Property investment; Singapore market;

Ten years ago, I began my real estate journey when I just started a family. My first property was a 5-room HDB flat in Bedok. That property let me made my first pot of gold when I sold it at the peak of the 2013 property market. Back then, we had decided to downgrade to a 3-room HDB flat in Bedok. Subsequently in 2017, my family upgraded to an Executive Condominium (EC) in Punggol – The Terrace.

As I look back at my family’s financial journey, I can’t help but marvel how property had indeed played a significant part in my life’s progression. No doubt about it, if you played the game right, real estate can truly unlock value for you. As we are approaching the 5-year Minimum Occupation Period (MOP) for our EC, we are considering the next step forward. So when property blogger, Vina Ip, invited me to review her book – Behind the Scenes of The Property Market – I thought it was really god-send.

Incidentally, this is the second book review that I am doing for Vina. In 2014, I had done a review on her book “No B.S. Guide to Property Investment – Dirty Truths and Profitable Secrets to Building Wealth through Properties”.

Although I am a financial blogger, I must confess that I have not been following the property market closely in recent years. Apart from providing insights on the new government policies on property curbs and guest posts from property bloggers, I have not been writing articles on the property market.

Vina’s latest book gives me the opportunity to keep myself updated on the latest developments in the property market, and at the same time, enables me to make a more informed decision in my next property purchase. In this article, …

Below is a guest post on property buying in Singapore. It is written by Stuart Chng, Senior Associate Executive Director of OrangeTee & Tie, a renowned leader, real estate broker and personality in the real estate industry.

He is a licensed real estate agent, team leader, industry trainer and speaker, columnist for several property newsletters and blogs and is often quoted in media interviews on 938FM, Channel 5, PropertyReport, PropertyGuru and other publications.

Throughout his career, he has also coached many top million dollar producing agents from different real estate agencies in Singapore. You can find out more about him at www.StuartChng.com.

A Comprehensive Property Buying Checklist

Congratulations on starting your search for a new home or investment property!

Whether you’re a soon-to-be parent, a first time property buyer or investing in your Xth property, it helps to have a comprehensive guide & checklist to follow when deciding on a property.

Apart from the criteria cited in my earlier article, Important Entry Signals for Property Investors, here’s a checklist of stuff you would do well to check for when committing to possibly the largest purchase in your lifetime!

Some are basics, some take a little more work.

Ready? Let’s dive in!

A Very Comprehensive Property Buying Checklist

A Guide When You’re Early In The Search Process

Is it for Investment or Own Stay Purposes?

Properties are mostly for investment purposes (Rental cash flow, capital growth play or both) or for your own occupation.

An investment home that’s smack in the Central Business District might not make the best home choice for everyone. Neither does a condominium in Sembawang make the best investment objective choice.

So make sure you have a conversation about what the family really wants with this purchase.

Affordability Check

Before you start searching …

By now, most Singaporeans would be aware of the new property cooling measures implemented by government. While most attention is focused on the eye-popping Additional Buyer Stamp Duty (ABSD) of 12%, the more sinister aspect of the cooling measures for existing private property home owners should be the Loan-to-Value (LTV) limits. In the worst case scenario, existing home owners may be forced to do margin top ups if their property value plunged in the next few months.

Read on to find out why LTV can be so important to your home loan and why you should pay attention to this cute little rule because if property prices dropped in the coming months, you would likely to suffer refinancing nightmares. And I am not joking.

Many Singaporeans assume that property prices would keep rising. But this may not necessary be true. A lot of factors come into play but ultimately, supply and demand still play a major role. In this respect, the outlook for home prices is quite gloomy. And existing home owners may need to pay attention to the LTV ratios. Just picture the following.

Supply glut

According to URA, as at the end of 1st Quarter 2018, there was a total supply of 40,330 uncompleted private residential units (excluding ECs) in the pipeline with planning approvals compared with the 36,029 units in the previous quarter. Of this number, 23,514 units remained unsold as at the end of 1st Quarter 2018, up from 18,891 units in the previous quarter. From the supply side, there would be a glut of private properties flooding the market in the next few years.

Demand destruction

From the demand side, many buyers would be deterred to enter the market because of the ABSD and also the LTV. Most Singaporeans are not cash rich and would …

It seems that the government had thrown yet another hand grenade to the private property market by announcing further housing cooling measures (ABSD) on 5 July 2018, after the closure of the stock market.

On hindsight, the government may be forced to implement new ABSD rates because developers had refused to lower the prices for private properties even after the Qualifying Certificate and Developer ABSD were implemented several years ago. As entities, developers are also subject to the ABSD rate of twenty-five percent, an increase from the previous fifteen percent. Developers may apply for remission of this 25% ABSD, subject to conditions (including completing and selling all units within the prescribed periods of 3 years or 5 years for non-licensed and licensed developers respectively).

Though I am not planning to buy a second property nor am I vested in any SGX stocks, the latest round of cooling measures certainly came as shocking to me. This is because the new cooling measures also targeted existing private property owners through the revised LTV ratios. Whether the new measures that included an increase of ABSD rates and lower LTV ratios would be effective or is well-intended is beside the point. The issue is the timing.

99-to-1 Tenancy in Common

The stunning new ABSD rates certainly roiled the stock market, with major property stocks like Oxley, Capitaland, UOL and City Development all suffering from meltdowns in share prices. Bank stocks like DBS and OCBC were not spared either as they are the market leaders for local home loans. It seems that the ones who got the last laugh are those who opted for 99-to-1 Tenancy-in-Common as no matter what the ABSD rates would be, they would be immune.

Previously, I have written an article on 99-to-1 Tenancy-in-Common. Those who have structured their Manner …

The mission of SG Wealth Builder is to build and protect wealth. Real estate, especially private property, offers one of the most viable routes to reaching financial freedom for many wealth builders. In this article, I will discuss the outlook of both public and private property in Singapore.

Hard truth about HDB flat

In 2017, Minister of National Development Lawrence Wong rocked the real estate market by clarifying that not all older HDB flats would be eligible for the selective en bloc redevelopment (SERs) scheme. Of more chilling is that all HDB flats must be returned to the government at the end of the 99-year lease. The stunning revelations raise the question on whether Singaporeans should buy private property to protect their wealth.

To put things into perspective, Singaporeans should wise up to the fact that the mandate of HDB is to build affordable homes for Singaporeans. It is not the role of HDB to build homes for Singaporean investors to build wealth. Thus, there is a need to adjust our mentality and refrain from thinking that HDB flats is a form of investment asset.

The Terrace Executive Condominium

You can definitely rent out your HDB for asset monetization purposes in order to supplement your retirement income. But do not bank on the approach of capital appreciation because government policies will always influence the price and demand for HDB flats.

On looking back, Minister Wong may be forced [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

Sign up as member and receive a bonus investment report on Singapore stocks! The membership benefits include:

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Have prices of private properties bottomed out and is it the right time to buy private property now? If so, should you buy freehold or leasehold properties? To answer these questions, it depends on whether you are an upgrader or investor. Recently, I received the following email from a follower and decided to share some of my thoughts.

Hi Gerald,

I am a big fan of your blog. It’s very informative and insightful.

Currently we are staying in fully paid 4room HDB flat. My husband and I have been searching for property to upgrade this year. We are looking for freehold condominium or landed property with SGD2 million budget. Do you think it’s possible? Any good projects to recommend? Appreciate and thankful in advance.

Previously, I have written an article on my thoughts on freehold and leasehold properties in Singapore. Readers should check it out and have the right mindset when buying freehold properties, taking into consideration the rules and government policies for land use in Singapore. Do not assume that you really own the land and house just because it comes with a freehold tag. In a land-scarce nation like Singapore, you never really own a house. The government has various legal provisions to acquire your property for development purposes – regardless its freehold or leasehold.

Landed or non-landed?

The next question is whether SGD2 million is sufficient to purchase a freehold condominium or landed property. In my humble opinion, the budget is definitely impressive. However, if you are looking at new freehold landed property, SGD2 million may not be enough. A comfortable figure should be SGD4 million. But even with SGD4 million, you can probably only afford those projects that fall outside of the central region.

However, with a budget of SGD2.5 million, buyers can look at 99-year …

Once again, this is an article that all existing home-owners and aspiring home-buyers should never miss. Many Singaporeans tend to focus on the interest rates offered in the market when shopping for home loans. However, the biggest nightmare for home-owners is not the rising interest rates. After all, even if the interest rate of your home loan did spike overnight, the monthly installment amount is not going to be catastrophically high. Instead, the scary thing about home loan is when you are faced with margin call due to the loan-to-value (LTV) ratio.

What is margin call? What is loan-to-value (LTV)? Why do they matter and how could they possibly lead to your financial downfall? Once again, I am putting a disclaimer that this article is not meant to be a financial advice. I am sharing this article based on my home-buying experiences. If you have any doubts, please seek advice from your property agent or financial adviser.

If you are using HDB loan to finance your property, then you can sleep well as you would not be subjected to margin calls. This is because HDB loan is a form of concessionary loan granted to Singapore citizens. Unlike banks, HDB would not force home-owners to top up the loan difference in the event that the value of the HDB flat plummeted. So how does margin call or loan-to-value (LTV) works?

Generally, there are two main criteria banks used to assess your loan eligibility and they are the Total Debt Servicing Ration (TDSR) and loan-to-value (LTV).

TDSR refers to the ratio of combined total monthly debt obligations (including car loan, credit debt, student loan, existing home loan(s), etc) to the total monthly gross income. Under this framework, the monthly repayment installments for all property loans and other debt obligations are not to …

This is an article that all existing and aspiring home-owners should never miss. And I do mean it. A few years ago, I wrote about a 54-year-old Singaporean lady who was left stranded after she was not allowed to use her CPF monies to finance her home. In her situation, she had to use cold hard cash to pay for her housing loan even though she still had savings in her CPF Ordinary Account (OA). Read on to find out how to avoid this devastating financial pit-fall created by CPF Housing Withdrawal Limit in your twilight years.

Before I proceed further, there are a few things you need to know about CPF Housing Withdrawal Limit. Specifically, they are Withdrawal Limit, Valuation Limit, HDB loan, type of property and lastly, bank loan. I will first discuss the merits and cons of HDB loan.

HDB Loan

Through the years, Singapore government has been packaging HDB loan as a form of “privilege” exclusive only to Singaporeans. To qualify for this “privilege”, you need to meet many eligibility conditions. Hence, this give Singaporeans the impression that getting an HDB loan is the best option when financing property. In my point of view, such thinking may not hold water.

Just think about it. The HDB concessionary housing loan interest rate is pegged at 0.1% above the CPF OA interest rate. The CPF OA interest rate has been 2.5% for the longest time. So effectively, those who opted for HDB loans would be paying 2.6% of interest rate for their housing loans. This is a lot of money considering the fact that housing loans offered by banks had drastically dropped to below 2.6% since the Great Financial Crisis. Currently, there are many different types of home loan packages in the market but essentially, most of them …

In my previous article, I shared the strategy of using 99-to-1 Tenancy-in-Common to avoid paying hefty Additional Buyer Stamp Duty (ABSD) for investors looking at buying second property. Some followers were skeptical while there are those who may not seem to grasp the concept. As such, this follow-up article will explain in more details on how the strategy works.

Before I proceed, readers must understand that 99-to-1 Tenancy-in-Common only works for Executive Condominiums (EC) and private properties. This is important to note because in April 2016, HDB has banned the transfer of HDB flat ownership among married couples. So now married couples cannot decouple their HDB flat. However, this new HDB rule is not applicable to private properties.

When you buy your first property with your spouse/family, it is important to understand the implication of “Manner of Holding”, specifically the significance of Joint Tenancy and Tenancy-in-Common. This is because this relatively unknown term could have major impact on your future property investments and could even result in bitter court cases in the event of divorce cases or death.

No, I am not exaggerating. In my blog, several readers have written in to share their sad stories. This is real and I want you to fully comprehend this article before making judgement. You certainly would want to avoid such pitfalls.

Most people mistakenly thought that the term Joint Tenancy meant that 2 joint owners would each have 50% share of the property. [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

Read my other articles on property-related investments:

1. 99-to-1 Tenancy-in-Common
2. Frightening HDB rules
3. Managing your CPF proceeds from the sale of your HDB to build wealth
4. HDB: The

During the Singapore’s Budget this year, many Singaporean investors were disappointed that the government retained the current Additional Buyer Stamp Duty (ABSD). However, instead of wishing for the stamp duties to be reduced or removed, do you know you can actually beat the system without paying an arm or leg? In this article, I will share with readers on how to avoid paying the ABSD with Tenancy-in-Common.

Note that the strategy I am sharing here is not “decoupling” (Resale part-share) for HDB, a popular move which involves the transfer of HDB ownership between married couples. In any case, Singapore government has clamped down on decoupling and tightened the rules in April 2016 to ban the transfer of HDB flat ownership between married couples. However, private residential owners are not subject to this rule.

Background of ABSD

ABSD was introduced by Singapore government among a slew of property cooling measures to stabilize market prices. It was revised upwards in 2013 in light of escalating housing prices. Under this rule, home owners are required to pay ABSD if they are buying second property or if they are not Singapore citizens.

Many property investors may have come across articles on property cooling measures in Singapore. But many of these articles may not be helpful in enabling you to make asset planning. Through this article, readers would learn how to avoid paying hefty sum of money to the government through [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

Read my articles on HDB and property investments:

1. Frightening HDB rules
2. Managing your CPF proceeds from the sale of your HDB to build wealth
3. HDB: The thin fine line between Joint Tenancy

Prior to our purchase, one of the questions that my wife and I had been thinking over and over again is whether it is worth buying The Terrace Executive Condominium (EC). We are certainly not buying for investment purposes but then again, as a wealth builder, you would want a home with potential to appreciate in value significantly over the long run. In Punggol and Sengkang residential areas, we shortlisted three ECs for consideration and they are The Vales, Bellewaters and The Terrace EC, which is known famously as “Venice of Punggol”.

In terms of location, The Vales is considered the best among the three because it is located within walking distance to the SengKang MRT. However, as an upgrader, we need to pay the resale levy for The Vales, hence this project is not an option for us. Then again, we also noted that virtually most of the good-facing units have been sold. Those remaining unsold are either road-facing or facing the nearby SengKang Hospital. To make things worse, the recently launched EC, Treasure Crest is located just beside The Vales. Thus, the residents of The Vales will have to put up with the incessant noise and dust pollutions for at least 3 years after moving into their new homes.

In terms of interiors, Bellewaters is slightly better than The Terrace and there is no need to pay for the resale levy. We would have purchased this project if not for the fact that the Temporary Occupation Permit (TOP) is earlier than my Minimum Occupation Period (MOP). But beyond these points, wealth builders need to look at the big picture level, SengKang ECs lose out to Punggol ECs for the lack of major developmental projects that cater to lifestyle needs.

Eventually, we are glad to purchase The …

There are a lot of online debates on how to build wealth with property. In my humble view, there is no absolute right or wrong answer for this topic because whether property is a wealth enhancer or value trap really depends on how you play the game. If you play your cards right, there is no doubt that property investment is one of your best tickets to financial freedom. However, if you don’t have a clear strategy on playing the property game, it can be your greatest financial nightmare.

One thing that readers must be clear is that property investment may not be suitable for everyone because every wealth builder’s financial needs, goals and profiles are different. As such, when it comes to building wealth from property, it is not possible for Singaporeans to adopt a blanket approach. The conventional wisdom is to wait for a financial crisis and expect housing prices to drop and then you go in for the kill as a bargain hunter. However, in today’s context, things are not so straightforward anymore.

To illustrate my point, I shall use my family’s real estate strategy and compare it with a working couple. Let’s assume that both my family and the working couple are presently living in a 3-room HDB flat and planning to purchase the next property. Let’s also assume that both families each have outstanding loan of approximately $100,000 housing loan. For my case, my family will be upgrading to an Executive Condominium (EC) while the working couple is planning to buy an additional property and has obtained approval from HDB to decouple the HDB flat. Which family is better off and why?

Many Singaporeans would have taken the approach of the working couple and purchase a private property while keeping their HDB flat. This is …

In one of my previous posts, I updated that I have recently purchased an Executive Condominium (EC), which is actually The Terrace at Edgedale Plains, Punggol Drive. In this article, I will touch on the motivating factors for my family’s purchase and also share with readers the buyer referral scheme offered by the developer of The Terrace Executive Condominium (EC).

HDB Resale Levy

In 2013, HDB announced that second-timers must pay a resale levy for new ECs launched on or after 9 December 2013. However, for land sale before 9 December 2013, applicants need not pay the resale levy. There is a list of ECs that HDB upgraders need not pay resale levy and it is found here. One of the motivating factors of my purchase of The Terrace EC is that this project is exempted from resale levy, which in my case, amounted to $45,000. If you have previously bought a new Design, Build and Sell Scheme (DBSS) or received a CPF Housing Grant, then you need to pay a resale levy when you purchase your next home.

Due to the fact that my family’s first subsidised flat was a 5-room flat, so we need to pay $45,000 for projects that come with resale levy. My wife and I were reluctant to pay this amount of monies to the government. After all, we received only $40,000 housing grant, so why should we pay back $45,000? Henceforth, we were attracted to The Terrace EC because it is one of the last few projects which upgraders need not pay resale levy.

Good Location and amazing amenities

In terms of location, The Terrace is situated right next to the Kadaloor LRT Station. In fact, upon visiting the actual site, our unit is literally a stone throw away from the LRT …

I just bought my first Executive Condominium (EC) last month. On looking back, it was truly an enlightening experience because I have learned a lot on the housing regulations and CPF-related ruling. Prior to this, my wife and I had visited many projects for the past 2 years and we were fairly clear on what we are getting. But what we didn’t expect was the whole slew of housing regulations that not many Singaporeans are aware of. In the next few articles, I will touch on regulatory matters relating to private properties. In this article, I will instead share my views on whether it is the right time to buy private property now.

According to data from URA, for the whole of 2015, prices for private residential properties fell by 3.7%, compared with 4.0% decline in 2014. Credit to the Singapore government, the Property Price Index witnessed a soft landing since 2013. Despite various cooling measures firmly entrenched, the property market did not crash but nonetheless, prices have declined from the stratospheric levels seen in the last few years.

Source: URA

One important trend to note for 2015 was the record vacancy rate of 8.0% since 2011. This trend is expected to continue given the huge supply glut of private residential properties for the next three years. To put things into perspective, 26,467 units (including ECs) will be completed this year alone, followed by 17,234 units in 2017 and 16,223 units in 2018. Considering the fact that the whole of 2015, developers sold 7,440 units, compared with 7,316 units in 2014, this pipeline supply is overwhelming. As there are only so many upgraders and property investors, and with so many projects to be completed this year, the market is really at a tipping point.

Source: URA

For the developers, …

There is much to consider when the time comes to take out a housing loan in Singapore. Though it may seem intimidating and confusing at first, understanding the terms that you are dealing with will help, you get a head start on making your decision. Tools like the mortgage calculators offered by Property Guru can help you plan out payments and what fits best into your budget, but it’s best to start by learning about some aspects of mortgages in Singapore that may be unfamiliar. You’ll want to learn a little bit about how the SIBOR affects interest, the different types of rates that are offered on home loans, and how this factors into why refinancing is common in Singapore. Here’s a bit of an introduction to these concepts to start you on the way to your home loan.

Getting a Grip on the SIBOR
To put it simply, the SIBOR, which stands for Singapore Interbank Offered Rate, is the reference by which banks in Singapore determine interest rates on loans. Experts indicate that the SIBOR is predicted to rise to 2 percent by the end of 2016. You’re probably wondering what this means to you. Basically, the SIBOR will help you determine the initial interest you will be paying on your bank’s home loan, and can in turn help you decide on whether or not a fixed rate home loan or a floating rate home loan is the best choice for you. Though the SIBOR is predicted to rise, it can also fluctuate up and down, and will be added periodically (usually monthly or every three months) to the interest rate your bank already has set in place. Therefore, the SIBOR can cause your total interest rate to either rise or fall over the length of your loan.

Fixed-Rate …

An Information and Networking Luncheon by Property Club Singapore

In the coming months, my mortgage loan will be due for refinancing. Under the loan agreement, I am supposed to be paying interest fees at board rates set by the bank and the interest fees payable are scheduled annually accordingly. The fees payable is of course much lower than the HDB concessionary rate.

However, last month, I received a surprise upward revision in the interest fees, probably due to the soaring SIBOR rates in the market. This triggered me to check the term and conditions in the loan agreement, which stated that the bank actual reserves the rights to revise the fees according to market conditions. In my opinion, this is a fair clause and I am not complaining about the bank practice. But I thought that as an engineer by profession, I should have factored in safety margins in my mortgage loan to cater for such unexpected circumstances.

While the additional amount to be forked out is small because my mortgage loan is not much, many others in Singapore may be starting to feel the heat from the rising SIBOR rates. Aspiring homeowners, upgraders and investors are starting to feel the pain as banks start to adjust the refinancing and repricing packages. Incidentally, Property Soul, Singapore’s leading property blogger, invited me to her mortgage luncheon Making a Smart Move for Your Mortgage Information and Networking Luncheon this Saturday at NTUC Centre.

Synopsis
With the rising SIBOR rates hitting the home loan market, how would it affect homeowners? What precautions should property owners and investors take to cushion the impact of interest rate hike? How to make a strategic choice out of refinancing, repricing and restructuring? What are the legal implications that all borrowers should know when financing their properties?

Get …

Data don’t lie but how it is sliced can lead to different pictures. Therefore in a bid to improve the methodology, the Urban Redevelopment Authority (URA) released the flash estimate of the private residential property price index (PPI) for 1st Quarter 2015.

The rationale for the revision is because there is greater variation in the housing size and age profile of the private housing developments. With this in mind, URA has decided to switch to a regression method and used the period of 1Q2009 as baseline reference.

Flash estimate of 1st Quarter 2015 PPI

Using the revised methodology for the PPI, the overall private residential property index fell by 1.1%. This is the sixth continuous quarter of price decrease. This moderate decline is within my expectation and in my view, the slide is expected to continue unless the government lift some of the restrictive cooling measures.

Prices of non-landed private residential properties declined in all market segments, as they did in the previous quarter. Price fell 0.6% in Core Central Region (CCR), 1.8% in Rest of Central Region (RCR), and 0.9% in Outside Central Region (OCR). Prices of landed properties fell 1.1%.

The flash estimates are compiled based on transaction prices given in contracts submitted for stamp duty payment, caveats lodged and survey data on new units sold by developers during the first ten weeks of the quarter. The statistics will be updated 4 weeks later when URA releases the full real estate statistics for 1st Quarter 2015, which captures more data from the caveats lodged, stamp duty records and the take-up of new projects.

Past data have shown that the difference between the quarterly price changes indicated by the flash estimate and the actual price changes could be significant when the change is small. The public is advised to …

I started my investment journey more than 10 years ago when I was serving my National Service. Back then, I had bought 2 lots of Unisteel using my brother’s account and I remember I had invested about SGD2000. It was a small amount of money by any measure but I found it memorable because this investment kick-started my wealth building journey and led me to create my first investment notebook.

Unisteel was a listed company that specialized in producing fasteners and screws for computer hard-disk drives. By and large, it was a successful investment as the stock price increased consistently throughout the years. I sold my shares in Unisteel before it was de-listed and had went on to invest several other shares in the SGX.

Although my experiences with Unisteel was a positive one, I had my ups and downs with other stocks. Nonetheless, these battles had provided me valuable investment experiences.

Throughout the years, I had kept a little blue notebook to capture down my various “victories” and “defeats”. To me, investing in stock is like being engaged in a war. You have to prepare and research well; devise strategies and tactics to win the battle. Of course, choosing the right generals (stocks) is crucial as well. Nothing beats the thrill of finding a multi-bagger and the anguish of owning a “falling knife”.

It is through all these battles that I became a better and wiser investor. The little notebook contains my various thoughts and reflections made throughout the process of investing. It has served me well and honed my investment experience. Do you keep an investment notebook as well?

Magically yours,

SG Wealth …