Sidelined in the private property game

Soapbox
Published December 16, 2006

Sidelined in the private property game
One young aspiring owner waits for the next property bust...


By JEAN CHUA
REPORTER

I HAVE missed the boat.


A home in a private development is beyond my reach now. This wasn't the case two years ago.

At the end of 2004, I started looking into buying my first home. My specs: a two-bedroom private unit. Actually, there wasn't really any incentive to go private. It was more a case of not having a choice - I was single and under 35, so I could not buy an HDB flat.

Considering my budget, I was pleasantly surprised to find that I actually had options in areas I would like to live in. I looked at walk-up apartments in the Joo Chiat/Katong area that were close to 20 years old. Sure, they needed some renovation to make them more to my liking, but for the amount I could pay, I could get a two-bedder of about 900 sq ft.

I also looked at Pierce View, a freehold development with about 40 units, close to the reservoir.

Thinking I could be picky and take my time to choose - after all, prices had fallen for so many years and there was no sign that they were going to go the other direction any time soon - I put off my purchase.

Before I know it, landlords are asking 15-20 per cent more for the same type of walk-ups. And that Pierce View apartment? The owner wants 15 per cent more too.

He still hasn't sold the unit, a freehold 980 sq ft two-bedder. People are sticking to their guns and refusing to pay what he wants - and he is not willing to negotiate.

The poor fellow, who bought this apartment during the previous property boom in the mid-90s, is hoping that the IR effect, which has spilled over to nearby Joo Chiat/Katong, will come to the northeast too. That is the only way he can make a profit, after making mortgage payments for 10 years and seeing the value of his property drop.

Meanwhile, I continue to look at the Joo Chiat/ Katong/Telok Kurau area. About 12 months ago, I saw a bunch of new developments in one of the lorongs at Telok Kurau. The builders were asking about $550 per square foot, which was fine. But I was posted to China, so I didn't buy the unit.

Last month, I went to the same area - give or take a few lorongs - and lo and behold, I could not find anything cheaper than $700 psf. That's a 30 per cent increase in just 12 months.

What happened between then and now?

Some say it's the IR effect, or maybe the 'Hongkonger effect'. With Genting and Las Vegas Sands pumping in billions of dollars to add exhibition space, hotels, restaurants, marine parks, casinos, shops and amusement rides, tourists will pour in, tens of thousands of jobs will be created and everyone will be better off.

The economy at large is also doing well. Government estimates peg this year's growth at 7.5-8 per cent, before easing to 4-6 per cent next year.

Incomes will rise more next year than they did this year - which was itself a good 12 months for workers. Asset prices are going up. Everyone, it would seem, is better off.

So why am I whining about rising property prices?

Well, while it is true that the headlines are being grabbed by the foreigners and millionaires paying record prices for Marina Bay Residences, the rest of us are really just spectators - and cursing about the thousands of extra dollars we have to fork out in interest payments every year.

Well, at least some folks have a private home. Me? I may have to wait for the next bust or until I'm 35 or until some lucky man marries me - whichever comes first.