mr funny
17-12-08, 16:39
http://www.businesstimes.com.sg/sub/views/story/0,4574,310401,00.html?
Published December 17, 2008
LETTER TO THE EDITOR
Risk profiling for home buyers?
MANY Singaporeans who bought property last year have ended up in a bind.
Following the financial turmoil, the property market took an about turn and some banks froze lending altogether. People would stand to lose a lot of money trying to sell in this declining market, a problem further compounded by 'flippers' who are stuck with properties they bought under the deferred payment scheme with every intention to dispose of them when prices went up before TOP.
While property prices can head north erratically during a boom, economic turmoil can also bring about a collapse of the property market with severe consequences for the economy, given the significant proportion that property values constitute in total wealth.
Many people are oblivious to affordability when buying a long-term asset, such as property, when prices skyrocket, and blindly jump into the market hoping to get a good bargain, or simply to make a windfall by flipping the unit.
Like the financial advisory and insurance industries, maybe it is time that the government and industry association implement a fact-finding process for potential home buyers.
Under the Financial Advisers Act/Financial Advisers Regulations, a fact-finding process is mandatory before any investment product can be sold to a consumer. The objective is to ensure consumers buy what they can afford, taking into account their needs and risk profile.
Buying a property involves substantial financial resources and for the average person, probably a life time of commitment to service the loans. Many could end up enslaved by their properties.
They could face significant financial losses when their outstanding mortgage loans far exceed the market value of their property. It is high time a more rigorous regulatory regime be introduced to help in their financial decisions.
Ee Teck Siew
China
Published December 17, 2008
LETTER TO THE EDITOR
Risk profiling for home buyers?
MANY Singaporeans who bought property last year have ended up in a bind.
Following the financial turmoil, the property market took an about turn and some banks froze lending altogether. People would stand to lose a lot of money trying to sell in this declining market, a problem further compounded by 'flippers' who are stuck with properties they bought under the deferred payment scheme with every intention to dispose of them when prices went up before TOP.
While property prices can head north erratically during a boom, economic turmoil can also bring about a collapse of the property market with severe consequences for the economy, given the significant proportion that property values constitute in total wealth.
Many people are oblivious to affordability when buying a long-term asset, such as property, when prices skyrocket, and blindly jump into the market hoping to get a good bargain, or simply to make a windfall by flipping the unit.
Like the financial advisory and insurance industries, maybe it is time that the government and industry association implement a fact-finding process for potential home buyers.
Under the Financial Advisers Act/Financial Advisers Regulations, a fact-finding process is mandatory before any investment product can be sold to a consumer. The objective is to ensure consumers buy what they can afford, taking into account their needs and risk profile.
Buying a property involves substantial financial resources and for the average person, probably a life time of commitment to service the loans. Many could end up enslaved by their properties.
They could face significant financial losses when their outstanding mortgage loans far exceed the market value of their property. It is high time a more rigorous regulatory regime be introduced to help in their financial decisions.
Ee Teck Siew
China