New Budget Measures

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22-01-09, 17:46
gfoo

New Budget Measures

My interpretation is bad news for own-stay buyers in 07/08, and for landlords

1. Project completion period for properties new and under development can now be extended from 6 years to 7 years. So if property launched 2007, the completion can now be 2015, and TOP can be anytime before that. Will we see a wave of developments still in 'showroom stage' be TOP delayed significantly? I doubt those that are completing in 2009 will be affected as $$ has been spent to pay subcontractors

2. Unsold properties in developments now need not be disposed of within 4 years, and developers can rent them out. This means a whole huge supply of new rental units on top of those already bought and waiting to be rented out. This combined with almost 200k developers leaving for home will mean a massive supply glut of apartments for rent.

My take:

Those who bought in 05/06 and TOPing 2009 are safe - projects will most likely TOP on time as $ has been spent building it.

If you intend to rent out your TOP 2009/2010 unit, you are screwed, as now the developers have up to 4 years to rent out before mandatory disposal. In prev crisis, pple like FEO have lelonged rent prices just to make some $$ on empty units

If you intend to stay in your TOP 2009 unit, nothing changes - the normal deflation and drop in property prices continue.

If you just bought a unit in 2008, piling has not started, showflat still there, and less than 50% sold, you can expect TOP to be delayed further. Legally, it can now be delayed for 6-7 years from launch, as now it benefits the developer to complete later than sooner. If you bought for own stay, sorry you are kinda screwed there. If you bought for investment, this is a lifeline thrown to you.
22-01-09, 21:44
isaaclim

Hurah! A big handy plus for Property market.

Short and simple! No shit!
23-01-09, 06:49
gfoo

It's a big plus for developers with tons of unsold units - eg ola, orchard scotts, etc. They can now delay TOP by another year.

For investors that hold one amber and the rest, its bad news - they will now compete with developers renting out unsold units for 4 years. Esp w a much smaller rental base vs high number of units for rent, these investors will be stuck bad.

The govt has essentially decided to save banks and developers fr dps defaults and passing the buck to property investors. But remember - those properties TOPing in 09 under dps will still kena
23-01-09, 07:14
isaaclim

Quote:

Originally Posted by gfoo

It's a big plus for developers with tons of unsold units - eg ola, orchard scotts, etc. They can now delay TOP by another year.

For investors that hold one amber and the rest, its bad news - they will now compete with developers renting out unsold units for 4 years. Esp w a much smaller rental base vs high number of units for rent, these investors will be stuck bad.

The govt has essentially decided to save banks and developers fr dps defaults and passing the buck to property investors. But remember - those properties TOPing in 09 under dps will still kena

gfoo... no need to make it too complex. It is so simple.

Before the budget, all developers throw the ball to government. Now the government is skillfully throw the ball back to developers.

"I allow you to delay your project. Now, it is up to you to manipulate the supply."
23-01-09, 10:09
firec

Quote:

Originally Posted by gfoo

The govt has essentially decided to save banks and developers fr dps defaults and passing the buck to property investors. But remember - those properties TOPing in 09 under dps will still kena

Banks and developers will still face defaults if the buyers decide to do so, especially if they are faced with mountains of debt.
23-01-09, 21:18
Sean.G

Actually, I believe gfoo and I are looking at One Amber. Hence, we share the same ideology that the investors holding on to One Amber will suffer and we can potentially get fire sales.

But, I would like to take a step back and look at the situation we are in now. Even after the budget, we are not sure who are the real winners and losers because every single buyer at One Amber will have their own strategy to deal with the downturn.

So the best thing to do is continue monitoring how the market moves as a whole and see how we can benefit from the movement. I honestly dunno when the market will bottom out, but after spending some time house hunting in the amber area, I have concluded that I will only consider moving into that area after all the construction is completed.

Because now that area is SEE BEH DUSTY from all the construction. Lucky i did not buy into esta and move in now becuase i will be sweeping heaps of dust out of my house everyday.:spliff: