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Thread: CM6: Hypothetical Cases

  1. #1
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    Default CM6: Hypothetical Cases

    From sbr

    Here are hypothetical cases to illustrate impact of new property measures

    What happens if a 30-yr old first time buyer buys a S$1mn condo?

    According to Nomura, unless home buyers have ample capital, mortgage repayment could now be 24-45% higher and thus less attractive for existing home owners to refinance.

    Case 1: 30-yr old first time home buyer buys a S$1mn condo

    Before 6 Oct 2012:

    Max LTV = 80%, assuming a 40- yr mortgage at a rate of 1.5%pa, equity = S$200k, monthly
    mortgage repayment c. S$2,220

    With effect from 6 Oct 2012:

    Scenario 1: max mortgage tenure of 35-yr at a rate 1.5%pa but LTV capped at 60%, equity = S$400k, monthly mortgage repayment c. S$1,840.

    Scenario 2: takes a 30-yr mortgage at a rate of 1.5%pa and LTV of 80%, equity = S$200k, monthly mortgage
    repayment c. S$2,760

    Remarks:

    Unless the first time home buyer has an additional capital of S$200k, the monthly mortgage repayment w ill now be c. 24% more than previously.

    Case 2: Existing home owner who bought his unit 3 yrs ago for S$1mn at LTV of 80% looking to refinance. Assuming existing mortgage is 40-yr at rate of 1.75%pa, monthly repayment c. S$2,320

    Before 6 Oct 2012:

    Refinance w ith 40-yr mortgage at a rate of 1.5%pa, monthly mortgage repayment c. S$2,100.

    With effect from 6 Oct 2012:

    Max tenure allow ed = 32 yrs, assuming rate of 1.5%pa, monthly mortgage repayment c. S$2,500

    Remarks:

    Does not make sense to refinance even though market rate is low er than that of the existing loan.

    Case 3: 40-yr old Singapore citizen with an existing mortgage buys a 2nd condo at S$1mn for investment.

    Before 6 Oct 2012:

    Max LTV = 60%, assuming a 40- yr mortgage at a rate of 1.5%pa, equity = S$400k, monthly mortgage repayment c. S$1,660

    With effect from 6 Oct 2012:

    Scenario 1: max mortgage tenure of 35-yr at a rate of 1.5%pa but LTV capped at 40%, equity = S$600k, monthly mortgage repayment c. S$1,220

    Scenario 2: takes a 25-yr mortgage at a rate of 1.5%pa and LTV of 60%, equity = S$400k, monthly mortgage repayment c. S$2,400

    Remarks:

    Unless the buyer has on hand capital of S$600k, the monthly mortgage repayment is now c. 45% higher than before. Note that for PRs buying a second residential property, ABSD of 3% w ill also apply.

    Case 4: A company buys a S$1mn condo for investment.

    Before 6 Oct 2012:

    ABSD of 10% applies and max LTV = 50%. Minimum holding period of 4 yrs to avoid SSD. Assuming 40-yr mortgage, 3.5% rental yield and 20% capital appreciation upon disposal at end of 4 yrs, IRR = 7%.

    With effect from 6 Oct 2012:

    Max LTV = 40% and max. mortgage tenure = 35-yr. All other conditions apply = lower IRR of 6.3%

    Case 5: A developer buys a condo plot with GFA = 0.4mn sq ft at S$750psfppr. The project is launched and fully sold 1 yr later at S$1,300psf. The project takes 4 yrs to complete.

    Before 6 Oct 2012:

    Max LTV = 50%. Assuming cost of borrow ing = 2%, IRR = 7.5%.

    With effect from 6 Oct 2012:

    Max. LTV = 40%. Assuming cost of borrow ing = 2%, IRR 6.3%.

    Remarks:

    This calculation assumes that the project is fully sold and completed within 5 yrs. Otherwise, the ABSD of 10% applies.

  2. #2
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    Another impact, HDB queue will be longer. BTO price will be going up and up, now that HDB provide a better financing and affordability in comparison to PC.

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    Quote Originally Posted by indomie
    Another impact, HDB queue will be longer. BTO price will be going up and up, now that HDB provide a better financing and affordability in comparison to PC.
    This is what our gov wish to see!!

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    Quote Originally Posted by indomie
    Another impact, HDB queue will be longer. BTO price will be going up and up, now that HDB provide a better financing and affordability in comparison to PC.
    Sign... It seems that HDB is not so affordable now as compared to last time. The theory is if you can't afford, stay in suburban area, leave the town area for the rich people. Even for some of the resale flats, the resale prices can be comparable with pte ppty. So what's the difference between the public and private housing?

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    Quote Originally Posted by irisng
    Sign... It seems that HDB is not so affordable now as compared to last time. The theory is if you can't afford, stay in suburban area, leave the town area for the rich people. Even for some of the resale flats, the resale prices can be comparable with pte ppty. So what's the difference between the public and private housing?
    Not much different.... Its only tiiming different. Gov let the private housing to go sky high first, before they sell public housing at sky high price. Otherwise how to justify expensive HDB?

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    Quote Originally Posted by carbuncle
    From sbr

    Here are hypothetical cases to illustrate impact of new property measures

    What happens if a 30-yr old first time buyer buys a S$1mn condo?

    According to Nomura, unless home buyers have ample capital, mortgage repayment could now be 24-45% higher and thus less attractive for existing home owners to refinance.

    Case 1: 30-yr old first time home buyer buys a S$1mn condo

    Before 6 Oct 2012:

    Max LTV = 80%, assuming a 40- yr mortgage at a rate of 1.5%pa, equity = S$200k, monthly
    mortgage repayment c. S$2,220

    With effect from 6 Oct 2012:

    Scenario 1: max mortgage tenure of 35-yr at a rate 1.5%pa but LTV capped at 60%, equity = S$400k, monthly mortgage repayment c. S$1,840.

    Scenario 2: takes a 30-yr mortgage at a rate of 1.5%pa and LTV of 80%, equity = S$200k, monthly mortgage
    repayment c. S$2,760

    Remarks:

    Unless the first time home buyer has an additional capital of S$200k, the monthly mortgage repayment w ill now be c. 24% more than previously.

    .
    Either

    - This Nomura analyst is an i* who thinks that a buyer of this profile borrowed more than 30 years,

    Or

    - The buyer is indeed an i*

    Oops...moderator don't flame me ah..

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    Quote Originally Posted by indomie
    Another impact, HDB queue will be longer. BTO price will be going up and up, now that HDB provide a better financing and affordability in comparison to PC.
    Is BTO prices going up??? I thought KBW promised in BLACK and WHITE that BTO prices will not track market price anymore but rather peg to construction costs.

    how come people never read newspaper?

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    Quote Originally Posted by wind30
    Is BTO prices going up??? I thought KBW promised in BLACK and WHITE that BTO prices will not track market price anymore but rather peg to construction costs.

    how come people never read newspaper?
    400k for a 4 room flat? What kind of construction cost is that?

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    Quote Originally Posted by wind30
    Is BTO prices going up??? I thought KBW promised in BLACK and WHITE that BTO prices will not track market price anymore but rather peg to construction costs.

    how come people never read newspaper?
    Actually, it is all up to the individual to say. The seller can also say that I buy/pay high, so I must sell high. One good example is a few months back, I went to a hawker centre to buy a piece of fruit, the fruit seller told me that the prices of the fruits had gone up as his vendor had charged him higher, so instead of the normal 50cts, he charged me 60cts. But till now, other stalls in the same hawker centre are still selling at 50cts. Though this is a small amount, so not much people bother about it but what happens if it involves a big sum of money. So I wonder is the inflation cause by "man-made inflation".

    I always heard people say "only businessman can make money" .

  10. #10
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    Quote Originally Posted by irisng
    Actually, it is all up to the individual to say. The seller can also say that I buy/pay high, so I must sell high. One good example is a few months back, I went to a hawker centre to buy a piece of fruit, the fruit seller told me that the prices of the fruits had gone up as his vendor had charged him higher, so instead of the normal 50cts, he charged me 60cts. But till now, other stalls in the same hawker centre are still selling at 50cts. Though this is a small amount, so not much people bother about it but what happens if it involves a big sum of money. So I wonder is the inflation cause by "man-made inflation".

    I always heard people say "only businessman can make money" .
    Thanks for sharing your story sis.

    The moral of your story is not that prices have gone up, but that buyers (like you) are still willing to pay for it. Especially when you know that other stalls are still selling at 50c.

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    Just when u think that u are ahead financially.... Then come the inflation, increase taxes, new laws preventing capital gains, the rest of our friends catching up..... These things seem never end.

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    Quote Originally Posted by carbuncle
    Thanks for sharing your story sis.

    The moral of your story is not that prices have gone up, but that buyers (like you) are still willing to pay for it. Especially when you know that other stalls are still selling at 50c.
    No lah, I realise it only after a few days when I went to another stall to buy. So now I don't patronize this stall anymore.

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    Quote Originally Posted by irisng
    No lah, I realise it only after a few days when I went to another stall to buy. So now I don't patronize this stall anymore.
    Too bad we only have 1 seller for hdb.

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    HDB valuation SGD 595,000 for 5 Room, rented out 2 years ago for SGD 2400.

    1. What is fair market value of the HDB?

    2. Rental increase to SGD 2800, what is the new value?

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    Quote Originally Posted by Arcachon
    HDB valuation SGD 595,000 for 5 Room, rented out 2 years ago for SGD 2400.

    1. What is fair market value of the HDB?

    2. Rental increase to SGD 2800, what is the new value?
    Yes. Interestingly, when rental is E stamped, their valuation follows the rental. Rents at HDB still holding very well. My relative 5 bedroom lease extended another year to 2014.

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    Want cheap HDB, stop HDB renting. Full stop. U cant have it both way. Cheap HDB price yet you can milk it by renting high.

    Or impose a levy on people who rent out HDB. Don't waste tax payer money to subsidize people who want to profit from HDB

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    Quote Originally Posted by Allthepies
    Want cheap HDB, stop HDB renting. Full stop. U cant have it both way. Cheap HDB price yet you can milk it by renting high.

    Or impose a levy on people who rent out HDB. Don't waste tax payer money to subsidize people who want to profit from HDB
    *Like
    *Agree

    Seriously HDB should not be for rental and government should impose a tax on HDB rental. Eg. Owner need to apply for a license to rental out. The cost of the license will be say 30% of the rental collected. The objective is : It is the PEOPLE of Singapore who should benefit from HDB rental and not the individual. Why should we subsidize HDB flats for people to rental out and make money ?

    Another point regarding the impact of CM6 - there is a VERY BIG assumption that people cannot afford a shorter loan tenure. This is absolutely wrong. If you have purchased a property before you will know that it makes PERFECT sense to loan to the max at the initial period. Even if you can afford a shorter tenure, loan to the max.

    This is the Principle of Bank Loans : Easy to repay, hard to loan extra.

    DKSG

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    Hdb owner will have declared rental income once it is e-stamp as there is a record in iras.
    Quote Originally Posted by cnud
    Yes. Interestingly, when rental is E stamped, their valuation follows the rental. Rents at HDB still holding very well. My relative 5 bedroom lease extended another year to 2014.

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    CM7

    HDB owner buy private, 10% ABSD
    HDB owner buy private, to dispose of HDB within 6mo
    HDB owner currently renting out whole flat, not allowed to buy private
    All COV subject to tax as income

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    Do you mean income (including COV) from sale of hdb is not taxable? Got to declare.
    Quote Originally Posted by carbuncle
    CM7

    HDB owner buy private, 10% ABSD
    HDB owner buy private, to dispose of HDB within 6mo
    HDB owner currently renting out whole flat, not allowed to buy private
    All COV subject to tax as income

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    Quote Originally Posted by carbuncle
    CM7

    HDB owner buy private, 10% ABSD
    HDB owner buy private, to dispose of HDB within 6mo
    HDB owner currently renting out whole flat, not allowed to buy private
    All COV subject to tax as income
    *Very Like

    With item 2, no need item 1 la. Give them a chance to upgrade!
    They should mandate those owning HDB and private to dispose of either 1 within 9 months from TODAY! Else, property tax for the PC will be 50% of AV.

    I seriously cannot understand government stand on those who own HDB + private. Does government really intend to subsidize them ?

    Office Boy never get subsidy, so red eyed! hahahaa!

    DKSG

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    since when capital gain need to declare?

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    Do not mean capital gain tax. There is box in income tax declaration called "other income"?
    Quote Originally Posted by carbuncle
    since when capital gain need to declare?

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    oh you mean the box where we declare our 4D and TOTO winnings...

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    Becos some PMETs do provide consultancy services which can be equal or more than their active monthly income. This is where they can declare becos sale of property is made known to Iraq right?

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    Capital gain from property sale is non taxable for most situations.

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    Good to know
    Quote Originally Posted by Allthepies
    Capital gain from property sale is non taxable for most situations.

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    Quote Originally Posted by DC33_2008
    Good to know
    Bro, it is taxable when it is deem by IRAS as trade/biz. So for example, you Love watches. You go to the Internet and do a lot of buying and selling. Then, it is considered you trade in watches and not a hobby. So frequency of trade is important. So no need to Ok?
    I simplify for you.

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    What if I sell all at one go or one after another? Should be alright?
    Quote Originally Posted by chestnut
    Bro, it is taxable when it is deem by IRAS as trade/biz. So for example, you Love watches. You go to the Internet and do a lot of buying and selling. Then, it is considered you trade in watches and not a hobby. So frequency of trade is important. So no need to Ok?
    I simplify for you.

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    Quote Originally Posted by DC33_2008
    What if I sell all at one go or one after another? Should be alright?
    It depends on how long you hold and if they view you to be trading. Typically, they will speak with you and tell u you are trading(if they view it to be).
    If you held it for say 6 years and decide to let go all, typically, because you held it for 6 yrs and rented out, they deemed it as investment and most likely will not tax. The trick is they did not clearly define trading and they did define frequency of trade. So the definition is up to them.
    But I should be overly worriedif I had held for awhile.

    Typically, if you have it as an occupation/"second" job, then tax kicks in. But how to have it as a job if u sell it after say 3 years. You will go hungry by then. Hahahaha.

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