errr.. if I was rushing to work, last thing I want is idyllic... the speedier the boat the better
Newbie
errr.. if I was rushing to work, last thing I want is idyllic... the speedier the boat the better
Senior
There already is an Idyllic service. When the critical mass comes up in a few years time, maybe there will be the speedier service. Did anyone notice that RG already has its own "dock" where people can board and alight from boats? Its located closer to Jiak Kim bridge than Robertson bridge I think.
Junior
I believe ferry is meant to be leisure and even if they want to speed it up.. they can't outdo the speed offered by land transportation.
Ferry is very applicable when it is used to transport people between islands ... maybe singapore to sentosa to Pulau Ubin to St John to Pulau Tekong to Whatever island we have...
Like in Sydney... a lot of people live in Manly Island ..and take ferry to/fro work..
But in Brisbane.. the ferry .. is along the river and you can see there is hardly a crowd since most would rather take a car...
Junior
Looks like prices are still in the $12xxpsf region.. went to see the 2rm layout and their kitchen layout and design is actually much better than the 3rm.. heard frm a few agents that there will be more key collections for the 2rms in #13/14 next wk
Newbie
The respone for RG is very good. Many owners after collected keys decided to stay or rent. See some sellers asking for higher price now. Understand that some deals closed yesterday at higher than expected price. May be got to wait for all the owners to collect keys and than the price will stabilise.
Newbie
you will need to wait between 3 to 12 months (or even longer). That is when we will see people loose holding power. Off course some will get lucky. There are people who need to rent ASAP, so they cannot wait, so they take what is available. Then there are people who decide to stay (although who knows if this is by choice). Lets not forget the real morgage killer, interest rate increase. While not yet on the horizon it will happen sooner or later. If you are an investor you dont buy now. Buying now means you are speculating. Rental currently does not justify a 1200psf.Originally Posted by rogerang
Junior
agree absolutely ~
Newbie
what a f..cking crap it is !!! " Owners after collecting the keys decided to stay")) You make me sick .. so according to you they lived on the streets prior to collecting the keys , and then ohh , what a f..king nice place it is why don't we stay in it .. rediculous ,, I beleive whoever the owners they would have decided a very very long time ago what they wanna do with this ..
Now open the paper , 3 bedders high floor asking 5k and I bet if you offer 4.5k they will go for it !! ( if they do not take 4.5k they will miss the boat sitting on empty unit and waiting a few month to catch another boat at 3.5k per month as supply is damn massive and demand lesser and lesser ) This 4.5k is just less then 2% yeild after agent's fee, property tax, maintenance , some minor renovations e.t.c. not even enough to service your mortgage !! and just wait for the interest to go up and then you are f..ked !! Negative yield !! At current unwrapping of the situation on ther market this project not worth even 1000 psf !! If you have some money buy Australian dollars while it still cheap and put on time deposit , you make 3% yield per annum , haveno obligations, no risks, you get currency appriciation when commodity pick up , and you are very liquid in case something hot comes on the market like even RG at 800psf in September!
Newbie
Nice try J-Dog in your analysis. Initially you mentioned that price for RG will free-fall to $800 by April-May. Then you pushed the dateline to June (as below), July-August (as below), then October-November (as below) and then finally to end of the year (as below).So what's next? By mid 2010?
Sometimes, it's good to have dreams.
Ha-ha by April-May it will definetely drop to 800psf and even below !! Trust me !! Let's let the chance to a stupid buyers buy a few units at 1000psf and then we will take the rest $750-800 they will have no choice but to offload ..
They sold 100 units at $700 , they've been defaulted, got 20% deposit so as far as they are concerned even if they sell at 700 they still making profit of 20% !! Just wait everybody .. Now I am flooded with smses and emails regarding RG.. so too many units, to many keen sellers , too much supply coming to the market which will bring the price down, down, down !! How would you feel buying at 900psf realising the next month you could have bought it at 800psf ?In this deflationary market , Cash is the king and they are being sucked by the banks and financial institutions with amazing rate , the cash drying up rapidly .. Soon there will be a very few buyers with cash to buy , expats less and less , businesses are suffering , pay cuts e.t.c., lay offs, rental rapidly going down .. 40,000 units to TOP and most of them will flood rental maret which is crazy weak now ..
just open a news paper .. Sail being offered for 2k per month , CSR - 2k per month can get for 2 bedrooms, Hillview can get 2 bedder for 1.3k per month all that half the price from what it would be a year ago .. Luxury rentals got hit the most , everyone downgrading to cheaper places to stay as no spare cash to spend .. and with RG there will be 500 too many units on the market .. This is only a tip of an iceberg ... I am damn sure if I wait till Oktober - November my dick will only get bigger after I buy at 700psf and have a very competitive advantage at renting at higher yeild and cheaper price ..
Junior
relax lah, even top economists and analysts make adjustments as time passes.Nice try J-Dog in your analysis. Initially you mentioned that price for RG will free-fall to $800 by April-May. Then you pushed the dateline to June (as below), July-August (as below), then October-November (as below) and then finally to end of the year (as below).
Sometimes, it's good to have dreams
so he is more of a price pessimist, i don't see any issue here ~
DN
I am generally inclined to agree with J-Dog on the point of RG pricing. But having said this, I suspect some of the owners are already prepared to take the rental route, even if it means taking negative yield. These are two possible scenarios:-
Let’s assume this is the worse case scenario for owners – 3rd phase purchaser :
Assumptions:-
1507sf bought @ 1500psf = SGD2.26mio.
Loan amount (80%) = SGD1.8mio; tenor = 35 years. All-in rate for mortgage = 1.5%(SIBOR) + 1.0% (margin) = 2.5%
Mortgage payment monthly = SGD6.5K
Maintenance ~ SGD350 per month (I heard from agents. We assumed it at face value)
Monthly financial commitment of owner = 6850/1507 = 4.5psf per month
Rent Option – At a rental which will not cover monthly obligations
Rent out: Assuming mortgage and maintenance for the unit is 4.5psf per month (psfpm) - this works out to be about SGD6800 mortgage per month for a 1507 unit. Next, we assume rental for a 1507sf unit is 3psfpm (this works out to be SGD4500 rent per mth for the unit).
Net loss to the owner is (4.5-3)*12 = 18psf per year.
After two years, owner lose 36psf, on a standardised basis (i.e. psf).
This said, the above standardised loss (i.e. 36psf after 2 years), keeps the owner to retain ownership of the property after 2 years and thus he is still exposed to price risk of market two years later. If he takes the rental route, and after 36psf loss on his property, when he renews the rental contract, he would be continue to be exposed to further rental losses or sale loss (i.e. market risk).
Sell @ Loss Option
Sell: If the owner obtain the unit at the same price 1500psf. To achieve the same equivalent result as per the rental scenario, owner will sell at 1500-36 = 1464psf. If owner sells below 1464psf, he would be in effect in a worse off position if he had taken the rental route (assuming the rental numbers as accurate) - the benefit he gets is closing out his position on this property completely and not exposed to any further losses thereafter, no matter how the market moves. If the owner sells at 1392psf, the loss he made would be equivalent to having the unit empty for 2 years with no rental received at all. We all know if any owner tries to sell any RG units today, it will be way below 1392psf. However, this said, if the owner goes down the sale route, he will close out his position completely and not subject to any further loss, no matter how the market turns out thereafter.
Am I getting my logic wrong or did I miss something ?
Like most people here, I have a vested interest to “have” RG’s pricing to head downsouth (I thought it important to flag my interest in RG, and thus you apply your bias on my analysis accordingly). But, based on my layman assessment, it seems it may not be that easy to get owners to sell-down their RG’s units now at a huge loss. My understanding is that, it appears, owners, even by going with the "loss-making" rental (notwithstanding it is may not be able to cover monthly mortgage obligations) is able to preserve their positions, by taking small monthly losses, without having to realize huge upfront losses. Though they may be yielding gradual (~36psf over two years) losses over two years, they may find comfort that
(i) its something quite small on a monthly basis and
(ii) they look to the future in hope of getting it back when the market turns around.
If my estimates above is roughly correct, a 1.5psf per month loss (i.e. say 1507 * 1.5psf per mth = SGD2,260per month) is something which they will have to contend with – cash outflow of SGD2.3K per month so as to keep their ship afloat. They probably prefer this than to realize few hundred thousand loss at one go - sell now at a loss, potentially huge one now?
It may be I am missing something completely or have gotten the fundamental property financing math wrong. Please enlighten me on the same and am happy to learn more (or correct my misconception).
Thanks in advance.
Last edited by DW; 30-03-09 at 12:41.
Newbie
Yup. I'll just wait and see.
Btw, I'm not an agent.
relax lah, even top economists and analysts make adjustments as time passes.
so he is more of a price pessimist, i don't see any issue here ~
Newbie
Well, the bottom line it is a falling market and there is only one way down , fisrt of all May has not come yet and secondly it will happen more towards the end of the year, but Thanks for following me and inthoughtful studies of my postings
Dear DW, you have not counted the property tax of 10% , agent's commies, cost of renovations ( how are you going to rent ? with bare wires hanging off the ceiling ? no drapes ? e.t.c. there is cost to it ) so if they go by rental path the losses would be much greater then you think , providing they lucky to get a tenant quick which is not easy . Also , providing they have enough cash flow to top up 2.5-3k per month to feed the mortgage. Providing , the nterest rate stays low , Providing the rental market and property prices will not go further down ( which I have view they will ) if all these "Providing" do not meet the ends and one of those go sour .. there might be a possibility of repossession which is really awfull thing to have when someone looses half of their life's savings.. Hope , they never face such a turn..
Of course if the cost so high , one has to fight for your asset and do everything imaginable , the other option to short , to buy cheaper and of the year , but if your cost as tower 93 1000psf I would rather sell while can fetch 1,150 still makng profit !
Newbie
Hi DW
I am not a expert but I think your calculations make sense.
However, the numbers are dependent on the bank loan of 80% going through.
Well according to what they are saying, the valuation of RG has gone down tremendously. I dont know if it has reached the 900psf as quoted but if I am a banker, I will reconsider the risk profile and assess accordingly.
Assuming a drop in valuation till 1200psf. The max exposure is $1,446,720 (80% of $1200 x 1507sf).
Given the loan of $1.8 million, the bank may ask the owner to top up the difference, thereby effectively realising this loss of few hundred thousand.
It may make sense to hold the property and suffer smaller quantum of monthly losses. but only when the circumstances allows you to. Maybe most of us here are waiting for such drastic / desparate moves by owners to pick up units at bargain price.
Newbie
Fully agree.
The danger of keeping the unit is not on covering loan installment. Whoever bought RG without holding power of financing their loan at least 12 months ahead are really playing fire. Hen , I don't think RG owner have any issue on rental for loan.
Let assume Owner bought a 1500sf unit at $1500psf
Unit price : 2.25mil
80% loan entitlement : 1.8mil
Assume current valuation @$1200psf , Owner need to top up cash 0.36 mil
Let assume 3 month later , valuation @ 1000psf ,owner need to top up another 0.24mil
Assuming that J-Dog is right (I hope so) , valuation drop till $800psf six months from now, owner top up another 0.24 mil.
At this point of time , owner need to have cash of close to 1 mil to keep his dream house.
Senior
at least he bet his dick on it for the oct/nov/dec ones...something for forumers to look forward to.Nice try J-Dog in your analysis. Initially you mentioned that price for RG will free-fall to $800 by April-May. Then you pushed the dateline to June (as below), July-August (as below), then October-November (as below) and then finally to end of the year (as below).
Sometimes, it's good to have dreams
Newbie
There is also another class of investor to consider. The ones who invest in property without a morgage (individuals, funds etc..). They might need cash so they liquidate, or they have discovered a better performing investment and decide to sell their property in Singapore which is an underperforming asset.
Newbie
very insightful analysis by all. thanks for sharing.
guess a simple analogy is like buying shares using loans. some die die refuse to lose money and hang on hoping prices will pick up later. problem with that is if the market moves further south, one has to top up the loan amount or face forced selling.
the longer one hopes, and the longer they refused to liquidate, the downside could be they stand to lose even more, even their pants
Senior
Technically, your "loss" under the rent assumption is not exactly a loss. More correctly, its the amount that needs to be topped up. Out of the 4.5k rental received, part of it goes to interest payment and part of it goes to repay the principal. The part that goes to the interest payment is the real "loss", while the part that goes to the principal is actually helping the owner to reduce his loan.
Given that bank valuations tend to be around 1200psf, its even harder for those owners which bought high to sell. Thus, you are right about more people opting for the rental option, likely the worst units will go for 4.5k ultimately after many months vacant. So far, 3 bedders with good facing have been able to secure 6 to 6.5k (stack 3 and 5) and 4 bedders (stack 6 and 10) still managing to secure 8 to 8.5k for the good ones so can use that as the peak benchmark. Rents should be weaker for the rest coming up.
Newbie
yup very apt examplevery insightful analysis by all. thanks for sharing.
guess a simple analogy is like buying shares using loans. some die die refuse to lose money and hang on hoping prices will pick up later. problem with that is if the market moves further south, one has to top up the loan amount or face forced selling.
the longer one hopes, and the longer they refused to liquidate, the downside could be they stand to lose even more, even their pants
of course there is a school of thought that local banks are unlikely to request for a top up, when valuation falls, if you have been steadily repaying your loan.
i have no personal experience on this so cannot comment.
if this is true, then such owners have no worries once the loan is approved.
Senior
you'd be surprised, but a low floor 4 bedder (not sure stack 1 or 2) was rented out bare for 7k. owner gets to keep the curtains, lights, fridge, washer and dryer after the 2 year lease is up, just for info.
Well, the bottom line it is a falling market and there is only one way down , fisrt of all May has not come yet and secondly it will happen more towards the end of the year, but Thanks for following me and inthoughtful studies of my postings
Dear DW, you have not counted the property tax of 10% , agent's commies, cost of renovations ( how are you going to rent ? with bare wires hanging off the ceiling ? no drapes ? e.t.c. there is cost to it ) so if they go by rental path the losses would be much greater then you think , providing they lucky to get a tenant quick which is not easy . Also , providing they have enough cash flow to top up 2.5-3k per month to feed the mortgage. Providing , the nterest rate stays low , Providing the rental market and property prices will not go further down ( which I have view they will ) if all these "Providing" do not meet the ends and one of those go sour .. there might be a possibility of repossession which is really awfull thing to have when someone looses half of their life's savings.. Hope , they never face such a turn..
Of course if the cost so high , one has to fight for your asset and do everything imaginable , the other option to short , to buy cheaper and of the year , but if your cost as tower 93 1000psf I would rather sell while can fetch 1,150 still makng profit !
Newbie
http://www.propertyguru.com.sg/listi...sale-rivergate
http://www.propertyguru.com.sg/listi...sale-rivergate
large units now advertised at 1100psf.
btw all you guys calculating rent, are presuming that rental income is immediate. As some people will not find tenants ASAP due to the amount of units and competition from other developments, their situation will get worse. They will have to service the morgage at TOP. I have a feeling that people who are invested in property in Singapore tend to own more than 1-2 units. So these people will suffer even more, even if they bought units in different developements (provided all where purchased after 2005).
Senior
Property loans do not work like you buy stocks on margin and keep having margin calls. You are not required to top up your loan everytime the valuation falls even if you are in negative equity. The important thing is to be able to keep servicing the monthly loan installment. You are only required to top up your loan when you want to refinance your property and find yourself unable to meet the valuation.
Newbie
Oh really...? I must sell my DBS , OUB and OCBC share liao... Thier exposure is damn high.
Newbie
there are already many examples of "investors" who had been asked by their banks to top up loans, even those who had been paying promptly and who have lots of assets to their nameyup very apt example
of course there is a school of thought that local banks are unlikely to request for a top up, when valuation falls, if you have been steadily repaying your loan.
i have no personal experience on this so cannot comment.
if this is true, then such owners have no worries once the loan is approved.
banks are prudent, if valuation falls, they have to get borrowers top up unless the fall is negligible.
Newbie
i suggest you talk to some bankers before you give erroneous advice to the members here, it could result in some of them overstretching themselves and getting into financial difficulties. banks DO ask for topup EVEN IF you had been servicing your loans promptly.
Newbie
Pls tell me which local bank WILL NOT ask for top up. Any shareholder can demand an explaination from them.
I can bet you no bank will tell you they will not ask for top ups. Don't be so naive...
Newbie
what a f..cking crap it is !!! " Owners after collecting the keys decided to stay"
Now open the paper , 3 bedders high floor asking 5k and I bet if you offer 4.5k they will go for it !! ( if they do not take 4.5k they will miss the boat sitting on empty unit and waiting a few month to catch another boat at 3.5k per month as supply is damn massive and demand lesser and lesser ) This 4.5k is just less then 2% yeild after agent's fee, property tax, maintenance , some minor renovations e.t.c. not even enough to service your mortgage !! and just wait for the interest to go up and then you are f..ked !! Negative yield !! At current unwrapping of the situation on ther market this project not worth even 1000 psf !! If you have some money buy Australian dollars while it still cheap and put on time deposit , you make 3% yield per annum , haveno obligations, no risks, you get currency appriciation when commodity pick up , and you are very liquid in case something hot comes on the market like even RG at 800psf in September!
U miss the point. Before owners collected keys, they said they would sell. But after they collected the keys, they like the development so much so they decided to keep and stay instead. Some decided to rent for the moment and stay after that. They dont sleep on the street . Most are private pty owners. They later decided to move in to RG and rent the pty that they used to stay. Dont get sick...not worth
Senior
Cartman, Mezz72SG,
Do any of you own private properties at all?
Get the low-down on home loan top-ups
Banks don’t usually ask for fresh valuations despite price slide
WITH the slide in property prices and a looming long economic downturn, some borrowers may be forgiven if they harbour thoughts of getting calls from their banks to top up their home loans.
But banks told BT that as long as borrowers are current in their monthly loan instalments, they will not ask for fresh valuations which could then lead to a top-up.
A DBS Bank spokeswoman says a key consideration when granting loans is the repayment ability of the customer.
‘As such, when the customers are promptly servicing their monthly repayments, the bank will not usually require the customer to top-up the housing loan.’
Even those who took up loans on the deferred payment scheme (DPS) need not worry about the fall in the value of their homes, she says.
‘Customers who took up loans on the deferred payment scheme would have had the approval granted based on the valuations at the point of the submission of their loan applications. And likewise, the approval will take into account the repayment ability of the customer.
‘By the same token, when the loan is disbursed, as long as the customer can meet the monthly repayment amounts, the bank will not usually take any other course of action against the customer, even if valuations of these properties are now lower than that at the time of purchase.’
In reply of BT queries, a Monetary Authority of Singapore spokeswoman says non-performing housing loans are currently low.
‘While we expect these to rise, the increase will not be significant,’ she says.
‘Banks in Singapore do not generally repossess a property once a loan is in default. Repossession is usually a final step after exhausting other avenues with the borrower, such as restructuring the loan,’ she adds.
The MAS, however, does not intervene in such commercial decisions by the banks, she adds.
A United Overseas Bank spokeswoman says it is currently not the bank’s practice to require a fresh valuation for DPS properties.
DPS borrowers typically begin paying their instalments some two years after they bought their homes.
Some observers are expecting a rash of defaults on the part of DPS buyers when the properties are completed and loan drawdowns begin.
Vibha Coburn, Citibank’s head of secured finance solutions, says it is not the bank’s usual practice to ask for top-ups in the case of existing borrowers who are servicing their loans on an ongoing basis.
‘While we may conduct valuations on properties held within our loans portfolio, these would form part of our internal portfolio management and due diligence processes,’ she says.
The UOB spokeswoman says the bank periodically reviews its mortgage portfolio, including the update of property values.
Source : Business Times - 8 Dec 2008
Newbie
Sorry, I guess I just woke up in bad mood ..
For those who think bank will not ask for top ups .. They might easily .. I was recently asked to top up as valuation dropped , at first I bugged them off but then they started to call everyday and damage my brain , eventually I topped up.. though I am on interest payments only .. could be why ..
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