S'pore property prices may continue climbing: survey

[amk]

One question,

How ... the AV of a....

hey what's this obsession with AV ? does this in any way affect your life ?

[SpinCity]

hey what's this obsession with AV ? does this in any way affect your life ?

just type "property tax annual value" in Google and answers shall come out fairly quick. Just make sure to look for those information relevant to the Singapore context.

[rockinsg]

4. Your remark about opportunity cost is somewhat misguided. Opprtunity cost has to be looked at in terms of investment horizon. Sure, some alternative investments may reap you better gains over short-term horizons but in terms of a long term investment horizon, property can't be beat. This chart is testament to that statement. Of course, it all boils down to timing your entry point (see item 2)and your holding power.

what you mean by long term? 50 years?
Everyone has diff notion of long term..You may intend to die and leave your "great property investment" for you childrens to profit from..

You seem to be among the group who believe they can buy and property will always rise.. I dont belong to that group.. if it rises in 50 years time..its of no use for me.. 10 year is the max I want to wait to be in a green..


do I think singapore property in bubble? - No
Can prices dip? - Sure.
Will it dip? - God knows.
All one can do is analyse and take a stance if they want to take the risk or not..

My stance is sg prices are not in bubble given singapore economy.. but they are in bubble given global economy..
Now all it boils down to is, will SG economy get impacted due to global weakness?

So surely am waiting for a dip.. 10-15% dip will make it attractive to me..

If that doesn't happen.. no worries.. there are always other opportunities in world

[stalingrad]

My question was "Does rental drives value of property or value of property drives rental" not rental yield.

Does anyone have an example of 2 side by size projects, one LH one FH and both are about the same size and age. Would be nice to make a comparison,

LH properties would have higher rental yield than FH ones. very simple. since LH properties provide shorter streams of rental income, the owners would demand that rental yield be higher.

another way of looking at this. bother FH and LH properties command the same rent. Thus, the rental yield of the LH properties would be higher since LH properties have lower capital value.

[stalingrad]

hey what's this obsession with AV ? does this in any way affect your life ?

AV as in what?

Are you a naughty boy today?

[thomastansb]

Which also explains property can just hold and rent out. 15% drop say in 3 years before recovering will just even out if you were to rent out for 3 years. Anyway, who knows when the next crash might be. 1 month or in 10 years time, no one knows.

what you mean by long term? 50 years?
Everyone has diff notion of long term..You may intend to die and leave your "great property investment" for you childrens to profit from..

You seem to be among the group who believe they can buy and property will always rise.. I dont belong to that group.. if it rises in 50 years time..its of no use for me.. 10 year is the max I want to wait to be in a green..


do I think singapore property in bubble? - No
Can prices dip? - Sure.
Will it dip? - God knows.
All one can do is analyse and take a stance if they want to take the risk or not..

My stance is sg prices are not in bubble given singapore economy.. but they are in bubble given global economy..
Now all it boils down to is, will SG economy get impacted due to global weakness?

So surely am waiting for a dip.. 10-15% dip will make it attractive to me..

If that doesn't happen.. no worries.. there are always other opportunities in world

[howgozit]

1. How is Annual Value (AV) determined?

A) Buildings

The AV is the estimated annual rent of your property if it were to be rented out, excluding the furniture, furnishings and maintenance fees. It is determined after analysing the rents of similar or comparable properties. The basis of determining the AV is the same whether the property is rented out at high or low rental rates, owner-occupied or left vacant.
Illustration (A):
Estimated market rent of your flat is $1,000 per month
Annual Value is: $1,000 x 12 = $12,000

*Property Tax payable is derived by subsequently applying the relevant tax rate (%) on the AV.

B) Land and Development Site

The Annual Value is determined at 5% of its estimated freehold market value.
Illustration (B):
The market value of your land is $1,000,000
Annual Value is: 5% x $1,000,000 = $50,000

C) More specialised properties

Certain categories of properties (such as hotels, ports, refineries, etc.) may be assessed using a statutory formula or prescribed methods.

For some properties (such as petrochemical and power plants, etc.) with no rental evidence, valuation methods using costs and receipts may be used to estimate the market rent.

http://www.iras.gov.sg/irashome/default.aspx

[Jadey]

1. How is Annual Value (AV) determined?

A) Buildings

The AV is the estimated annual rent of your property if it were to be rented out, excluding the furniture, furnishings and maintenance fees. It is determined after analysing the rents of similar or comparable properties. The basis of determining the AV is the same whether the property is rented out at high or low rental rates, owner-occupied or left vacant.
Illustration (A):
Estimated market rent of your flat is $1,000 per month
Annual Value is: $1,000 x 12 = $12,000

*Property Tax payable is derived by subsequently applying the relevant tax rate (%) on the AV.

B) Land and Development Site

The Annual Value is determined at 5% of its estimated freehold market value.
Illustration (B):
The market value of your land is $1,000,000
Annual Value is: 5% x $1,000,000 = $50,000

C) More specialised properties

Certain categories of properties (such as hotels, ports, refineries, etc.) may be assessed using a statutory formula or prescribed methods.

For some properties (such as petrochemical and power plants, etc.) with no rental evidence, valuation methods using costs and receipts may be used to estimate the market rent.

http://www.iras.gov.sg/irashome/default.aspx

This PDF will give you more insight into AV and also the FAQ.

http://www.iras.gov.sg/pv_obj_cache/...taxamended.pdf

[howgozit]

Hi Jadey, I don't know why you keep directing questions at me when there are so many experts that have more than adequately answered your questions.

I have dutifully tried to answer all your questions for so many pages that this has evolved into another matter of rental vs value. Some people are starting to call me illogical (apparently having not read the background of how all this started)

So can you finally tell me why you refuse to accept the way AV is calculated or how some people derive rental yield?

And can you also reveal what has your line of questiong (wrt rental vs value) has got to do with AV and rental yield? You have promised me earlier that you'll get to it after I answered your questions.

Cheers!

[SpinCity]

Hi Jadey, I don't know why you keep directing questions at me when there are so many experts that have more than adequately answered your questions.

I have dutifully tried to answer all your questions for so many pages that this has evolved into another matter of rental vs value. Some people are starting to call me illogical (apparently having not read the background of how all this started)

So can you finally tell me why you refuse to accept the way AV is calculated or how some people derive rental yield?

And can you also reveal what has your line of questiong (wrt rental vs value) has got to do with AV and rental yield? You have promised me earlier that you'll get to it after I answered your questions.

Cheers!

Hi, Howgozit, just give yourself a break. Really no need to linger on the property tax issue. Until you confess that property tax is determined by property value, there is no end to it. But then IRAS may sue you for misrepresentation so why don't we call it a day on this one?

[howgozit]

double post

[howgozit]

Hi, Howgozit, just give yourself a break. Really no need to linger on the property tax issue. Until you confess that property tax is determined by property value, there is no end to it. But then IRAS may sue you for misrepresentation so why don't we call it a day on this one?

Agreed.

This is wasting bandwidth. I'll refrain from further comments on this. Apologies if any of my postings caused offence to anyone. Cheers!

[masterkey]

hey what's this obsession with AV ? does this in any way affect your life ?

AMK, I think this forum is too serious for people like us.....

[mygeemeel]

Why dont just discuss whether the debt problem will bring us lower mortgage rates or not.

[ysyap]

Spain and Italy may be next in the firing squad after Greece and Portugal in the EU to need loads of cash! Hmmm... one by one these countries are shouting for attention...

[kane]

Why dont just discuss whether the debt problem will bring us lower mortgage rates or not.

Short end of the SOR is low as it is. Probably 1 year SOR might head lower.

[Rosy]

We are not moving anywhere, we are still debating if rental drives the value of property or vice versa.

I do think that value in the property drives rental because if tenants or investors doesn't see value in the property, then you would be able to command high rental.

Rental is just one of the many contributing factors to the market value of the property. There are many other impt factors such as lh/fh, design, condition, layout, environment, location, view, high/low floor etc

Value do not drive rental

[thomastansb]

I already ignore him/her. He/she is not interested to read anyway so don't waste energy.

Talking about Italy, they are really in deep shit. Debt to GDP is killing them. I give them at most 2 years. Greece already in grave so just ignore Greece. Personally, I think Italy is in deeper shit than Spain or Ireland now. No thanks to their excessive crazy borrowing. And also, their tourism is falling due to the frequent strikes and working attitude.

Agreed.

This is wasting bandwidth. I'll refrain from further comments on this. Apologies if any of my postings caused offence to anyone. Cheers!

[rockinsg]

I already ignore him/her. He/she is not interested to read anyway so don't waste energy.

Talking about Italy, they are really in deep shit. Debt to GDP is killing them. I give them at most 2 years. Greece already in grave so just ignore Greece. Personally, I think Italy is in deeper shit than Spain or Ireland now. No thanks to their excessive crazy borrowing. And also, their tourism is falling due to the frequent strikes and working attitude.

But its really interesting now.. unchartered territory..
world is flushed with so much liquidity that nobody knows where to put money to..

Its funny watching CNBC now..Bank charging client for cash deposit now..

Swiss also thinking of taxing people if put money is Switzerland.. noone wants to have cash anymore

Is Deflation scenerio really possible? That would be a real shit..
Can't even run for cover now

[Rosy]

But its really interesting now.. unchartered territory..
world is flushed with so much liquidity that nobody knows where to put money to..

Its funny watching CNBC now..Bank charging client for cash deposit now..

Swiss also thinking of taxing people if put money is Switzerland.. noone wants to have cash anymore

Is Deflation scenerio really possible? That would be a real shit..
Can't even run for cover now

We should be grateful of the 0.3% int rate for scb esaver?

Euro, usd are devaluing and likely to continue in near term. So, inflation is more likely than deflation?

[rockinsg]

We should be grateful of the 0.3% int rate for scb esaver?

Euro, usd are devaluing and likely to continue in near term. So, inflation is more likely than deflation?

Euro ,USD devaluation... should cause Inflation..defaltion scare os cause of scared people..everyone running for cover whereever they can..
Lot of liquidity in system..put everyone want to hide and sit on cash..

Praobably this time the scare is real..not the one caused by liquidity issue..but due to growth..

People are realizing that there is no real growth but just the fake growth created by FED..
Everyone knows FED will do QE3 in a month or two... still people scared and runnign for cover?

Really difficult to do any trade now.. time to sit on whatever you have a wait

[thomastansb]

Well, the good thing is you can't have deflation in the whole world. That is not possible. With US printing so much money, I don't believe they will hit deflation. Maybe Singapore already in infact stage of deflation. Not a bad thing actually. $1.20 to USD $1.

But its really interesting now.. unchartered territory..
world is flushed with so much liquidity that nobody knows where to put money to..

Its funny watching CNBC now..Bank charging client for cash deposit now..

Swiss also thinking of taxing people if put money is Switzerland.. noone wants to have cash anymore

Is Deflation scenerio really possible? That would be a real shit..
Can't even run for cover now

[cornycow]

stocks tumbled again tonight.

is this a warning?

[HP65]

stocks tumbled again tonight.

is this a warning?

Feels like Feb 2008.... Get ready for a 700 pts DOW drop in a day. Might not happen, but better to be prepared for it.

[thomastansb]

US is happily clearing their debt at the expense of other countries - especially China. They are really good. I think they are coming back strong. I am more worried for Europe. Those PIGS are just delaying their death and the more they delay, the more severe will be their death.

Feels like Feb 2008.... Get ready for a 700 pts DOW drop in a day. Might not happen, but better to be prepared for it.

[hyenergix]

The poorer than expected economic data are partly due to exhaustion of QE2 in June 2011. Fed will be forced to go for QE3 in the next few months. Many countries are devaluing their currencies. I'm afraid Singapore might need to weaken the SGD too because by then our exports will be severely affected since other countries' products are cheaper. Note that our inflation is currently held in check by the strong SGD.

[rockinsg]

The poorer than expected economic data are partly due to exhaustion of QE2 in June 2011. Fed will be forced to go for QE3 in the next few months. Many countries are devaluing their currencies. I'm afraid Singapore might need to weaken the SGD too because by then our exports will be severely affected since other countries' products are cheaper. Note that our inflation is currently held in check by the strong SGD.

That would be very very big thing as MAS will need to change whole policy of currency to control inflation...so dont think that will happen anytime soon...

But thats true... Singapore is becoming a bit of fool by increasing SGD constantly..Its nothing but making Singapore export expensive...
Every punter is making money in SGD/USD trade cause SGD will rise and USD will fall...

If SGD keep rising manufacturing will die a slow death..thats what US/EU wants anyway..push their exports..