New PRs 'likely to eye private homes under $1m'

[mermaid]

Published August 29, 2013

PRIVATE homes costing under $1 million may now draw keener interest among Singapore permanent residents (PRs) who have held their residency status for less than three years, and who are now blocked from buying HDB resale flats, property consultants say.

They added, however, that the shift to the private property segment by this group of buyers is unlikely to raise the number of private-home transactions significantly.

Mohamed Ismail, chief executive of PropNex Realty, said: "The increase in number of transactions in the private property market will not be huge, but it will also not be totally insignificant."

The HDB resale market recorded 25,094 transactions last year. The HDB said a fifth of resale flats are bought by PRs.

http://www.businesstimes.com.sg/prem...er-1m-20130829

[mermaid]

demand for HDB resale dip while those of pte will increase.
so finally HDB $ is gonna delink fm pte?

[Amber Woods]

You need to be in the shoes of a PR to understand what they are looking at.

Like what the expat forumer said, HDB resale flats are still a lot cheaper than private flats.

But the most important consideration for PRs when come to housing is that they would compare buying a flat vs renting one. By buying a HDB resale flat, the PR stands to recoup all the money thrown into housing when the HDB resale flat is eventually sold prior to the PR family leaving Singapore. With a bit of luck, he might even be able to make a good capital gain on selling his HDB resale flat. If the PR rents a flat, he will never be able to recoup any rentals when he leaves.

For example, assuming the PR pays $2,000 per month to rent a HDB flat and assuming he will work in Singapore for the next 20 years before deciding to retire back in his home country, his total rental expenses will be $480,000 for the whole of 20 years. This money, of course, cannot be recovered.

Assuming he buys a 4 room HDB resale at $500,000, he will still come out better even if he loses, say, $300,000 (including interests) when he sells his flat 20 years later. And certainly, the downside risk in buying a HDB resale flat is a lot lesser than buying a private one.

In their minds, PRs will tend to compare with rentals. And for this reason, they are also more willing to aggressively bid for a HDB resale flat.

[mermaid]

but the problem is, they r unable to buy HDB within the 1st 3 yrs.
so now the option for PRs is either:

1. rent HDB for 3 yrs and den buy resale hdb
2. buy resale condo and den buy resale hdb after 4 yrs.
which one is better?

[Amber Woods]

If you are an average PR, would you go and buy a $1m PC or wait 3 years to buy $400K resale flat? Renting for 3 years is only about $70K vs paying 50K of ABSD upright when buying a PC now..

[princess_morbucks]

The new PRs usually will rent at least 1 year before they buy, unless they have been in SG for a few years before getting their PR.
So overall not much effect.

[mermaid]

If you are an average PR, would you go and buy a $1m PC or wait 3 years to buy $400K resale flat? Renting for 3 years is only about $70K vs paying 50K of ABSD upright when buying a PC now..

ABSD is 5% nia for PR rite? so pte resale de ABSD oni ard $25-35k if buy ard ppty of price range $550-$700k.

shdnt be counting normal BSD since resale HDB oso will hv BSD.

u oso din factor in how much the pte ppty would hv appreciated after the 3 yrs.

in the end, might be worser off renting for the 1st 3 yrs wor!

[walkthetiger]

If you are an average PR, would you go and buy a $1m PC or wait 3 years to buy $400K resale flat? Renting for 3 years is only about $70K vs paying 50K of ABSD upright when buying a PC now..

Factoring the quality and size of $1m PC, the choice of average PR seems clear to all.

[xebay11]

but the problem is, they r unable to buy HDB within the 1st 3 yrs.
so now the option for PRs is either:

1. rent HDB for 3 yrs and den buy resale hdb
2. buy resale condo and den buy resale hdb after 4 yrs.
which one is better?

Another option for the talentless low pay foreigners especially those from North, is to rent in JB and wait the 3 years...all the properties near Holiday Plaza or Taman Sentosa area, huat ah!!!

[mermaid]

Another option for the talentless low pay foreigners especially those from North, is to rent in JB and wait the 3 years...all the properties near Holiday Plaza or Taman Sentosa area, huat ah!!!

I srsly dun tink the bulk of PRs r high earners. Most shd still be under the $5k pay. 3 more yrs of rental expense is a lot.
Lol! I oso tink tis new rule might cause more new msian PR to rent in JB instead. No wonder more & more Singaporeans turned their attn to JB ppty liao, haha …

[walkthetiger]

The new PRs usually will rent at least 1 year before they buy, unless they have been in SG for a few years before getting their PR.
So overall not much effect.

There also so many average foreigners affected, this group was all along eyeing on HBD but waiting for PR status.

[Amber Woods]

ABSD is 5% nia for PR rite? so pte resale de ABSD oni ard $25-35k if buy ard ppty of price range $550-$700k.

shdnt be counting normal BSD since resale HDB oso will hv BSD.

u oso din factor in how much the pte ppty would hv appreciated after the 3 yrs.

in the end, might be worser off renting for the 1st 3 yrs wor!

Again one has to think like a typical PR to know what they are looking at.

If they spend $2K on renting a HDB flat means that his family needs the space. If he choose to buy, he would probably buy a 4-rm HDB flat for $400k. He would not pay $500K to $700K for a PC half the size of the 4-rm flat.

The risk of holding a resale 4-rm flat is much lower than holding a $1m PC especially this PR has no intention of staying put in Singapore.

[xebay11]

I srsly dun tink the bulk of PRs r high earners. Most shd still be under the $5k pay. 3 more yrs of rental expense is a lot.
Lol! I oso tink tis new rule might cause more new msian PR to rent in JB instead. No wonder more & more Singaporeans turned their attn to JB ppty liao, haha …

Yes, actually I am quite attracted to those landed property in between KSL and Holiday Plaza for own stay or maybe rent out.

[mermaid]

Yes, actually I am quite attracted to those landed property in between KSL and Holiday Plaza for own stay or maybe rent out.

but I heard rental market for msia is not as lucrative as in sg leh ...
personally I find it a risk to stay in msia. no matter how cheap oso no use, my life more precious.

danger aside, it is afterall not sg govt. u oso dunno wat mischief their govt will be up to in the future ...

[mermaid]

Again one has to think like a typical PR to know what they are looking at.

If they spend $2K on renting a HDB flat means that his family needs the space. If he choose to buy, he would probably buy a 4-rm HDB flat for $400k. He would not pay $500K to $700K for a PC half the size of the 4-rm flat.

The risk of holding a resale 4-rm flat is much lower than holding a $1m PC especially this PR has no intention of staying put in Singapore.

so wat do u tink will happen when there is not enuff HDB for rental in the market?

[Amber Woods]

so wat do u tink will happen when there is not enuff HDB for rental in the market?

The rental market is one big one consisting of HDB flats and mass market PCs for this segment of the market. If there is an oversupply of PCs, rental will fall and some will migrate to PC rental. Market forces will find its way.

[mermaid]

The rental market is one big one consisting of HDB flats and mass market PCs for this segment of the market. If there is an oversupply of PCs, rental will fall and some will migrate to PC rental. Market forces will find its way.

I suppose a lot of OCR condos who currently unable to find tenants did indeed benefited from tis new measure.
take NV resi at pasir ris for eg. 3 bedder $3.5k nego. HDB 5 rm flat abt $2.8k in similar loc.

[Amber Woods]

I suppose a lot of OCR condos who currently unable to find tenants did indeed benefited from tis new measure.
take NV resi at pasir ris for eg. 3 bedder $3.5k nego. HDB 5 rm flat abt $2.8k in similar loc.

Bearing in mind that many upgraders are renting out their HDB flats and not selling them means that there are a lot more HDB flats available for rental.

Should HDB at a later stage mend the rule not to allow renting of entire flat, some upgraders may decide to move back to their HDB flats leaving their PCs for rental. Some upgraders may choose to sell their HDB flats instead and continue to live in their PCs.

As long as there is no shortage of rented flats be it HDB or private, these PRs make their decisions to buy or rent base on the amount of rental they are going to pay verse buying their own and the risk of holding the properties given that most PRs have no intention of staying put.

[sunny88]

Bearing in mind that many upgraders are renting out their HDB flats and not selling them means that there are a lot more HDB flats available for rental.

Should HDB at a later stage mend the rule not to allow renting of entire flat, some upgraders may decide to move back to their HDB flats leaving their PCs for rental. Some upgraders may choose to sell their HDB flats instead and continue to live in their PCs.

As long as there is no shortage of rented flats be it HDB or private, these PRs make their decisions to buy or rent base on the amount of rental they are going to pay verse buying their own and the risk of holding the properties given that most PRs have no intention of staying put.

I note your emphasis that most PRs do not intend to stay for good.

And I agree 100% with you!

In the circumstances, we should just let them loose to buy from Singaporeans and benefit the locals. When they sell their properties and leave for good, IRAS can impose special levy on the profit made by PRs on residential properties. Same rationale for foreigners buying PCs.

[freesoul]

5yr EC is a better choice for PRs who are barred from buying HDB, compared to more expensive PC.

[reporter2]

http://www.businesstimes.com.sg/prem...er-1m-20130829

Published August 29, 2013

New PRs 'likely to eye private homes under $1m'

But such buyers unlikely to raise demand by much: property watchers

By Felda Chay [email protected]


PRIVATE homes costing under $1 million may now draw keener interest among Singapore permanent residents (PRs) who have held their residency status for less than three years, and who are now blocked from buying HDB resale flats, property consultants say.

They added, however, that the shift to the private property segment by this group of buyers is unlikely to raise the number of private-home transactions significantly.

Mohamed Ismail, chief executive of PropNex Realty, said: "The increase in number of transactions in the private property market will not be huge, but it will also not be totally insignificant."

The HDB resale market recorded 25,094 transactions last year. The HDB said a fifth of resale flats are bought by PRs.

The government had announced this week that Singapore PR households with no Singapore-citizen owner will have to wait three years from the date of obtaining their PR status before they become eligible to buy a resale HDB flat.

Yesterday, the HDB clarified that if PR applicants want to buy such a flat together, both must meet the three-year wait-out period before a sale can be inked. The sale cannot go through if just one of two potential buyers of a flat meets the condition. In cases where there is only one buyer, at least one other PR essential occupier who forms a family unit with the buyer will have to have fulfilled the wait-out period.

Mr Ismail said: "So let's say about 5,000 HDB resale flats are bought by PRs every year. Since some PR buyers will actually meet the three-year requirement, and some may choose to rent, the number of PRs who choose to buy private property could add 2,000 or so transactions a year."

Steven Tan, the managing director of OrangeTee, said private homes costing less than $1 million will see the keenest interest from this group of buyers, because they are likely to be middle-income families and unlikely to shell out large sums of money for a home.

"Many may not be prepared to rent because there are no returns to that investment. So they may end up buying a private home," he said.

Homes below $1 million will also make for a more manageable amount in additional buyers' stamp duty, so such properties will be in "high demand", noted Eugene Lim of ERA Realty.

Aside from the three-year wait-out period, the government also announced that resale flat buyers who take HDB loans will henceforth be able to use only up to 30 per cent of their gross monthly income to repay their loans, down from 35 per cent.

And they can take only up to 25 years to repay HDB housing loans, down from 30 years previously; bank loans taken to buy HDB flats must be paid up in 30 years, down from 35.

The government also announced an enhanced Special CPF Housing Grant (SHG), which will be extended to middle-income families earning up to $6,500 and buying four-room flats. Previously, the SHG was pitched only at families earning up to $2,250 and seeking to buy two-room and three-room flats.

In a Facebook posting yesterday, National Development Minister Khaw Boon Wan said the enhancement will cost the government at least $150 million more a year.

"This will raise our current housing grants for new flats (the Additional CPF Housing Grant and SHG) from about $290 million to over $440 million a year.

"The enhancement is not a trivial policy shift, but a significant one made after careful consideration."

[edwinleeap]

5yr EC is a better choice for PRs who are barred from buying HDB, compared to more expensive PC.

Very sharp to see this

[mermaid]

5yr EC is a better choice for PRs who are barred from buying HDB, compared to more expensive PC.

psf wise, I agree wif u, resale EC is more worth den PC but EC quantum is bigger in general, hence affordability is an issue.

[freesoul]

psf wise, I agree wif u, resale EC is more worth den PC but EC quantum is bigger in general, hence affordability is an issue.

for a 3 bedder 5yr EC, the price tag is generally under 1 mil, which is considered affordable for the aflluent ones (PR).

[gemstone]

You need to be in the shoes of a PR to understand what they are looking at.

Like what the expat forumer said, HDB resale flats are still a lot cheaper than private flats.

But the most important consideration for PRs when come to housing is that they would compare buying a flat vs renting one. By buying a HDB resale flat, the PR stands to recoup all the money thrown into housing when the HDB resale flat is eventually sold prior to the PR family leaving Singapore. With a bit of luck, he might even be able to make a good capital gain on selling his HDB resale flat. If the PR rents a flat, he will never be able to recoup any rentals when he leaves.

For example, assuming the PR pays $2,000 per month to rent a HDB flat and assuming he will work in Singapore for the next 20 years before deciding to retire back in his home country, his total rental expenses will be $480,000 for the whole of 20 years. This money, of course, cannot be recovered.

Assuming he buys a 4 room HDB resale at $500,000, he will still come out better even if he loses, say, $300,000 (including interests) when he sells his flat 20 years later. And certainly, the downside risk in buying a HDB resale flat is a lot lesser than buying a private one.

In their minds, PRs will tend to compare with rentals. And for this reason, they are also more willing to aggressively bid for a HDB resale flat.

Let's ask the gov to ban them buying hdb! Foreigners/pr should just be restricted to pte condo., not even landed!

[flxcat]

A few of my PR friends are more lucky(slightly better income) as they can still bite bullet and buy private condo or apartment to stay.

They choose not to buy HDB for a simple reason, not going to grow root here, but interested to tap Singapore growth where they can keep the unit as investment after they decided to leave for good. Since it is private, they need not forced to sell and can officially rent out or wait for capital appreciation.

The view is no many country have a good rental potential and Singapore is definitely is one of these country and above all the stable SGD.

[mermaid]

Let's ask the gov to ban them buying hdb! Foreigners/pr should just be restricted to pte condo., not even landed!

I tot landed all along can oni be purchased by sinkies nia?

I dun tink govt will ban them completely cos tat would means tat sinkies will hv problem finding buyers for their HDB flats ...

I tink a better way is to make PR pay ABSD on hdb flat as well, hahaha

[mummy]

Yes, actually I am quite attracted to those landed property in between KSL and Holiday Plaza for own stay or maybe rent out.

For own stay is ok but if hope to sell later might want to reconsider as I just read in Sammyboy LivinginJB forum that they might ban reselling of properties to foreigners...there was an article in one Kampongsinchew daily, dunno if reliable tho, still trying to find out...

[mermaid]

For own stay is ok but if hope to sell later might want to reconsider as I just read in Sammyboy LivinginJB forum that they might ban reselling of properties to foreigners...there was an article in one Kampongsinchew daily, dunno if reliable tho, still trying to find out...

even if it is for own stay it is still not ok cos cannot resell to foreigners means tat it's gonna be a white elephant!

my dear fellow bros, 不要贪小便宜。

好货非便宜;便宜非好货。

furthermore to invest in ppty dominated in a depreciating currency is a bad, bad strategy!

[economist]

All your discussions are based on the assumptions that PRs have to stay in Singapore.

Put yourself in PRs' shoes, don't you find PR status less attractive? So, another consequence is to leave Singapore for other cities; and those holding EP will not apply PRs and leave Singapore earlier too.

And then what happens to our rental income?