Beware another recession - all look very familiar

[Park88]

Unit at Hougang Green hits $809 psf

11 April 2011

ChannelNewsAsia

Homes in suburbs such as Simei and Buangkok are enjoying a resurgence of interest owing to their affordability and accessibility as new malls and MRT lines are built. The appreciation in the prices of such property is prompting some homeowners to cash out at a profit.

 

In Buangkok, prices at the 99-year leasehold Hougang Green recently hit a peak of $837 psf in February when a 764 sq ft unit on the 10th floor was sold for $640,000. This comes after the launch of a new executive condominium development a few streets away

[SimonTan]

Ask yourself how long did the last recession last?

2 years?

 

99% of these investors will have the cash or CPF to Tahan the installment for 2-3 years!

No problem one lah.

 

[Soya]

what has the article gotta do wif being aware of another recession??.....

[Curahee]

I think what he mean is bubble getting bigger and bigger and gg to burst anytime which in turn may trigger a recession.

[SimonTan]

Just look atht he properties prices in HK and China.

Singapore is still very cheap.

There is a huge group of china businessman....that will dump their money on singapore properties. If the situation goes bad in Chinda due to recession, these businessman will divert all their money to SIngapore properties.

Properties wont die one!

 

If scared...then vote for Marlborol...he will die die sustain the property for another 5 years term.

 

[Unidentified]

SONGZ!subprime crisis in singapore.

good luck to those jokers getting 800k-1mil HDB flats in east coast which in reality only worth 300K at most.

HAHAHAHA

[Chengwh492]

YES! Recession will be the best.

 

BUT the ruling party will take the opportunity to blame opposition if opposition is voted in with majority votes while they enjoy their millions in offshore banks.

[Soya]

if the gahmen is serious abt reigning in the runaway prices, they shld impose restrictions on non-resident purchases. i mean, a rich chinaman not residing in sgp can get away wif a 20% d/p for speculation while a sgp family gotta pay 40% d/p for a genuine home upgrade.

 

something not very right here.

[Ben5266]

Let's look at Changi Rise.

Price for a 3rm 1200sqf is about $1mil.

Rental is about $3300 pm or $3000 after deduct maintenance fee.

If investment cost, Interest rate from Bank is 2%, Annual interest is $20000 or $1700 only.

So, from an investor point of view, this condo still return 3.6% of rental yield, which is not bad plus potential capital gain.

 

For someone who has $300k spare money, they could use the $300k as down payment and rent it out with $3k nett income.

$700k loan over 25 y @2% interest, their repayment is about $3k. Zero cash flow per month but After 25y, the condo is his. Every year, needs about $2k for the property tax and a few $k for the repairs. Of course, there are risk.

 

If the interest rate is 4%, the above business plan is not viable. It will be better to save the money in conventional FD.

So, the high property price is partly caused by the low interest rate.

[Throttle2]

Recession, nothing to be scared of, .....if you are a "cash based" person...

 

but if you are a "loan based" person, wish you beri good luck.

[Chucky2007]

I bought my place in May last year for 850k.. then there are other neighbours sales transactions after that at 955k, 970k, 1.17m, 1.37m, and recently cross 1.4m.All units are same size n same views. Its damn scary looking at how fast it move up in prices.

[Throttle2]

Let's look at Changi Rise.

Price for a 3rm 1200sqf is about $1mil.

Rental is about $3300 pm or $3000 after deduct maintenance fee.

If investment cost, Interest rate from Bank is 2%, Annual interest is $20000 or $1700 only.

So, from an investor point of view, this condo still return 3.6% of rental yield, which is not bad plus potential capital gain.

 

For someone who has $300k spare money, they could use the $300k as down payment and rent it out with $3k nett income.

$700k loan over 25 y @2% interest, their repayment is about $3k. Zero cash flow per month but After 25y, the condo is his. Every year, needs about $2k for the property tax and a few $k for the repairs. Of course, there are risk.

 

If the interest rate is 4%, the above business plan is not viable. It will be better to save the money in conventional FD.

So, the high property price is partly caused by the low interest rate.

 

 

actually many folks including myself, can easily challenge the way, your single dimension calculation is done.

 

but my question is , have you done it / are doing it?

Edited April 19, 2011 by Throttle2

[Throttle2]

I bought my place in May last year for 850k.. then there are other neighbours sales transactions after that at 955k, 970k, 1.17m, 1.37m, and recently cross 1.4m.All units are same size n same views. Its damn scary looking at how fast it move up in prices.

 

good for you so sell loh, waiting for what.

until realised, profits are little different from losses except adding a smile on your face

Edited April 19, 2011 by Throttle2

[Enye]

If only it was plain single dimension mathematics (as you suggested), I would buy another 3 more.

 

Isn't this sustaining the property market right now?

[Throttle2]

Isn't this sustaining the property market right now?

 

 

yes and no.

 

but I dont make my decisions base on another person's decision.

 

thats my take

[Ben5266]

If you are renting out a property, likelyhood is you already have one.

Therefore for $1mil property you need to down $400k. not $300k

Therefore, your above calculation is all flawed.

 

If only it was plain single dimension mathematics (as you suggested), I would buy another 3 more.

Ok, the policy has changed to 40% down.

This is one reason why the govt increase the down from 20% to 40%.

At 20%, many is investing on 2nd property.

At 30%, still many although less than before but price still headed north.

Now 40%... pace has slow but still going up.

But this measure only cut off those not too rich from investing. The super/ultra rich will have less competition and will make more.

[Acemundo]

if the gahmen is serious abt reigning in the runaway prices, they shld impose restrictions on non-resident purchases. i mean, a rich chinaman not residing in sgp can get away wif a 20% d/p for speculation while a sgp family gotta pay 40% d/p for a genuine home upgrade.

 

something not very right here.

 

yep i have also the same view when the policies to rein in the runaway property market was introduced.

[Sabretan]

Raised Bank Interest Rates to 5 % n c how many jokers start losing money on their "investment yield instrument". These jokers will not have e capital to hold on to their property investment (at least majority of them) n have no choice but to dispose of them asap else they will be having a negative yield or cash flow. Those who act fast will be able to cash out of their prop w some profits...the slower ones will realize that many of their counterparts who r playing e same ball game due to attending most likely the same property talk seminars by some gurus (on how to earn millions thru property investments) will be burnt....

 

 

But don't worry....a few years or so down e road, the cycle repeats itself...that's why we have property boom n bust. LOL. Some will go bankrupt, some may commit suicide, some will gain, some will become filthy rich...Welcome to the School of Hard knocks.