. I always fall back to the 80-20 rule.
That's why most of the time, things are not what it seems if u look deeply enough.
Lastly, please understand the human behaviour. If you can understand this portion, trust me, you will start making money. You become the House. And remember, the House always wins. I hope u understand what I am trying to tell u.
Yup i know. Sometimes i just marvel at these people's decisions.
Yup i know. Sometimes i just marvel at these people's decisions.
Bro, I was thinking like this in my early 30s. Then I wondered to myself, why was I wondering and telling myself they are crazy? What do I gain? What about myself, what have I done for myself?
Learn human nature and behaviour. The study of this takes a long time. Learn how they behave. You have already observed their buying behavior, now u just need to put it into practice for your future investment plan.
Another point, the key to investments for u is very simple(bro, if u think I have crossed the line, let me know. I will stop, ok). Learn to make big bucks. Spend more time reading books on eq, a must read is "how to win friends and influence people" by Dale Carnegie. And lastly, a person who can save say 300k a year, guess what is his investment strategy vs a person who gets paid 200k. Notice the diff - saves vs earns.
Sometimes I really feel I share too much.... But I feel u have chemistry w me.
And lastly bro, this is the last time I talk so cheem openly ok. And please, I don't need people to boost my ego in this forum. Trust me, I don't need it in both the forum and the real world.
:ashamed1:
Secretariat
19-10-12, 07:04
Let's illustrate with the case of an investor.
A simplistic scenario, post-CM6.
In a nice area, Project A getting TOP in Dec 2012, 1000 sqf condo units being offered in resale market at $1.4 mil each. Nearby there is Project B, new launch in Dec 2012, TOP in late 2017, 1000 sqf condo unit at indicative $1.7 mil each.
Investor has to come up with 60% to buy any one of these. His intention is to renovate the unit to be purchased, atas finishing & furniture, budget for ID $100,000.
Project A prospective gross annual rental $60,000. Five years potentially $300,000. Project B's payment schedule, 20% year 1, 20% year 2, 20% year 3.
Which one do you think a rational investor will buy?
Let's illustrate with the case of an investor.
A simplistic scenario, post-CM6.
In a nice area, Project A getting TOP in Dec 2012, 1000 sqf condo units being offered in resale market at $1.4 mil each. Nearby there is Project B, new launch in Dec 2012, TOP in late 2017, 1000 sqf condo unit at indicative $1.7 mil each.
Investor has to come up with 60% to buy any one of these. His intention is to renovate the unit to be purchased, atas finishing & furniture, budget for ID $100,000.
Project A prospective gross annual rental $60,000. Five years potentially $300,000. Project B's payment schedule, 20% year 1, 20% year 2, 20% year 3.
Which one do you think a rational investor will buy?
all things being equal, good location, both equally good upside, etc etc ...
it all boils down to how much liquid cash the investor has. the investor with the 60% liquid funds, either in bank or from recent sale, will go for project A cos immediate rental yield soon of 4.2%, translates into 7% (cos leverage) - 1% admin - eg 1.2% interest = 4.8% effective yield on cash invested, excluding capital appreciation to at least project B's 1.7mil in 3 years. also can look forward to top effect soon. in addition, in 3 years time, just before project B's top, can even consider swap portfolio to project B!
unless this investor can find a better yield elsewhere, like some of forummers here who are experts in bonds or other instruments, then this may be a useful investment.
otherwise the cash-strapped <60% investor will go for project B, which allows his other funds to come in over the next few years.
practically the investor will only come up with 40%, why pay 60%, and have a shorter loan tenure. this way the numbers will be even better. 4.2% = 10.5% leverage - 1% admin - 1.2% interest = 8.3% rental yield.
Bro, I was thinking like this in my early 30s. Then I wondered to myself, why was I wondering and telling myself they are crazy? What do I gain? What about myself, what have I done for myself?
Learn human nature and behaviour. The study of this takes a long time. Learn how they behave. You have already observed their buying behavior, now u just need to put it into practice for your future investment plan.
Another point, the key to investments for u is very simple(bro, if u think I have crossed the line, let me know. I will stop, ok). Learn to make big bucks. Spend more time reading books on eq, a must read is "how to win friends and influence people" by Dale Carnegie. And lastly, a person who can save say 300k a year, guess what is his investment strategy vs a person who gets paid 200k. Notice the diff - saves vs earns.
Sometimes I really feel I share too much.... But I feel u have chemistry w me.
And lastly bro, this is the last time I talk so cheem openly ok. And please, I don't need people to boost my ego in this forum. Trust me, I don't need it in both the forum and the real world.
:ashamed1:
No worries. It's some useful pointers there. Will check out the book you mentioned.
No worries. It's some useful pointers there. Will check out the book you mentioned.
Bro, get the book. Read it and then guess wat age I read the book. U will freak out.
This book is the true 1st investment book for me and still is no1 in my mind.
Some invest for yield, some just want to flip.
Some invest for yield but flip when an irresistible offer comes along.
A for me without need for further thinking
Bro, get the book. Read it and then guess wat age I read the book. U will freak out.
This book is the true 1st investment book for me and still is no1 in my mind.
this one?
"how to win friends and influence people" by Dale Carnegie
this one?
"how to win friends and influence people" by Dale Carnegie
Yup. This book has so many life experiences dating back so many decades ago which is very applicable in todays market. This book is a MUST read for the young generation who grew up with computers and lack the interacting skills. This will give the new kid on the block an edge against his/her peers. Bro/sis Laguna, trust me, get this book for your kid. This will allow him/her to interact with people and understand how they think if they can apply the principles.
He has other books like - How to stop worrying and start living.
I give this book to all my direct reports and insist they read !!!
Yup. This book has so many life experiences dating back so many decades ago which is very applicable in todays market. This book is a MUST read for the young generation who grew up with computers and lack the interacting skills. This will give the new kid on the block an edge against his/her peers. Bro/sis Laguna, trust me, get this book for your kid. This will allow him/her to interact with people and understand how they think if they can apply the principles.
He has other books like - How to stop worrying and start living.
I give this book to all my direct reports and insist they read !!!
Thank a lot
ya, I have this in my collection and my children have read it...
A for me without need for further thinking
If for investment, choice A.
For own stay, depends. Too many factors to simplify in one post.
Thank a lot
ya, I have this in my collection and my children have read it...
Wa, you damn champion. I read this at age 16 and applied it and success rate 80%.
Wild Falcon
19-10-12, 11:42
Those who buy new for 3 main reasons:-
1) Cash Flows - cash outflows deferred. Can save up during that time
2) Can "borrow" renovation costs - most new condos come with new and nicer fixtures and kitchen appliances which is package deal which means hor those with no money for such things is happy they effectively no need to pay for such things upfront. That is what somebody told me before. No money to renovate, buy new means everythings goes into 30 year loan
3) Singaporeans generally follow trends blindly. So current trend is steel and glass so all new condos = glass and steel box = classy.
Yup. This book has so many life experiences dating back so many decades ago which is very applicable in todays market. This book is a MUST read for the young generation who grew up with computers and lack the interacting skills. This will give the new kid on the block an edge against his/her peers. Bro/sis Laguna, trust me, get this book for your kid. This will allow him/her to interact with people and understand how they think if they can apply the principles.
He has other books like - How to stop worrying and start living.
I give this book to all my direct reports and insist they read !!!
Could you hire me?
Could you hire me?
No......:(
Bro, if you are real, you have to start thinking. If I were to put it bluntly, all the sharing I gave has fallen on deaf ears. Really bro, do some soul searching. I hope I dont project myself to be telling you off but really bro, you have to start learning how to fish and know the technique instead of thinking of getting a boat to catch marlin.
Lastly, I really will not want to meet anyone in person but I am indeed sincere to share my knowledge. Some people may frown at it but if 5% can learn from knowledge, I already happy. I am sharing because along the way, I have met people who shared with me and I need to pass on this good deed.
Bro, really, at least read the book I suggest. This may give u a head start.
Secretariat
19-10-12, 12:01
If for investment, choice A.
For own stay, depends. Too many factors to simplify in one post.
Let's narrow the scope then.
Say the buyer is very flexible; can buy and move in straight away, can also buy and wait 5 years before moving in.
Bro Secretariat,
Can I know what you are trying to derive at so I can share my views?
Secretariat
19-10-12, 12:13
Bro Secretariat,
Can I know what you are trying to derive at so I can share my views?
Hosay liao, bro...
I am just trying to understand if CM6, the latest CM, does change the dynamic of property buying, a swing from the preference of new launches to new property getting TOP soon and in 2013.
Bro Secretariat,
Can I know what you are trying to derive at so I can share my views?
Bro Secretariat,
As bro Kanarazu mentioned before, "another way of looking at affordability is quantum"
In the recent almost sold out Kovan Regency, if you compare it with Kovan Residence (TOP about 1 yr ago), I noticed that for the price you pay for a 2 bedroom in K Residence, you can get a 3 bedroom Compact in K. Regency. Similarly, 3 bedrm in K Residence can get you a 4 bedrm in K Regency.
Of course the very big downside is that for K Regency, the living and dinning are really small. Heard that many bought K Regency for own stay and they doesn't seem to mind. Of course my observation may be wrong
Secretariat
19-10-12, 12:17
No......:(
Bro, if you are real, you have to start thinking. If I were to put it bluntly, all the sharing I gave has fallen on deaf ears. Really bro, do some soul searching. I hope I dont project myself to be telling you off but really bro, you have to start learning how to fish and know the technique instead of thinking of getting a boat to catch marlin.
Lastly, I really will not want to meet anyone in person but I am indeed sincere to share my knowledge. Some people may frown at it but if 5% can learn from knowledge, I already happy. I am sharing because along the way, I have met people who shared with me and I need to pass on this good deed.
Bro, really, at least read the book I suggest. This may give u a head start.
Wah, your EQ is power leh...
Can attract....? Hahaha
Secretariat
19-10-12, 12:29
Bro Secretariat,
As bro Kanarazu mentioned before, "another way of looking at affordability is quantum"
In the recent almost sold out Kovan Regency, if you compare it with Kovan Residence (TOP about 1 yr ago), I noticed that for the price you pay for a 2 bedroom in K Residence, you can get a 3 bedroom Compact in K. Regency. Similarly, 3 bedrm in K Residence can get you a 4 bedrm in K Regency.
Of course the very big downside is that for K Regency, the living and dinning are really small. Heard that many bought K Regency for own stay and they doesn't seem to mind. Of course my observation may be wrong
Thanks bro for the info.
I am actually trying to look at the finance part of the equation post-CM6, how a buyer will choose between a new launch and a new unit getting TOP soon.
By "finance", to further clarify, it refers to how to deploy his fund.
No......:(
Bro, if you are real, you have to start thinking. If I were to put it bluntly, all the sharing I gave has fallen on deaf ears. Really bro, do some soul searching. I hope I dont project myself to be telling you off but really bro, you have to start learning how to fish and know the technique instead of thinking of getting a boat to catch marlin.
Lastly, I really will not want to meet anyone in person but I am indeed sincere to share my knowledge. Some people may frown at it but if 5% can learn from knowledge, I already happy. I am sharing because along the way, I have met people who shared with me and I need to pass on this good deed.
Bro, really, at least read the book I suggest. This may give u a head start.
Hi. It is a pity to learn of your decision.
I will see if I can download the book for free then.
Let's narrow the scope then.
Say the buyer is very flexible; can buy and move in straight away, can also buy and wait 5 years before moving in.
Still too general.
Why is buyer buying it for? Why is he moving? Upgrade? Downgrade? Stay near parents/school/work/personal reasons?
For finance part, the choice is obvious. But for personal or other reasons, very hard to tell...
Bro Secretariat, here goes, with the limited resources I have. So along the way, I will need help to get some answers so we can progress. OK? All of you must assist me, can? And this can be quite long, so bear with me and hamtam me so I can think harder. I need stats from u guys then together we can form a supercomputer.
1st, lets not look at CM first.
The market today
1. How many % of the buyers today are investors and how % are buyers to stay? I give the 80/20 rule again. I believe that the buyers today are home buyers and the make up is about 70-80% of home occupiers with the balance being investors. How I derived at this. In a typical condo and the bulk being OCR/RCR (let not talk about CCR in this topic). I typically see 20-30% being rented out. OF course there are some who buy the condo and stay in it and rent out their HDB. I have lumped this into the 20-30% ratio. At this point, please correct me if I am wrong because it will affect the rest.
2. So if the majority of the buyers are typical home owners (you see the data in this forum is more skewed because we have many investors). What do this home buyers prefer? Typically, they prefer new. Why? Because they can see the showroom, they can choose the floor they want. They can choose the size of the house. It is like going supermarket. Think of the purchase of the car. A wise investor will buy a second hand car but still many buy new because of the "song/shiok" feeling. You can never discount this because this is the behaviour since the early days. If they want resale, this buyers will need to go unit to unit - sun facing cannot, run down cannot, this cannot and that cannot. So that's why new sells. Lots of choices at 1 site. Only when new becomes unreachable, resale kicks in.
3. So it is the home buyers that are driving up the pricing. The smart investors sees this and participates before or in the run up. The trader see opportunities and flips.
So we need to look at the majority of the buyers and not the investors that determine the rise. The investors can never buy so many units to cause the run up of the price.
4. HDB occupies about 80% of the market. Every year, how many % from this market will have people climbing up the ladder? How many will start earning > 15K. Such information should be available but I am too lazy to find out. If lets say this group of people form 5% fromm the entire hdb market. There will be 5%x80% = 4% of the entire housing will have the potential to upgrade. So let's say half decides to dive in. This means there will be 2% of the entire market trying to get in. 2% of 1 million dwellings works out to be 20,000 trying to enter the market. Now this number is correct with the assumption of 1 or the following : a.Job stability b.Aspiration of the folks to upgrade c.hdb paid fully paid up(the numbers will also determine how many can now enter private for this), please add more.
5. There is the herd mentality involved here - We are all animals. We will follow the herd. So when the market is up, do you want to take advantage, some will, some say u stupid. I am neither for nor against, the risk is yours to take. So the question is as the group is formed by the herd, it will get larger and larger. My question to all is how big is this group today and how many more can/will come in? My opinion, and this is my opinion (you form your own - but please dont tell me u are right and I am wrong or you are wrong and I am right - this is purely for discussion). My opinion is the group formation is not big yet. But if a black swan strikes, every thing will drop. You dont even need a bubble to be pricked. Basic needs will be more important then the house. Once you lose your job, you will first sell your car, then stocks, then burn your cash (in any order please - depending on the person who loses his job) but definitely last in line is the house u stay in. That's why people always say properties lag stocks/shares in the run up and the sell down.
So I like to view it as who are major influences to the property run-up, it is not the investors in my opinion but the occupiers.
I really dont know how % of the private condos are rented out but I reckon 20-30%. Now if the data is wrong, then my analysis is totally wrong and so please forgive me. Then I will re-analyse the situation. But I strongly believe that the rental market is definitely smaller then home occupier market. If I am proven wrong on this, I will be very scared and start letting go of my units because there is a cause for concern.
Let's dwell further on this and make this an interesting discussion with inputs from all of you.
:)
Also depends on the size of the unit. Smaller means likely for rental yield. Used to be MM can be champion capital appreciation but now it's getting harder and harder.
Bigger units (3br and above in OCR) on the other hand is more for own stay. These are likely upgraders from HDB.
2 br units of about 800sf is the best bet for investing. Easy to rent, easy to sell. Lower quantum also.
Also depends on the size of the unit. Smaller means likely for rental yield. Used to be MM can be champion capital appreciation but now it's getting harder and harder.
Bigger units (3br and above in OCR) on the other hand is more for own stay. These are likely upgraders from HDB.
2 br units of about 800sf is the best bet for investing. Easy to rent, easy to sell. Lower quantum also.
Bro, exactly, so many variables right??? But how many % of the make-up are rental and how many % are home occupiers from a general market. If not, there will be no end to this topic. So if not, the TS needs to identify a particular market and we can begin from there. If not landed will pop up and within it so many classes. Then CCR will pop up, 3 diff district, etc.... I think TS looking at main stream. So I target main stream with is my qualifier of OCR/RCR.;)
I really dont know how % of the private condos are rented out but I reckon 20-30%. Now if the data is wrong, then my analysis is totally wrong and so please forgive me. Then I will re-analyse the situation. But I strongly believe that the rental market is definitely smaller then home occupier market. If I am proven wrong on this, I will be very scared and start letting go of my units because there is a cause for concern.
Let's dwell further on this and make this an interesting discussion with inputs from all of you.
:)
Maybe, I could offer some input on this. Having spoken with some property consultants involved in collective sale, typically, the the percentage of rented units in most development is between 35-40%. My own development is close to 40%.
Maybe, I could offer some input on this. Having spoken with some property consultants involved in collective sale, typically, the the percentage of rented units in most development is between 35-40%. My own development is close to 40%.
Bro, there are 200K pte. assume 40% means 80k pte rented out. I really dont think so high leh.
I will surf in free time. IRAS should have the numbers based on rental stamp duty.
Yup. This book has so many life experiences dating back so many decades ago which is very applicable in todays market. This book is a MUST read for the young generation who grew up with computers and lack the interacting skills. This will give the new kid on the block an edge against his/her peers. Bro/sis Laguna, trust me, get this book for your kid. This will allow him/her to interact with people and understand how they think if they can apply the principles.
He has other books like - How to stop worrying and start living.
I give this book to all my direct reports and insist they read !!!
chestnut, your surname don't happen to start with letter G?
My ex boss gave that exact 'How to stop worrying and start living' book to me on my birthday.
chestnut, your surname don't happen to start with letter G?
My ex boss gave that exact book to me on my birthday.
Huh, you are that person I gave to???
Nope, not G. hahaha. Did you enjoy the book? ;)
Secretariat, I think you better buy me coffee for all this damn hard work. On top of that, I laying off props some more.
I called my agent to give me the info for 1 year and quarterly then I post real number. Surf the web until give up. Stay tuned.
Secretariat
19-10-12, 17:08
Secretariat, I think you better buy me coffee for all this damn hard work. On top of that, I laying off props some more.
I called my agent to give me the info for 1 year and quarterly then I post real number. Surf the web until give up. Stay tuned.
Aiyo bro, I am also surfing leh...hahaha. Coffee anytime la.
OK, two figures I think around there...
Number of non-landed residential property 190,000 plus, let's round up to 200,000
Number of rental transactions per year 30,000
Aiyo bro, I am also surfing leh...hahaha. Coffee anytime la.
OK, two figures I think around there...
Number of non-landed residential property 190,000 plus, let's round up to 200,000
Number of rental transactions per year 30,000
I also think around there leh. 80/20 rule. My agent cannot get figure and still checking. So based on this, the market is actually driven by home occupiers and hdb upgraders. This looks very similar to the run up in 1997 where upgraders were the ones driving the price once HDB prices started to shoot up. Cycle repeats itself man.:doh:
Bro Secretariat, here goes, with the limited resources I have. So along the way, I will need help to get some answers so we can progress. OK? All of you must assist me, can? And this can be quite long, so bear with me and hamtam me so I can think harder. I need stats from u guys then together we can form a supercomputer.
So I like to view it as who are major influences to the property run-up, it is not the investors in my opinion but the occupiers.
I really dont know how % of the private condos are rented out but I reckon 20-30%. Now if the data is wrong, then my analysis is totally wrong and so please forgive me. Then I will re-analyse the situation. But I strongly believe that the rental market is definitely smaller then home occupier market. If I am proven wrong on this, I will be very scared and start letting go of my units because there is a cause for concern.
Let's dwell further on this and make this an interesting discussion with inputs from all of you.
:)
I've done this analysis before on the number of units out there versus teh number of people needing a roof (be it tenant or owners).
You need to figure out how many are white collar, blue collar, construction related.
Souce :- http://www.mom.gov.sg/statistics-pub...ceNumbers.aspx
Pass Type As at Dec 2011
Employment Pass (EP) 176,000
S Pass 113,000
Work Permit (Total) 908,000
- Work Permit (Foreign Domestic Worker) 206,000
- Work Permit (Construction) 264,000
Total Foreign Workforce Around 1.19 million
So, let's work on these figures.
So, Work Permit holders account for almost 76% of the 1.2mil foreign workforce. These people do not need homes as they are housed within dormitories or employers' residence.
So we are left with the S-Pass (usually the service industry and lower wage office workers) and the EPs(the higher wages office workers).
The S-Pass holders usually congregates with each other(most without bringing family over) with min. of 4 pax per unit (but it is 8pax usually for those waitresses and cooks and drivers etc). So, let's divide, 113k S-pass with 4 pax which will give you the max units needed to house them of 113/4 = 28k units.
The EP holders will have some families and some singles, so let's assumed half of them are families and half are singles, so the amount of units needed to be 176k/2 = 88k units.
Adding all up, you need a supply of around 28k + 88k = 116k units.
Do not, this is the demand needed. Not the SUPPLY created during the boom years like you mentioned.
So now matching supply with demand.. we should use the SUPPLY of ALL outstanding units in singapore up for rental (HDB + condos, we'l ignore landed).
Again, googling for some info , turns up .. http://www.ura.gov.sg/pr/graphics/2012/pr12-44e1.pdf
Condos completed units
- available 270.9k
- occupied 254.7k
- vacant 16.1k
- Vacancy rate 6%
Condos supply pipeline
- under construction 49.5k
- planned (ignored this since planned can be deferred but under construtions mean supply will be created definitely).
This is only the condos hor.. i haven't counted the hdbs.
Assumed, one third of condos(33.33%) are rented out while the rest are actually owner-occupied. So there is an availability for rental of 270.9k/3 = 90.3k units available for rent.
Ok, let's assumed only EP holders rent private.. you will see from te previous research, we need 88K units. Now, we have 90.3k units COMPLETED(not counting the under construction ones), so the demand and supply is matched. Surprising... if you look at 88k/90.3k = 97.5% of all rental units available.
The Vacancy rate was indicated as 6%. So, I can only assumed I might have over-estimated the demand while the real figure(the vacancy rate) reflects an oversupply of 6%.
Now, the S-Pass holders.. I am lazy to do research laready... so i just hantam.. 80% of households are living in HDB.. we know roughly it's 5% landed, 15% condos, 80% public..
So, there's 1.44mil HDB available. But let's be conservative and take the 2010 numbers from Mah Bow Tan .
http://www.mnd.gov.sg/reflections_housing/article2.htm
It is 800k HDB households.
So S-pass needs 28k HDB units.. so it's 28/800 = 3.5%.
Only 3.5% of HDB households need to rent out their flat to meet the demand.
Ok.. so now... I am wondering.. do you thiink there is really an under-supply of housing if govt restricts the no. of EP and WP and SP into singapore for the next few years.. (if they do).
Bro, I think work permit can stay in hdb, right? I remember sands sourcing for hdb to house this workers.
Marriages are as follows :
http://www.singstat.gov.sg/stats/themes/people/marriages.pdf
2006 - 24K
2007 - 24K
2008 - 24K
2009 - 26K
2010 -24k
2011 - 27K
Correspond this to no of hdb flats completed during those years and you will see undersupply. This people need housing right?
Hdb upgraders to condo? How many % will jump in? because you did not include those.
Of course you also have death, which can you then check.
OK got the info : Rental for non-landed = 42K. So 80/20 rules apply. August 2011 to August 2012 = 45975.
OK, now I tired liao. Will let our Mr Secretariat take over.
:sleep::sleep::sleep:
Secretariat
19-10-12, 17:48
Marriages are as follows :
http://www.singstat.gov.sg/stats/themes/people/marriages.pdf
2006 - 24K
2007 - 24K
2008 - 24K
2009 - 26K
2010 -24k
2011 - 27K
Correspond this to no of hdb flats completed during those years and you will see undersupply. This people need housing right?
Hdb upgraders to condo? How many % will jump in? because you did not include those.
Of course you also have death, which can you then check.
OK got the info : Rental for non-landed = 42K. So 80/20 rules apply. August 2011 to August 2012 = 45975.
I was about to bring these up.
New citizens running at 20,000 per year? OK, most originated from the existing PR pool, 530,000? But I know of a few that brought over the girl-friends or parents over after gaining citizenship. Is this the norm?
Thanks bro Focus, cool...
I was about to bring these up.
New citizens running at 20,000 per year? OK, most originated from the existing PR pool, 530,000? But I know of a few that brought over the girl-friends or parents over after gaining citizenship. Is this the norm?
Thanks bro Focus, cool...
Bro secretary, I damn lazy... If you can consolidate for us, I really appreciate. Or Focus, your spreadsheet very champ, maybe you can consol. Someone needs to consolidate finally then I will participate. If not, all the effort go to waste leh.
Secretariat
19-10-12, 18:04
Bro secretary, I damn lazy... If you can consolidate for us, I really appreciate. Or Focus, your spreadsheet very champ, maybe you can consol. Someone needs to consolidate finally then I will participate. If not, all the effort go to waste leh.
I got no spreadsheet one in iPad...hahaha.
Bro Focus can?
What happen if ur prop is getting $3500 rental but price gone up to $2mil
Then it is your cue for time to sell. Even if the renewal is 30% higher, the yield will still be shitty based on your figures. With the spare case you can probably leverage on another property with higher yield.
Focus, definition of passes
http://www.mom.gov.sg/foreign-manpower/passes-visas/s-pass/before-you-apply/Pages/default.aspx
http://www.mom.gov.sg/foreign-manpower/passes-visas/employment-pass/before-you-apply/Pages/default.aspx
http://www.mondayemployment.com/2010/12/types-of-work-passes-in-singapore/
You need to go back to the drawing board and do your computation.
What happen if ur prop is getting $3500 rental but price gone up to $2mil
Are u asking a hypothetical question or is this a fact?
Curious?
Are u asking a hypothetical question or is this a fact?
Curious?
Almost real...
Almost real...
The lowest I encounter is 3%. Never saw this before unless unit old and going enbloc soon potentially.
one other reason people favour new is because a chunk of the reno that they would have to otherwise spend on a resale is in-built to the mortgage at the low rates. this will work provided the floor doesn't give way during the time of ownership. if you paid a significant premium over your neighbouring developments and the floor gives way, pray very hard...
The lowest I encounter is 3%. Never saw this before unless unit old and going enbloc soon potentially.
Yeap. Since it is not for living it makes no sense to hold forever as leesng suggested.
nut bro, yes I do remember I did enjoy the book very much, but was like 3/4 through only and moving again as I was buying and selling my places....
Some time back I was looking at The Trumps resale asking for high $11xxpsf for a small unit with immediate rental, while new launch at Waterbank was going at $12xxpsf.
Initially thought that Trumps at lower psf would be a better bargain but after considering the land age of almost 10yr old, meaning 10% of the 99yr lease is already gone, I would expect at least a 10% cheaper in psf, so decided to let it pass.
A significant amount of hidden costs/headache if the property is old, especially if you are buying for own stay. New unit bought at new launch is a form of forced saving. Upon TOP, the psf appreciation can be large and it gives a very feel-good effect.
Some time back I was looking at The Trumps resale asking for high $11xxpsf for a small unit with immediate rental, while new launch at Waterbank was going at $12xxpsf.
Initially thought that Trumps at lower psf would be a better bargain but after considering the land age of almost 10yr old, meaning 10% of the 99yr lease is already gone, I would expect at least a 10% cheaper in psf, so decided to let it pass.
And what is it's price now?
A significant amount of hidden costs/headache if the property is old, especially if you are buying for own stay. New unit bought at new launch is a form of forced saving. Upon TOP, the psf appreciation can be large and it gives a very feel-good effect.
Come on, 10 years is not that old for a well kept and maintained development.
Focus, definition of passes
http://www.mom.gov.sg/foreign-manpower/passes-visas/s-pass/before-you-apply/Pages/default.aspx
http://www.mom.gov.sg/foreign-manpower/passes-visas/employment-pass/before-you-apply/Pages/default.aspx
http://www.mondayemployment.com/2010/12/types-of-work-passes-in-singapore/
You need to go back to the drawing board and do your computation.
Nothing much has changed based on the links.
The only change is if you want to bring in your dependents to singapore, you need the $4k min. salary.
If not, the $2k min. salary still is applicable for the S-Pass holders.
The different level within the E-Pass of Q-pass ($3k min), P2($4.5K), P1($8K) is still applicable. In fact, with the figures I quoted, the Q-Pass who can bring in a family might be reduced as you need to hit $4k now. So they might be also renting with other S-pass like I mentioned on average, 2 pax to a condo. But more likley they are going to HDB with their salary.
Ok, I go back and try to do a more organised layout of the numbers including your marriages.
My thoughts now on marriages is they are taken from the population. If you say 80/20 rule, most will be applying for BTO. In my last example, i have not included the uncompleted properties(both BTO and Condos).
But if the 80/20 rule applies, out of 27k marriages , 20% will apply for pte condo, which means 5,000 private units needed for PURCHASE, not stay. And I suddenly remember, my last figure did not take into account the ECs launched which is under HDB , not private.
For death, we can discount that since a death in the family does not mean the family suddenly disappear without needing a home. the difference is neligible i guess.
let me do the figures later.
I will also give some thoughts to the fringe HDB upgraders to condo and ECs and those condos dwellers who swap to a HDB(Radha comes to mind..hehe).
In any case, when a demand is created in one place, a supply is also created in another. Unless the HDB upgrader did not rent out his HDB.
The work permit are the cooks, cashier, etc.... They need housing and employer do not house them. This will cause a big demand in hdb rental market.
I've done this analysis before on the number of units out there versus teh number of people needing a roof (be it tenant or owners).
You need to figure out how many are white collar, blue collar, construction related.
Souce :- http://www.mom.gov.sg/statistics-pub...ceNumbers.aspx
Pass Type As at Dec 2011
Employment Pass (EP) 176,000
S Pass 113,000
Work Permit (Total) 908,000
- Work Permit (Foreign Domestic Worker) 206,000
- Work Permit (Construction) 264,000
Total Foreign Workforce Around 1.19 million
So, let's work on these figures.
So, Work Permit holders account for almost 76% of the 1.2mil foreign workforce. These people do not need homes as they are housed within dormitories or employers' residence.
So we are left with the S-Pass (usually the service industry and lower wage office workers) and the EPs(the higher wages office workers).
The S-Pass holders usually congregates with each other(most without bringing family over) with min. of 4 pax per unit (but it is 8pax usually for those waitresses and cooks and drivers etc). So, let's divide, 113k S-pass with 4 pax which will give you the max units needed to house them of 113/4 = 28k units.
The EP holders will have some families and some singles, so let's assumed half of them are families and half are singles, so the amount of units needed to be 176k/2 = 88k units.
Adding all up, you need a supply of around 28k + 88k = 116k units.
Do not, this is the demand needed. Not the SUPPLY created during the boom years like you mentioned.
So now matching supply with demand.. we should use the SUPPLY of ALL outstanding units in singapore up for rental (HDB + condos, we'l ignore landed).
Again, googling for some info , turns up .. http://www.ura.gov.sg/pr/graphics/2012/pr12-44e1.pdf
Condos completed units
- available 270.9k
- occupied 254.7k
- vacant 16.1k
- Vacancy rate 6%
Condos supply pipeline
- under construction 49.5k
- planned (ignored this since planned can be deferred but under construtions mean supply will be created definitely).
This is only the condos hor.. i haven't counted the hdbs.
Assumed, one third of condos(33.33%) are rented out while the rest are actually owner-occupied. So there is an availability for rental of 270.9k/3 = 90.3k units available for rent.
Ok, let's assumed only EP holders rent private.. you will see from te previous research, we need 88K units. Now, we have 90.3k units COMPLETED(not counting the under construction ones), so the demand and supply is matched. Surprising... if you look at 88k/90.3k = 97.5% of all rental units available.
The Vacancy rate was indicated as 6%. So, I can only assumed I might have over-estimated the demand while the real figure(the vacancy rate) reflects an oversupply of 6%.
Now, the S-Pass holders.. I am lazy to do research laready... so i just hantam.. 80% of households are living in HDB.. we know roughly it's 5% landed, 15% condos, 80% public..
So, there's 1.44mil HDB available. But let's be conservative and take the 2010 numbers from Mah Bow Tan .
http://www.mnd.gov.sg/reflections_housing/article2.htm
It is 800k HDB households.
So S-pass needs 28k HDB units.. so it's 28/800 = 3.5%.
Only 3.5% of HDB households need to rent out their flat to meet the demand.
Ok.. so now... I am wondering.. do you thiink there is really an under-supply of housing if govt restricts the no. of EP and WP and SP into singapore for the next few years.. (if they do).
Now look at total housing over past few years and co relate with marriages, influx of total people. Check if it balance or swayed more to one side. Once you figure this, then u narrow to each sector. Like that it will be easier. Honestly, everything is already in my brain. I don't need the spreadsheet. I already have 2 feet in. I tell u, your analysis is flawed, that's why u did not get your answer.
The fun is in the search, the fruit is the the returns. no pain, no gain.
Cheers.
:cheers6:
Nothing much has changed based on the links.
The only change is if you want to bring in your dependents to singapore, you need the $4k min. salary.
If not, the $2k min. salary still is applicable for the S-Pass holders.
The different level within the E-Pass of Q-pass ($3k min), P2($4.5K), P1($8K) is still applicable. In fact, with the figures I quoted, the Q-Pass who can bring in a family might be reduced as you need to hit $4k now. So they might be also renting with other S-pass like I mentioned on average, 2 pax to a condo. But more likley they are going to HDB with their salary.
Ok, I go back and try to do a more organised layout of the numbers including your marriages.
My thoughts now on marriages is they are taken from the population. If you say 80/20 rule, most will be applying for BTO. In my last example, i have not included the uncompleted properties(both BTO and Condos).
But if the 80/20 rule applies, out of 27k marriages , 20% will apply for pte condo, which means 5,000 private units needed for PURCHASE, not stay. And I suddenly remember, my last figure did not take into account the ECs launched which is under HDB , not private.
For death, we can discount that since a death in the family does not mean the family suddenly disappear without needing a home. the difference is neligible i guess.
let me do the figures later.
Secretariat
20-10-12, 12:56
I am still at the broad picture level of supply leh...:(
Census 2012 (2011 figure) Total resident household = 1.146 mil (A)
http://www.singstat.gov.sg/stats/keyind.html
2010 figures from various sites:
Total HDB units = 901,971
Total PC = 186,812
TOTAL (B) = 1,089 mil
(A)- (B) = 57,400 units...??? (ok, landed is about 26,000 units)
In short, there is a discrepancy between the Census household figure (Demand), and the total stock (Supply) of 30,000 units.
(Demand here, not inclusive of new household formation like marriages, singles moving out...etc)
And what is it's price now?
Trumps last transacted for small unit is $12xxpsf while Waterbank is $15xxpsf
Trumps last transacted for small unit is $12xxpsf while Waterbank is $15xxpsf
Probably more for cashflow if you had committed to Trumps then. But I guess you look for capital gains....?
Probably more for cashflow if you had committed to Trumps then. But I guess you look for capital gains....?
Erm actually am unsure, but I don't intend to sell my properties in the short term. For trumps, unless I down pay 40% or more, otherwise with a 80% loan I don't think I will enjoy much positive cash flow every mth after servicing my mthly mortgage
Come on, 10 years is not that old for a well kept and maintained development.
10 years of less trouble n everything new. Y not?
For me, i am not looking so much into the renov and maintenance aspects. Neither am i against the idea of buying a resale LH project. Just that if 10yrs of a 99yr LH is gone, I will be prep to pay only 90% of the price of an equiv new launch.
UOL projects are really doing well. Southbank price gone up by at least double and Waterbank is at least 50% up since launched two years ago.
Trumps last transacted for small unit is $12xxpsf while Waterbank is $15xxpsf
what change in the past 6 mths ..
MM/studio - price stable or psf up 2-3%
3 bedder - price gained 50%
Penthouse - no tracking
Landed Semi D, GCB, - up 100%
agree ?
Ok, here is a helping hand.
http://www.ura.gov.sg/pr/graphics/2012/pr12-79e1.pdf
I am still at the broad picture level of supply leh...:(
Census 2012 (2011 figure) Total resident household = 1.146 mil (A)
http://www.singstat.gov.sg/stats/keyind.html
2010 figures from various sites:
Total HDB units = 901,971
Total PC = 186,812
TOTAL (B) = 1,089 mil
(A)- (B) = 57,400 units...??? (ok, landed is about 26,000 units)
In short, there is a discrepancy between the Census household figure (Demand), and the total stock (Supply) of 30,000 units.
(Demand here, not inclusive of new household formation like marriages, singles moving out...etc)
10 years property got trouble?
The way you say it is like those people buying Ardmore Park already 11 years old at average $3200 psf for 2885 sqft such big unit must be stupid since they could have bought Ardmore II nearby that is only 1+ years old at average $2700 psf!
If 10 years old got trouble must buy new, think you should ask all people don't buy property because any property will also become old and when old if got no or little value what for buy property? The worst is to be the stupid idiot to get slaughtered by buying new at a huge premium of >20% and yet the property will become old and cannot sell at a profit? :banghead:
10 years of less trouble n everything new. Y not?
Originally Posted by carbuncle
Come on, 10 years is not that old for a well kept and maintained development.
louisebrown
20-10-12, 18:28
10 years property got trouble?
The way you say it is like those people buying Ardmore Park already 11 years old at average $3200 psf for 2885 sqft such big unit must be stupid since they could have bought Ardmore II nearby that is only 1+ years old at average $2700 psf!
If 10 years old got trouble must buy new, think you should ask all people don't buy property because any property will also become old and when old if got no or little value what for buy property? The worst is to be the stupid idiot to get slaughtered by buying new at a huge premium of >20% and yet the property will become old and cannot sell at a profit? :banghead:
Originally Posted by carbuncle
Come on, 10 years is not that old for a well kept and maintained development.
The BULL is right here....not yet to come.
Nothing much has changed based on the links.
The only change is if you want to bring in your dependents to singapore, you need the $4k min. salary.
If not, the $2k min. salary still is applicable for the S-Pass holders.
The different level within the E-Pass of Q-pass ($3k min), P2($4.5K), P1($8K) is still applicable. In fact, with the figures I quoted, the Q-Pass who can bring in a family might be reduced as you need to hit $4k now. So they might be also renting with other S-pass like I mentioned on average, 2 pax to a condo. But more likley they are going to HDB with their salary.
Ok, I go back and try to do a more organised layout of the numbers including your marriages.
My thoughts now on marriages is they are taken from the population. If you say 80/20 rule, most will be applying for BTO. In my last example, i have not included the uncompleted properties(both BTO and Condos).
But if the 80/20 rule applies, out of 27k marriages , 20% will apply for pte condo, which means 5,000 private units needed for PURCHASE, not stay. And I suddenly remember, my last figure did not take into account the ECs launched which is under HDB , not private.
For death, we can discount that since a death in the family does not mean the family suddenly disappear without needing a home. the difference is neligible i guess.
let me do the figures later.
for the 20% , price may still play apart in their decision to buy PC (for e.g combined income 7k cannot buy Sky habitat). I think importing mainlanders wld be the best option to further prop the price up...
Secretariat
21-10-12, 07:49
Ok, here is a helping hand.
http://www.ura.gov.sg/pr/graphics/2012/pr12-79e1.pdf
Nice, saved in iBooks.
Thanks bro. :D
Ok.. Chestnut could be Leong?? ..lol.. We were talking about marriages, foreigners and HDB supply spill over. But it sounds right.. HDB undersupply.
But how will it spill over to the Pte apartments? People who cant afford pte condos will still not be able to afford because of the HDB undersupply. They can only rent HDB and wait out.
http://www.tremeritus.com/2012/10/21/hdb-supply-forgot-about-new-citizens/
10 years property got trouble?
The way you say it is like those people buying Ardmore Park already 11 years old at average $3200 psf for 2885 sqft such big unit must be stupid since they could have bought Ardmore II nearby that is only 1+ years old at average $2700 psf!
If 10 years old got trouble must buy new, think you should ask all people don't buy property because any property will also become old and when old if got no or little value what for buy property? The worst is to be the stupid idiot to get slaughtered by buying new at a huge premium of >20% and yet the property will become old and cannot sell at a profit? :banghead:
Originally Posted by carbuncle
Come on, 10 years is not that old for a well kept and maintained development.
The market is always right. Most buyers prefer new house n willing to pay a premium for it.
Bro, I give u 1 week to think. If till then u still can figure out, u pm me and I tell u the impact. You need to exercise your brains. Hahaha, but I am a nice person, so will share this part w u.
I am no Leong. I figured all this out very early in the game, if not why u think I have 2 foot in? Hahaha.
Ok.. Chestnut could be Leong?? ..lol.. We were talking about marriages, foreigners and HDB supply spill over. But it sounds right.. HDB undersupply.
But how will it spill over to the Pte apartments? People who cant afford pte condos will still not be able to afford because of the HDB undersupply. They can only rent HDB and wait out.
http://www.tremeritus.com/2012/10/21/hdb-supply-forgot-about-new-citizens/
Think you don't play stocks, because "the market is always wrong!" :doh:
Mark my words, These buyers buying new launch at >20% premium compared to nearby relatively young properties of <= 5 years old most likely won't make much money relative to buying resale even if property market continue to climb :rolleyes:
The market is always right. Most buyers prefer new house n willing to pay a premium for it.
Market is always right, we are wrong that's why we thonk the market is wrong.
Secretariat
22-10-12, 03:38
Think you don't play stocks, because "the market is always wrong!" :doh:
Mark my words, These buyers buying new launch at >20% premium compared to nearby relatively young properties of <= 5 years old most likely won't make much money relative to buying resale even if property market continue to climb :rolleyes:
I agree, about the market and the premium. :D
Cannot blame anyone else except the buyers who chase up the price. Willing seller willing buyer.
There will always be buyers. Just at what price.
Bro, I give u 1 week to think. If till then u still can figure out, u pm me and I tell u the impact. You need to exercise your brains. Hahaha, but I am a nice person, so will share this part w u.
I am no Leong. I figured all this out very early in the game, if not why u think I have 2 foot in? Hahaha.
Ok ok .. working on it. Coz I can see the undersupply in HDB , but the condo part, i am still seeing supply meeting demand.
So this part of the spillover is the one that I need to figure out.
Will take my time..
Think you don't play stocks, because "the market is always wrong!" :doh:
Mark my words, These buyers buying new launch at >20% premium compared to nearby relatively young properties of <= 5 years old most likely won't make much money relative to buying resale even if property market continue to climb :rolleyes:
Actually.. at this point, maybe you are right.
But I remember a lot of new launches a few years back which was priced at a premium to resales are now selling at higher than their launch prices. The resale prices also inched up together. Example the Bedok Reservoir area.
Secretariat
22-10-12, 12:35
(Warning: WOT, read at your discretion)
In the discussion of pricing, in the context specifically related to the premium of pricing new launches over existing stock (less than 5-years old) within the same area, we have to consider how new launches are priced.
But before that, what is true market-pricing? A true market-pricing situation typically has the ingredients of an open auction. To illustrate simply:
- we have a seller, an item he puts in auction, with a reserved price,
- we have interested buyers, given information related to the item, plus researches they did if any, who then formed an opinion of the price of the item.
The buyers bid amongst themselves, until one after the other withdraws from further bidding, and the item goes to the highest bid.
The auction house merely facilitates the bidding, they don't price the item at all.
We can find this kind of auctioning in the stock markets, forex, bond trading, futures etc.
Now, let's go back to our subject of property.
In this case, auctioning takes place in the resale market all the time, and therefore the pricing here is closer to true market-pricing. Not quite the same for new launches.
Typically, a developer will come up with a pricing to gauge the initial responds, either via vvip launch or otherwise. The developer sets the price, and the market forms an opinion of the pricing level by showing its demand.
During this process, and until the project is fully sold, the developer stays or adjusts the pricing according to its perceived demand. This is not a true market-pricing mechanism, because a savvy developer is able to induce demand, with a play on the buyer's psychology. How demand can be induced is not the scope of this discussion.
The point is that, the buyer has no avenue of bidding when demand hots up. Nor he has the ability to say "this unit is preferred over the others (facing, views etc), I am willing to pay $50,000 more for it over the developer price." The buying is pretty much on first-come-first-serve basis. vvips get the front rows of seating arrangement.
What do the buyer pay? In simple illustration, the developer pricing is made up of:
- land price (plus all the costs associated with it),
- construction cost
- the developer's profit
When developer bids higher for a land, it basically prices a future value. Until the project is fully sold, the developer carries the risk of this future valuation. This is also the biggest component of the eventual pricing of units.
Construction cost can be fairly accurately measured, and is fixed for a developer with good track history.
And then the last item, pretty much self-explanatory.
It should be quite clear for all to see that, any upward adjustment of pricing during the launch period, it all goes to and increases the profit. And it also further reduces the carrying risk of the developer's land cost.
And so, the basis of pricing premium comes from the premium paid for the land, plus an increased profit level.
This price premium, in a normal bouyant market, needs to narrow with the true market-pricing fairly quickly. Especially so for projects getting TOPs soon, on the next land plot or nearby, the resale pricing should quickly narrow with new launches. If not, then there is a good chance that the market has mispriced the premium.
Think you don't play stocks, because "the market is always wrong!" :doh:
Mark my words, These buyers buying new launch at >20% premium compared to nearby relatively young properties of <= 5 years old most likely won't make much money relative to buying resale even if property market continue to climb :rolleyes:
You missed out on the pyschological part of owning a new house, versus an old house. You are putting too much focus on the monetary aspect and forgotten about the emotional part. This is from the perspective of a buyer for own stay.
You missed out on the pyschological part of owning a new house, versus an old house. You are putting too much focus on the monetary aspect and forgotten about the emotional part. This is from the perspective of a buyer for own stay.
yes, ur right
it is real superb shiok to stay in a brand new house....
I am willing to pay a premium for staying in a new ones, perhaps 10%
This is my personal experience as a landlord of a 10yr old condo. When i took back my keys a few mths ago, quite a fair bit of items need to be replaced:
1) Aircon system (including the pipes)
2) Toilet pipings
3) Gas stove
4) Shower heads / Toilet flush
5) White goods ie. Fridge, Washer, Dryer
6) Ceiling lightings and lamps
7) Small items eg. door knobs, door bell
As much as I try to market my unit as a very well-maintained one, quite a no. of potential tenants commented that they prefer 'more modern' projects such as Seafront@Meyer, Belvedere, SeaView etc, citing that my IDs such as tv-console, bedroom wardrobes and the kitchen cabinets look rather dated.
I guess tenants have much more choices now, and every project still has its own market.
pinkpolkadot
22-10-12, 13:18
yes, ur right
it is real superb shiok to stay in a brand new house....
I am willing to pay a premium for staying in a new ones, perhaps 10%
I agree with you. Damn siok to stay in a brand new house.
This is my personal experience as a landlord of a 10yr old condo. When i took back my keys a few mths ago, quite a fair bit of items need to be replaced:
1) Aircon system (including the pipes)
2) Toilet pipings
3) Gas stove
4) Shower heads / Toilet flush
5) White goods ie. Fridge, Washer, Dryer
6) Ceiling lightings and lamps
7) Small items eg. door knobs, door bell
As much as I try to market my unit as a very well-maintained one, quite a no. of potential tenants commented that they prefer 'more modern' projects such as Seafront@Meyer, Belvedere, SeaView etc, citing that my IDs such as tv-console, bedroom wardrobes and the kitchen cabinets look rather dated.
I guess tenants have much more choices now, and every project still has its own market.
Having collected rent for 10 years already, you should be able to afford some reno to at least make the interior look less dated. In any case you have already made capital gains on it.
Furthermore, the yield to you based on the price you bought at 10 years ago, would be much better than the yield on a new property you buy at today's price. So you can afford to accept a lower rent compared to neighbouring newer properties which have to service a larger mortgage.
felicia_sg
22-10-12, 13:25
Yes but at what premium befor you say not worth it, might as well renovate till nice nice to your flavor rather than take what developers give you, many are lousy in OCR projects giving you homo tiles & low quality products?
Laguna say 10%, I say 10% max, what say you?
I agree with you. Damn siok to stay in a brand new house.
Having collected rent for 10 years already, you should be able to afford some reno to at least make the interior look less dated. In any case you have already made capital gains on it.
Furthermore, the yield to you based on the price you bought at 10 years ago, would be much better than the yield on a new property you buy at today's price. So you can afford to accept a lower rent compared to neighbouring newer properties which have to service a larger mortgage.
Thats if you assume that i am the 1st owner of this unit. In fact those who bought new launches in the late 90s are not really enjoying much capital gains, plus they were servicing mortage loans with high interest rates in the mid 2000s.
Thats if you assume that i am the 1st owner of this unit. In fact those who bought new launches in the late 90s are not really enjoying much capital gains, plus they were servicing mortage loans with high interest rates in the mid 2000s.
I did buy a new launch in the late 90s and my capital gain is ? around 80% (paper gain as I do not intend to sell). Hmmm...maybe you consider that not good enough. Yes interest rates were higher in the past but was diligently refinancing every 2 to 3 years along the way. Even if you buy now, who's to say that interest rates will not go back up to those levels 10 years down the road? At least my mortgage is more than half way being paid up and my outlay is much much lower than if I were to buy it now.
I did buy a new launch in the late 90s and my capital gain is ? around 80% (paper gain as I do not intend to sell). Hmmm...maybe you consider that not good enough. Yes interest rates were higher in the past but was diligently refinancing every 2 to 3 years along the way. Even if you buy now, who's to say that interest rates will not go back up to those levels 10 years down the road? At least my mortgage is more than half way being paid up and my outlay is much much lower than if I were to buy it now.
Yeah thanks for your sharing, it does make very good financial sense and in fact, i am in the same shoes as you. The unit was indeed bought at new launch and its working as my cash cow now.
Just that when some of the snrs here mention abt the emotional aspects, I could easily relate to some of the experiences i had with some potential tenants commenting on the dated designs =( Yeah, I am intending to set aside a sum to do up and refurb the house once the current tenancy ends. But i cant do anything to the lift, the lift lobby and common areas ..
buttercarp
22-10-12, 14:33
yes, ur right
it is real superb shiok to stay in a brand new house....
I am willing to pay a premium for staying in a new ones, perhaps 10%
Yes, agreed.
The smell of new paint, the scent of new wood, etc.......
And no need to go through the headache of renovating it extensively.
Yes, agreed.
The smell of new paint, the scent of new wood, etc.......
And no need to go through the headache of renovating it extensively.
I came across two guys, both are property investors
Every time when there is a property TOP, they will move in for a few months, stay till shiok shiok then move to another one
buttercarp
22-10-12, 14:35
Yeah thanks for your sharing, it does make very good financial sense and in fact, i am in the same shoes as you. The unit was indeed bought at new launch and its working as my cash cow now.
Just that when some of the snrs here mention abt the emotional aspects, I could easily relate to some of the experiences i had with some potential tenants commenting on the dated designs =( Yeah, I am intending to set aside a sum to do up and refurb the house once the current tenancy ends. But i cant do anything to the lift, the lift lobby and common areas ..
How much are you willing to spend?
I was wondering what is the reasonable amount cos my turn to let out my ageing unit is about to come.
buttercarp
22-10-12, 14:37
I came across two guys, both are property investors
Every time when there is a property TOP, they will move in for a few months, stay till shiok shiok then move to another one
Wow, cool.... they are like vagabonds :D .
Yeah thanks for your sharing, it does make very good financial sense and in fact, i am in the same shoes as you. The unit was indeed bought at new launch and its working as my cash cow now.
Just that when some of the snrs here mention abt the emotional aspects, I could easily relate to some of the experiences i had with some potential tenants commenting on the dated designs =( Yeah, I am intending to set aside a sum to do up and refurb the house once the current tenancy ends. But i cant do anything to the lift, the lift lobby and common areas ..
Yes can't do anything about the common areas. But an advantage that you have is space. You will have more space than the newer launches for the same rent. And that will attract a certain segment of the market. No need for an expensive reno. Just a simple reno to make it more modern-looking will suffice. After a while, those larger units with decent-size bedrooms will become more and more rare.....Fortunately the new launch that I bought has marble in the lift lobby....so it still looks decent. I also have another resale condo (2nd owner) that is about 12 years old which also still has decent common areas. As long as your location is good, you should be able to find tenants at a reasonable rent...taking into account your entry price for the property.
Yes, agreed.
The smell of new paint, the scent of new wood, etc.......
And no need to go through the headache of renovating it extensively.
Beware new paint and new carpentry has health hazards when you inhale them. google VOCs. Most of the laminates used for carpentry has strong formaldehyde fumes. You need to give it a good airing for some time before moving in. Or you and your family may experience symptoms like headaches, etc. It is akin to glue sniffing.
pinkpolkadot
22-10-12, 14:47
Yes, agreed.
The smell of new paint, the scent of new wood, etc.......
And no need to go through the headache of renovating it extensively.
And you get brand new surrounding and common areas. You can renovate old unit but you can't for area outside your unit.
Yes can't do anything about the common areas. But an advantage that you have is space. You will have more space than the newer launches for the same rent. And that will attract a certain segment of the market. No need for an expensive reno. Just a simple reno to make it more modern-looking will suffice. After a while, those larger units with decent-size bedrooms will become more and more rare.....Fortunately the new launch that I bought has marble in the lift lobby....so it still looks decent. I also have another resale condo (2nd owner) that is about 12 years old which also still has decent common areas. As long as your location is good, you should be able to find tenants at a reasonable rent...taking into account your entry price for the property.
Chiaberry - yeah, space is the key reason why i am still holding on to this older project. For all the 3 bedrooms, even after putting in a queen sized bed, i still have excess space for at least an office desk. The masterbed room could also fit in a tv console.
As compared with my other newer project which is actually just 150sf smaller, the bedrooms could only fit in a queen sized bed and nothing else. Most of the space goes to baywindows and HS :doh:
Chiaberry - yeah, space is the key reason why i am still holding on to this older project. For all the 3 bedrooms, even after putting in a queen sized bed, i still have excess space for at least an office desk. The masterbed room could also fit in a tv console.
As compared with my other newer project which is actually just 150sf smaller, the bedrooms could only fit in a queen sized bed and nothing else. Most of the space goes to baywindows and HS :doh:
You should see the size of 3 bedders in the current new launches. :doh: :doh: :doh:
When challenged, the agents admitted to customising furniture for their rooms. :simmering:
buttercarp
22-10-12, 15:13
Beware new paint and new carpentry has health hazards when you inhale them. google VOCs. Most of the laminates used for carpentry has strong formaldehyde fumes. You need to give it a good airing for some time before moving in. Or you and your family may experience symptoms like headaches, etc. It is akin to glue sniffing.
That adds to the euphoria of getting the new place :o .
That adds to the euphoria of getting the new place :o .
You're right! Getting a "high" on the VOCs! :cheers4:
pinkpolkadot
22-10-12, 15:25
That adds to the euphoria of getting the new place :o .
LOL! A good one!
How much are you willing to spend?
I was wondering what is the reasonable amount cos my turn to let out my ageing unit is about to come.
Buttercarp sis, you have asked a v good qn. For the past few tenancies, i have been telling myself that once this tenancy ends, i am going to spend some time and $ on a major renov. But each time seeing my unit rental could still move, I abandoned the plan and thus, procrastinated.
The $$ spent so far were mostly on the pipes and electrical appliances as all these items die die have to change if not tenants would kpkb. But the optional ones are the tv console, wardrobes, doors and kitchen cabinets which designs do look kind of dated now Some tenants even asked for built-in ovens. May need around $50K for a make-over?
euphoric move in.... nice way to put it. no wonder I always happy happy and steam steam after getting keys. then crash into depression once see the furnishing bill
buttercarp
22-10-12, 17:00
Buttercarp sis, you have asked a v good qn. For the past few tenancies, i have been telling myself that once this tenancy ends, i am going to spend some time and $ on a major renov. But each time seeing my unit rental could still move, I abandoned the plan and thus, procrastinated.
The $$ spent so far were mostly on the pipes and electrical appliances as all these items die die have to change if not tenants would kpkb. But the optional ones are the tv console, wardrobes, doors and kitchen cabinets which designs do look kind of dated now Some tenants even asked for built-in ovens. May need around $50K for a make-over?
Yup, I think that sum is reasonable.
A contractor quoted me $7k just for basic painting and plastering of the walls.
I would need to buy new furniture too.
When it comes to the toilets, I am quite hesistant to do anything to it. Cos the unit being old may have waterproofing issues in future.
If I really want to change the toilet, then I would have to change the whole piping system and waterproofing.
This the contractor quoted me $10K per toilet ! and I have 3 toilets!
Perhaps I may settle for a lower rental than go through all these trouble.
Yup, I think that sum is reasonable.
A contractor quoted me $7k just for basic painting and plastering of the walls.
I would need to buy new furniture too.
When it comes to the toilets, I am quite hesistant to do anything to it. Cos the unit being old may have waterproofing issues in future.
If I really want to change the toilet, then I would have to change the whole piping system and waterproofing.
This the contractor quoted me $10K per toilet ! and I have 3 toilets!
Perhaps I may settle for a lower rental than go through all these trouble.
Wow $10K for a toilet .... changing of taps, flush, shower heads I could easily do it myself la, but piping i definitely cant, so lan lan have to let them earn.
As for painting, i usually engage this handyman who charge me < $300 to paint the entire house (excluding the paints). But dont expect high professional standard ... sometimes the strokes can go anyhow .. lol.
buttercarp
22-10-12, 17:26
Wow $10K for a toilet .... changing of taps, flush, shower heads I could easily do it myself la, but piping i definitely cant, so lan lan have to let them earn.
As for painting, i usually engage this handyman who charge me < $300 to paint the entire house (excluding the paints). But dont expect high professional standard ... sometimes the strokes can go anyhow .. lol.
$10k per toilet is to tear the whole toilet apart. Lay the material for water proofing, change all the pipes, put back the false ceiling, lay new tiles, sinks taps and WC.
Does your handyman do plastering as well?
May I have his contact, please?
Perhaps you pm me? Thanks.
When it comes to the toilets, I am quite hesistant to do anything to it. Cos the unit being old may have waterproofing issues in future.
If I really want to change the toilet, then I would have to change the whole piping system and waterproofing.
This the contractor quoted me $10K per toilet ! and I have 3 toilets!
Perhaps I may settle for a lower rental than go through all these trouble.
$10K for toilet includes the sanitary ware and tiles or not? If not, it's kinda ex....
But honestly changing the toilets and kitchen would make a world of difference to the condo and definitely improve its rentability. If your toilets are quite run down, you might even find it difficult to get a decent tenant.
a nice kitchen is a good way to attack the soft spot on the wife side when you're trying to attract some tenants.
a nice kitchen is a good way to attack the soft spot on the wife side when you're trying to attract some tenants.
This is so true ...... the husband would usually stop at the kitchen entrance and wont bother to take a step in.
Powered by vBulletin® Version 4.2.2 Copyright © 2024 vBulletin Solutions, Inc. All rights reserved.