Speculation thread

[greglhc]

Hi all,

From the looks of things, the property market is drying up quick. From HDB resale, private resale and new condo launches.

This is mostly government induced. I think we can agree on that.

What do you think needs to happen in order for the government to start rolling back some measures?

And what measures will be rolled back first?

Speculation please!

[chestnut]

None

Why??? Its just gaining traction.... hahahahahaha

[gn108]

Too early to roll back any of the "temporary" measure. Some are permanent.

When did the Govt start with the first/second CM? What was the Index then?
I reckon that's close to the answer.

People/market never see Govt up from CM1-7, so now Govt's turn...

[Ringo33]

TIME is what the government need before they review the CMs.

I dont expect any changes till Q4 this year.

[yowetan]

End of the road. I am preparing for storm for next few years. More bodies in reserviors.

[chestnut]

End of the road. I am preparing for storm for next few years. More bodies in reserviors.

Why???

Let me paint a scenario for your guys...

Say a person bought an investment unit (prior to ABSD) and puts in 40% down for a 1 mil property....

Scenario 1
downpayment - 600k
loan tenure - 25 years
interest 1.2%
mortgage payment per month - $2,316
monthly rental - 3k
after 25 years, how much is the property worth????

Scenario 2
downpayment - 600k
loan tenure - 25 years
interest - 3.5%
mortgage payment per month - $3,003
monthly rental - 3k
after 25 years, how much is the property worth????

if you think there is no inflation in life??? I am surprised.... Yes, there will be inflation and deflation along the way... but over a period of 25 years, which do you think will win - inflation or deflation????

http://www.tradingeconomics.com/singapore/inflation-cpi

key in the period you want and see if inflation wins??? hahahahahaha

So in scenario 2, can a person top up a couple of hundred every month for the house???? So if hte house cannot rent out, can he lower the rent to 2.5K???? and top up the amount???? Of course if you say the husband and wife both lose their job, then I got nothing to say... what to do??? If you plan for such contingency, my suggestion is dont invest in anything lar.... hahahahaha

wishing for a major price drop and knowing under what circumstances will it trigger a major price drop are two different situations... Again, the moral of the story, what is your risk appetite and can you stomache it????

Those who took risk the last couple of years are ripping the rewards...

person rented out the unit over 3 years
Scenario 3
downpayment - 600k
loan tenure - 25 years
interest 1.2%
mortgage payment per month - $2,316
monthly rental - 3k

1 year of mortgage repayment = 2,316X12 = 27.8K
interest over 1 year = 600K x 1.2% = 7.2K
loan amount after 1 year = 580K
loan amount after 3 years = 540K
So his loan amount dropped to 540K... if he rents out for another 3 years, loan amount would drop to 480K.... Food for thought?????

I am not encouraging all of you to buy... please !!!!! The meat for property investment is over liao.... hahahahahaha

Just do simulations to see what is going to happen and you will have better sleep at nite...

Cheers

[august]

No roll back until next GE.

[rook]

No roll back until next GE.

Some possible indicators for authorities to start undoing CMs:

- Developers really start cutting prices to the extent they start losing money on projects
- Land bid prices start tanking more than 10% as compared to their peaks
- Increasing number of people start showing up at meet-the-people sessions to complain to their MPs that their HDB properties has no takers in the resale market

We can expect some easing of measures starting from Q4' 2014....

[Newbie1]

Why???

Let me paint a scenario for your guys...

Say a person bought an investment unit (prior to ABSD) and puts in 40% down for a 1 mil property....

Scenario 1
downpayment - 600k
loan tenure - 25 years
interest 1.2%
mortgage payment per month - $2,316
monthly rental - 3k
after 25 years, how much is the property worth????

Scenario 2
downpayment - 600k
loan tenure - 25 years
interest - 3.5%
mortgage payment per month - $3,003
monthly rental - 3k
after 25 years, how much is the property worth????

if you think there is no inflation in life??? I am surprised.... Yes, there will be inflation and deflation along the way... but over a period of 25 years, which do you think will win - inflation or deflation????

http://www.tradingeconomics.com/singapore/inflation-cpi

key in the period you want and see if inflation wins??? hahahahahaha

So in scenario 2, can a person top up a couple of hundred every month for the house???? So if hte house cannot rent out, can he lower the rent to 2.5K???? and top up the amount???? Of course if you say the husband and wife both lose their job, then I got nothing to say... what to do??? If you plan for such contingency, my suggestion is dont invest in anything lar.... hahahahaha

wishing for a major price drop and knowing under what circumstances will it trigger a major price drop are two different situations... Again, the moral of the story, what is your risk appetite and can you stomache it????

Those who took risk the last couple of years are ripping the rewards...

person rented out the unit over 3 years
Scenario 3
downpayment - 600k
loan tenure - 25 years
interest 1.2%
mortgage payment per month - $2,316
monthly rental - 3k

1 year of mortgage repayment = 2,316X12 = 27.8K
interest over 1 year = 600K x 1.2% = 7.2K
loan amount after 1 year = 580K
loan amount after 3 years = 540K
So his loan amount dropped to 540K... if he rents out for another 3 years, loan amount would drop to 480K.... Food for thought?????

I am not encouraging all of you to buy... please !!!!! The meat for property investment is over liao.... hahahahahaha

Just do simulations to see what is going to happen and you will have better sleep at nite...

Cheers

Thanks for the simulations. Very useful

Also to reiterate the point that with the no of CMs, the borderline ones are already out of the picture for a while. Those who bought in past 1-2 yrs are likely to ride this out

As for rolling back CMs, TDSR is the real obstacle, the removing of ABSD may have limited impact. If TDSR stays long term, ppty prices will be flat with minor fluctuations

[smartboy2]

Thanks for the simulations. Very useful

Also to reiterate the point that with the no of CMs, the borderline ones are already out of the picture for a while. Those who bought in past 1-2 yrs are likely to ride this out

As for rolling back CMs, TDSR is the real obstacle, the removing of ABSD may have limited impact. If TDSR stays long term, ppty prices will be flat with minor fluctuations

I agree with chestnut point of view.

Property is for the LONG TERM INVESTMENT, not speculation!
IF you are in for speculation without enough for rainy day, then good luck to you when interest rates rises.

The CM's are finally dissuading people to invest in property but nevertheless, i still think this is the best asset i'll own for the future

[Sandiwara]

Why???

Let me paint a scenario for your guys...

Say a person bought an investment unit (prior to ABSD) and puts in 40% down for a 1 mil property....

Scenario 1
downpayment - 600k
loan tenure - 25 years
interest 1.2%
mortgage payment per month - $2,316
monthly rental - 3k
after 25 years, how much is the property worth????

Scenario 2
downpayment - 600k
loan tenure - 25 years
interest - 3.5%
mortgage payment per month - $3,003
monthly rental - 3k
after 25 years, how much is the property worth????

if you think there is no inflation in life??? I am surprised.... Yes, there will be inflation and deflation along the way... but over a period of 25 years, which do you think will win - inflation or deflation????

http://www.tradingeconomics.com/singapore/inflation-cpi

key in the period you want and see if inflation wins??? hahahahahaha

So in scenario 2, can a person top up a couple of hundred every month for the house???? So if hte house cannot rent out, can he lower the rent to 2.5K???? and top up the amount???? Of course if you say the husband and wife both lose their job, then I got nothing to say... what to do??? If you plan for such contingency, my suggestion is dont invest in anything lar.... hahahahaha

wishing for a major price drop and knowing under what circumstances will it trigger a major price drop are two different situations... Again, the moral of the story, what is your risk appetite and can you stomache it????

Those who took risk the last couple of years are ripping the rewards...

person rented out the unit over 3 years
Scenario 3
downpayment - 600k
loan tenure - 25 years
interest 1.2%
mortgage payment per month - $2,316
monthly rental - 3k

1 year of mortgage repayment = 2,316X12 = 27.8K
interest over 1 year = 600K x 1.2% = 7.2K
loan amount after 1 year = 580K
loan amount after 3 years = 540K
So his loan amount dropped to 540K... if he rents out for another 3 years, loan amount would drop to 480K.... Food for thought?????

I am not encouraging all of you to buy... please !!!!! The meat for property investment is over liao.... hahahahahaha

Just do simulations to see what is going to happen and you will have better sleep at nite...

Cheers

Agree....... . . . .

[hyenergix]

Some possible indicators for authorities to start undoing CMs:

- Developers really start cutting prices to the extent they start losing money on projects
- Land bid prices start tanking more than 10% as compared to their peaks
- Increasing number of people start showing up at meet-the-people sessions to complain to their MPs that their HDB properties has no takers in the resale market

We can expect some easing of measures starting from Q4' 2014....

Govt has probably miscalculated the last TDSR cooling measure. The entire market including HDB resale is correcting and creating uncertainty for the upgraders. A correction of 5-10% will remove the effect of ABSD thereby allowing foreigners to return to the market while shutting out the local upgraders.

[teddybear]

TDSR is supposed to emphasize prudency, so obviously will shut out many local upgraders who is on borderline finance isn't it?

Govt has probably miscalculated the last TDSR cooling measure. The entire market including HDB resale is correcting and creating uncertainty for the upgraders. A correction of 5-10% will remove the effect of ABSD thereby allowing foreigners to return to the market while shutting out the local upgraders.

[hyenergix]

TDSR is supposed to emphasize prudency, so obviously will shut out many local upgraders who is on borderline finance isn't it?

Many had committed to the ECs/condos 1-2 years before TDSR.

There are many others who went to invest in London, Iskandar, Australia, and now Manila and Vietnam. Factoring forex and distance, TDSR could have made things worse in fact, but it will not show up in MAS data.

[pmet]

Many had committed to the ECs/condos 1-2 years before TDSR.

There are many others who went to invest in London, Iskandar, Australia, and now Manila and Vietnam. Factoring forex and distance, TDSR could have made things worse in fact, but it will not show up in MAS data.

3yrs ago govt told ppl to be prudent and don't buy liao loh. They have themselves to blame. Anyway, TDSR really only affect newer properties and the marginal folks who are ever so ready to show hand (in short, speculators)!

[thomastansb]

Definitely not this year. 2015 maybe got a slim chance. They waiting for prices to go down 15-20% looking at the measures. Especially HDB. Looks like they really want HDB to go down by quite a bit.

Hi all,

From the looks of things, the property market is drying up quick. From HDB resale, private resale and new condo launches.

This is mostly government induced. I think we can agree on that.

What do you think needs to happen in order for the government to start rolling back some measures?

And what measures will be rolled back first?

Speculation please!

[thomastansb]

Too bad. Investments carry risk. Those who invest blindly and lose money deserve it.

Many had committed to the ECs/condos 1-2 years before TDSR.

There are many others who went to invest in London, Iskandar, Australia, and now Manila and Vietnam. Factoring forex and distance, TDSR could have made things worse in fact, but it will not show up in MAS data.

[Luke65]

Properties probably won't have the 10% drop that many analysts made. There are no sudden hikes of interest, STI is still holding firm above 3000 and economy is still predicted to grow.

All the CM are there to hold the prices stable and it's functioning well. Prices are still firm across the board, have not heard of true fire sales openly alike 2003-2004 period.

At recent launches and land bid prices, it is still stable. Does not indicate a crash too, but downward developer margin and subsale adjustment is plenty for all to see.

[DC33_2008]

Great simulaton and analysis. It is really true as had properties that gone through 3 crisis, 2 crisis and 1 crisis. Had also experienced mortgage interest of as high as 5.25% and as low as 0.8%. End of the day, tenants help to pay for your homes as long as you have the holding power and not looking at the paper gain. Very much worst off by leaving the money doing nothing for you and not leveraging.

Why???

Let me paint a scenario for your guys...

Say a person bought an investment unit (prior to ABSD) and puts in 40% down for a 1 mil property....

Scenario 1
downpayment - 600k
loan tenure - 25 years
interest 1.2%
mortgage payment per month - $2,316
monthly rental - 3k
after 25 years, how much is the property worth????

Scenario 2
downpayment - 600k
loan tenure - 25 years
interest - 3.5%
mortgage payment per month - $3,003
monthly rental - 3k
after 25 years, how much is the property worth????

if you think there is no inflation in life??? I am surprised.... Yes, there will be inflation and deflation along the way... but over a period of 25 years, which do you think will win - inflation or deflation????

http://www.tradingeconomics.com/singapore/inflation-cpi

key in the period you want and see if inflation wins??? hahahahahaha

So in scenario 2, can a person top up a couple of hundred every month for the house???? So if hte house cannot rent out, can he lower the rent to 2.5K???? and top up the amount???? Of course if you say the husband and wife both lose their job, then I got nothing to say... what to do??? If you plan for such contingency, my suggestion is dont invest in anything lar.... hahahahaha

wishing for a major price drop and knowing under what circumstances will it trigger a major price drop are two different situations... Again, the moral of the story, what is your risk appetite and can you stomache it????

Those who took risk the last couple of years are ripping the rewards...

person rented out the unit over 3 years
Scenario 3
downpayment - 600k
loan tenure - 25 years
interest 1.2%
mortgage payment per month - $2,316
monthly rental - 3k

1 year of mortgage repayment = 2,316X12 = 27.8K
interest over 1 year = 600K x 1.2% = 7.2K
loan amount after 1 year = 580K
loan amount after 3 years = 540K
So his loan amount dropped to 540K... if he rents out for another 3 years, loan amount would drop to 480K.... Food for thought?????

I am not encouraging all of you to buy... please !!!!! The meat for property investment is over liao.... hahahahahaha

Just do simulations to see what is going to happen and you will have better sleep at nite...

Cheers

[Yuki]

Great simulaton and analysis. It is really true as had properties that gone through 3 crisis, 2 crisis and 1 crisis. Had also experienced mortgage interest of as high as 5.25% and as low as 0.8%. End of the day, tenants help to pay for your homes as long as you have the holding power and not looking at the paper gain. Very much worst off by leaving the money doing nothing for you and not leveraging.

Thanks for sharing...btw what is the mortgage interest which is the "norm"?

I guess for homeowners who entered the market peak, the risk of having paper loss is much higher?

And I am wondering what is the perceived correct price? correction of 10% ? 20%?

Coz anything lower than 20% means that homeowners have to pay the bank once the valuation dropped beyond the amount of loan they took out (assumption that they took 80% loan as max).

[chestnut]

Great simulaton and analysis. It is really true as had properties that gone through 3 crisis, 2 crisis and 1 crisis. Had also experienced mortgage interest of as high as 5.25% and as low as 0.8%. End of the day, tenants help to pay for your homes as long as you have the holding power and not looking at the paper gain. Very much worst off by leaving the money doing nothing for you and not leveraging.

Bro, here is what I have learnt in my investment route....

1. My dad never taught me about investment. I dont blame him....
why didnt he teach me??? because he didnt know how to invest... What he doesnt know, how to teach???? His investment strategy - work hard, get good pay, save and save, never be in debt....

2. So i read and read and learn along the way.... by the time I discovered certain things, wah lao should have bought more in the early years of my life and taken max loan. let tenant pay off my debt/loan, as I age, my salary increase leh, my savings can be used to pay mortgage if necc, money erodes with inflation, property to a certain extent is hedge in inflation.... but at least I entered and now can look forward to retirement....

3. Be knowledgeable... read and read, dare to try.... if you have this knowledge, you can impart to your kids....

4. Do not be pessimistic... why???? You will let too many opportunities run away !!!!!!!!

5. Be humble, remember - we dont know everything....

6. Be analytical.... why??? You will minimise risk.... Give an example, a person who exercises everyday, will he be healthy all the way??? No!!! He exercises to minimise risk, thats all !!!!! Just like healthy eating will not guarantee no illness, but it will minimise risk !!!!

I see so many pessimistic people in this forum and it saddens me... They spend so much energy hoping for the worst... They should spend more energy on maximizing joy, monetary gains or etc.... they only bring sorrow to themselves... so sad

I have told my kids to be optimistic in life !!! YOLO.... There is no obstacle you cannot cross !!!!!

Cheers to all and hopefully all of you take a obtimistic/positive view of life... remember, pessimism creates toxin which is bad for health !!!!

Get more endorphins by being optimistic

http://www.wikihow.com/Release-Endorphins

[august]

Thanks for sharing...btw what is the mortgage interest which is the "norm"?

I guess for homeowners who entered the market peak, the risk of having paper loss is much higher?

And I am wondering what is the perceived correct price? correction of 10% ? 20%?

Coz anything lower than 20% means that homeowners have to pay the bank once the valuation dropped beyond the amount of loan they took out (assumption that they took 80% loan as max).

3-4% was the norm.

Realistically 10-15% correction i reckon, but spread over quarters or years.

[Yuki]

3-4% was the norm.

Realistically 10-15% correction i reckon, but spread over quarters or years.

I see...15% for the OCR or across the board?

Sometimes I wonder how the 15% will apply..to the total cost of the unit or the psf? Coz smaller unit == higher psf.

The psf for smaller units are increasing over the years although they refer to the same type of unit. i.e. 2 bedders, 3 bedders etc. So some 2 bedders have a lower psf compared to the other newer developments.

[greglhc]

Hi chestnut, thanks for the simulation. My only quibble is that your interest calculations assume is incorrect since mortgage is an amortising loan and the interest over time is much higher than that.

Why???

Let me paint a scenario for your guys...

Say a person bought an investment unit (prior to ABSD) and puts in 40% down for a 1 mil property....

Scenario 1
downpayment - 600k
loan tenure - 25 years
interest 1.2%
mortgage payment per month - $2,316
monthly rental - 3k
after 25 years, how much is the property worth????

Scenario 2
downpayment - 600k
loan tenure - 25 years
interest - 3.5%
mortgage payment per month - $3,003
monthly rental - 3k
after 25 years, how much is the property worth????

if you think there is no inflation in life??? I am surprised.... Yes, there will be inflation and deflation along the way... but over a period of 25 years, which do you think will win - inflation or deflation????

http://www.tradingeconomics.com/singapore/inflation-cpi

key in the period you want and see if inflation wins??? hahahahahaha

So in scenario 2, can a person top up a couple of hundred every month for the house???? So if hte house cannot rent out, can he lower the rent to 2.5K???? and top up the amount???? Of course if you say the husband and wife both lose their job, then I got nothing to say... what to do??? If you plan for such contingency, my suggestion is dont invest in anything lar.... hahahahaha

wishing for a major price drop and knowing under what circumstances will it trigger a major price drop are two different situations... Again, the moral of the story, what is your risk appetite and can you stomache it????

Those who took risk the last couple of years are ripping the rewards...

person rented out the unit over 3 years
Scenario 3
downpayment - 600k
loan tenure - 25 years
interest 1.2%
mortgage payment per month - $2,316
monthly rental - 3k

1 year of mortgage repayment = 2,316X12 = 27.8K
interest over 1 year = 600K x 1.2% = 7.2K
loan amount after 1 year = 580K
loan amount after 3 years = 540K
So his loan amount dropped to 540K... if he rents out for another 3 years, loan amount would drop to 480K.... Food for thought?????

I am not encouraging all of you to buy... please !!!!! The meat for property investment is over liao.... hahahahahaha

Just do simulations to see what is going to happen and you will have better sleep at nite...

Cheers

[greglhc]

Anyone have opinion on the lowering of ABSD for foreigners to help spur demand more? I recall reading someone's opinion about lowering ABSD in certain areas where foreigners more likely to purchase.

Besides it being a political blunder since there is significant xenophobia in Singapore currently.

[catsick]

I think we need to see decent falls before any of the CM get removed , the TDSR is here to stay but I think some of the additional stamp duties will be cut if market drops more than 10%

[chestnut]

Hi chestnut, thanks for the simulation. My only quibble is that your interest calculations assume is incorrect since mortgage is an amortising loan and the interest over time is much higher than that.

can show me your calculation????? Where did you get the info from????

http://www.dbs.com.sg/personal/homel...e/default.page

Input the simulation.... go mortgage repayment... knowledge is KEY

[Rosy]

I kind of agree with ringo that foreigners stamp duties could be reduced for properties within the ccr.

[amk]

the simulation is not wrong, but honestly too simplistic. it makes pty investment too easy, almost sure win, doesn't it ? this is actually the exact reason so many marginal investors are drawn into the market. It is very easy to count "rental cover installment" and after x years pty is yours.

Very long time ago I read another HK professor claiming something similar, i.e. "as long as you hold your property, lower your rent in crisis, after x yrs still sure gain." etc. He quoted himself as example how he survives 1997 and 2001. But he failed to see he has an iron rice well paid bowl as a professor.

Pty investment is all about your capacity for risk. If you do not have appetite for risk, do not have the capacity for buffer, you will lose big time.

Simple simulation: what if no rental for 6 months, mortgage 3k, maintenance+pty tax 1k, you need 4k cover a month. A marginal investor exhausts all his resources paying the down payment, and with no cover at all only depending on rental for cashflow will face severe problems.

Pty investment is never meant for the average joes. Only in the last few yrs suddenly so many marginal investors jump in, exactly because so many success stories of "rent pay for the house" make them believe pty investment is as easy as that.

[chestnut]

the simulation is not wrong, but honestly too simplistic. it makes pty investment too easy, almost sure win, doesn't it ? this is actually the exact reason so many marginal investors are drawn into the market. It is very easy to count "rental cover installment" and after x years pty is yours.

Very long time ago I read another HK professor claiming something similar, i.e. "as long as you hold your property, lower your rent in crisis, after x yrs still sure gain." etc. He quoted himself as example how he survives 1997 and 2001. But he failed to see he has an iron rice well paid bowl as a professor.

Pty investment is all about your capacity for risk. If you do not have appetite for risk, do not have the capacity for buffer, you will lose big time.

Simple simulation: what if no rental for 6 months, mortgage 3k, maintenance+pty tax 1k, you need 4k cover a month. A marginal investor exhausts all his resources paying the down payment, and with no cover at all only depending on rental for cashflow will face severe problems.

Pty investment is never meant for the average joes. Only in the last few yrs suddenly so many marginal investors jump in, exactly because so many success stories of "rent pay for the house" make them believe pty investment is as easy as that.

bro, to come up with 20% downpayment is already an issue leh.... so my assumption is people need to have earning capacity to save that amount lar.... another assumption, salary should go up rite????

if job unstable, better dont buy lar....

I agree with you... too many ave joes came in and I seriously applaud the govt on the ABSD and TDSR to take the steam out and to even drop the price.....

if a person earns less than 10k, it is better to stick to HDB.... thats why to buy hdb has a ceiling of 10K... to me thats the benchmark...

Just that too many qualifiers and assumption to put in...

I hope the audience here is wise and do their own due diligence.... it is good for you to remind them of the pitfall... thanks for playing the devil's advocate....

cheers bro