In this article he gives you an insight on whether it is a good idea to wait before buying your dream home.

Here are his findings on the new launches of 2012 till present (May 2012)

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Despite the introduction of cooling measures such as the Additional Buyer Stamp Duty (ABSD), the housing demand has not faltered in the first quarter of this year. Local Investors and homeowners remain unfazed by these measures. However, the deterrence effect can be clearly observed among foreign investors whose purchases have reduced significantly.

ABSD has been made effective on 8 December 2011 and till 31 March 2012, $110 million has been collected. Statistics by the IRAS reveals that out of the total 1478 transactions that were taxed by the ABSD, 73% involved Singaporeans and Permanent Residents. However, this only accounts for 35% of the total levied fees as Singaporeans only need to pay 3% for the stamp duty compared to the hefty ten percent fee paid by foreigners.

A record of 6682 new private home units was sold in the first quarter. The breakdown is as follows:

January -  1872 units

February – 2417 units

March – 2393 units

Good Timing to Enter Resale Market

With a huge lineup of new launches this year, it is expected that the overall transactions of new properties will triumph last year’s 16027 units. The resale market may seem to cool down but it’s still too early to judge.

Property prices in central districts and speculative regions such as Marina Bay are likely to decrease in the near future. Investors can take advantage of this opportunity to purchase resale properties for a bargain as there is minimal difference in price per square foot in comparison to mass market properties. In fact, resale volumes have increased over the first quarter of 2012:

January 2012 – 314 transactions

February 2012 -  565 transactions

March 2012 – 1142 transactions (not including Executive Condominiums and En-bloc sales)

In fact, March’s resale volumes has surpassed that of November’s 981 transactions and December’s 776 transactions.

Genuine Home Buyers Should Not Speculate

The statistics in the rental category also serve as an indicator of the market’s trend. 2011 sees a spike in the number of rental households with 45062 private leasing contracts and 26130 sublet approvals. This increase is accounted for by locals, amongst which many decide to turn to renting while waiting for price correction to occur. Some of them have earned a tidy profit from en-bloc sales. However, they did not purchase their property during the last two years due to their wait-and-see approach. What happens is that they are playing into the hands of landlords who can demand higher rental due to the strong demand.

It is advisable that those who are looking for a property to settle down for long-term housing needs to avoid speculating. The focus should not be on making a profit but rather to purchase a new home without making a loss. The story is different for investors though as they need to take other factors into consideration for their next move.

*You can read more of Cijay’s articles here => www.CijayTew.com

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What are your thoughts and comments? Feel free to drop them in the comments section below. I’d love to hear from you.

Perry

Private home sales hit 14-month high despite cooling measures – i feel this statement is quite misleading as based on record transactions that took place in January 2012 caveated sales, mostly are primary sales.

This made it feel as if the measures are not effective or more measures are needed. However, looking carefully into segment of sales, which is mostly new launches in mass market. This gives us the clear picture that most of the purchasers are either local upgraders or first timers.

Given this statistic also means that the ABSD will not affect this group of purchasers as they have genuine demand for the homes in this segment. The core area are having lower volume of transactions as compared to OCR market due to the impact of latest measure, and prices are seen dipping on this particular area.

We must have an overall view before commenting on whether the measures are effective & even till now, we have not seen the real impact on the latest measures. Too early to tell now, will need at least six months from Dec 2011 to really comment on this.

Now let’s take a look at the charts below depicting the selling prices for condo units and HDB units in District 3 respectively:

For the private property sector, fluctuation is observed with prices peaking at $1100 psf at 4th Quarter 2007 and hitting the bottom at $800 during 1st Quarter 2009.

Economy was doing well and peaked in 2007. The political stability of Singapore and the government’s long standing favourable measures towards foreign investment are very appealing to investors. Also, many HDB homeowners have enjoyed increased paper wealth due to the steady increase in property value for HDB flats since 2001.

As many would know, the drop in the price can be pretty much accredited to the Lehman Brothers crisis in September 2008. Investors liquidated their investment properties to protect their profits from market sentiments. Not many dared to upgrade to private properties that may stretch themselves financially.

So why are there no heavy fluctuations in the prices of HDB despite the ups and downs of economy over the years?

1) The government has never introduced cooling measures for HDB; it intends for the value to rise steadily over time! First time buyers will usually apply for a flat directly from HDB and after the compulsory occupation period of 5 years, many of these homeowners will sell their flat due to income increase and rise of value of their flat (which can be 40% more!).

2) Little speculation. HDB market is not affected due to stringent criteria to own one. Most buy a flat to live in than to rent out.

3) Even in tight times, most HDB owners will not liquidate their flats. This is because relocation of their home is a tedious affair that cause disruptions to their life. Furthermore, those who really need the cash would want to have it as soon as possible. It would take months before they can get their hands on the money derived from the sale of the flat. They are probably not so distraught that they need to liquidate their flats. The monthly mortgage for a HDB is reasonable with a 5 room flat at less than $1000 a month. Owners can still delay payment for a while without being penalized.

The steady rise in prices is due to volume of transactions. There are not many criteria to fulfill for buying a resale HDB flat so buyers are not deterred. The sellers would be motivated to sell their flats so they can cash in on their profits and upgrade at the same time.

If you would like to upgrade, take note of the following:

• Economy downturn will provide you with opportunities to source for properties with lower selling prices.
• However, Cash Over Valuation would not be as high as during economic upswing. This is because buyers would not have much of a sense of urgency. They fear to overpay when the economy is down. It is also likely that they liquidate their own HDB for a lower COV so they have less cash on hand. They would be more prudent with their money. Keep in mind that COV is influenced by scarcity and urgency.

Here is a graph of Caspian in Jurong Lakeside from Jan 2010 to Jan 2012.

In this graph you will notice that the price has stagnated.

Price stagnation usually shows that there is a presence of a price gap between what sellers are asking for and what buyers are willing to pay.

It is almost like a Mexican stand off. The eventual movement of this graph would depend on the psychology of the buyers and sellers.

Since the 5 rounds of cooling measures have pretty much weeded out the speculators, coupled with the fact that the interest rates keep mortgage payment affordable, we are confident that the owners of these units have holding power.

No dumping would occur here. No dumping, no price free fall.

But this stagnation means that your profits are stuck at a plateau and your money is not working hard for you.

This is a good time to cash in your profit instead of just making a paper gain. Restructure your portfolio to a better unit with higher potential growth.

There are neglected segments in the property market that has been dormant and just beginning to pick up steam.

Did you know that there were no cooling measures affecting the commercial market, and that an industrial office with B1 light status can bring you more rental yield than a condo?

• You can even take another 80% loan on top of the existing home loan you have now.
• And the quantum is lower than $700K and less than $500 psf.
• Just like the good old times in 2008 after the property market cooled

In summary:

1. Price stagnation is a selling signal
2. Restructure your portfolio to units with better facing / higher rental yield / higher capital appreciation potential

Click on the red “play” button to listen to the 6 min interview

Summary:

The mass markets for HDB and condominiums are still active with high volume of transactions. HDB upgraders are not greatly affected by the latest implementation of ABSD (Additional Buyer Stamp Duty) as most are still at their first or second purchase of property.

Amount of foreign investors in the premium sector have decreased drastically and many of them are expected to turn to the commercial market to avoid ABSD and 40% downpayment.

For investors owning 3 or more properties, it is an ideal time to cash out with the current property market hitting an all time high. The profits can be kept till there is a downturn in the future. On the other hand, those investors at their second property can still hold on to it for further observation.

The market is rife with news of the Additional Buyer Stamp’s Duty implemented by the government as a cooling measure for the private property market. At first glance, it may seem like you will be hard hit by the expected decreased demand. However, if you seize the opportunity now, you can lock in a significant amount of profits in cold, hard cash just like a fellow investor:

He purchased a 4th floor unit of Caspian in 2009 and has recently sold it at a profit of $342, 700! A worthy investment indeed considering the short span of time.

Good news for you here: You can do it too!

Strong foreign interest has caused a significant hike in the prices of the private property market and this is the time to let go of your property for a return on your initial investment. A bird in the hand is worth two in the bush, so instead of sitting on pure paper gain, wouldn’t it be better if you can convert this into cash profits?

It has been about a week since ABSD is implemented. We are expecting an initial price stagnation with correction coming subsequently. Any new measures would generate market sentiments and it is human nature for people to wait it out. What this means is that your potential buyers will probably hold off their purchases to observe the market.

A reduce in demand only mean one thing – the selling price of your property would not be on the rise anymore. As of now, the value of your property is going to remain where it is where depreciation will come as time pass. A bane for the owner, for you!

Despite the inevitable decrease in demand that will impact the selling prices of private property, a free fall is not likely to occur because:

1. HDB prices are still increasing 5 to 10% on a yearly basis. Those on the borderline might still opt for an entry level priced private property.
2. Foreign owners of private property will turn to renting their houses instead of purchasing more properties to avoid incurring the ABSD.
3. Transactions of property are mitigated or held off. With little price movements, free fall is unlikely.

Foreign investors experience the greatest impact under the new measure so demand from that sector will decrease significantly. However, Singaporeans still account for the majority (85% according to Straits Times Credo Research) of purchases of mass market private property so sufficient demand is still sustained.

HDB upgraders who have netted a profit of > $200,000 after selling HDB flat will still want to advance into private housing. It is pretty evident that the government want to shift the influence of price movement from foreign investors to these HDB upgraders!

So How This Concern Me?

Prices would be hard to predict – that you and me can be sure of. The media’s constant coverage of the ABSD would only fuel market sentiments so the best time to lock in your profits is now! Take control of the situation instead of being passive. The smart thing to do is to let go of the property now during the uncertain period than leaving it up to chance with your profits.

By doing this, you capital is safe in your own pockets again. Now, using the profits (the money of your buyer), you can start to invest in areas that are not affected by the new measures.

This is true, but think about it this way, none of us knows for sure exactly how much the price fluctuation would be. Would you rather subject yourself to a passive situation where your investment is vulnerable to any change in the policy or market sentiment?

Time is money.

Don’t waste your time trying to hope for the situation to improve. I will show you how you can restructure your investment portfolio and direct other people’s cash to areas that will generate a passive income, at no risk of using up your personal capital.

Just contact me here and I’ll be happy to help with you with a one to one complimentary consultation.

In the harshest cooling measures seen so far, foreign buyers of the private properties in Singapore will now have to fork out a hefty 10% increase in the stamp duty while permanent residents and Singaporeans are also affected with an increased stamp duty on their second and third properties respectively.

Less People Buying and Selling – Price Stabilisation

This is going to be a major psychological setback and the immediate reaction will be a slowdown in the private property with transaction volume diving by 40% in the core central region and a dip of 20% in the mass market segment.

“The second round of cooling measures implemented in 2011, this time it was a surprise for many, with a huge increase of stamp duty on foreigners’ purchase of the private property.  This increase in stamp duty, which can amount up to $124,600 from an original $24,600, (for a $1m home), is going to dampen the interest of private property investment in Singapore.

Foreign buyers, if were to sell their property within the next four years will also be subjected to the sellers’ stamp duty of 16%, 12%, 8% and 4% in the first, second, third and fourth year of purchase respectively.

Double Whammy for Foreign Buyers

This is a double whammy for foreign buyers, as in the earlier cooling measure of sellers’ stamp duty, and has already eradicated speculators. The measures could have been targeted at preserving affordable prices in the mass market segment, those homes costing less than $2m as the prices have surpassed $1,000psf with recent interest of foreign buyers investing in this segment.

Having a blanket policy will impact the high-end market and this is detrimental as high-end homes have always been the investment interest of the foreign buyers,” commented Mr Mohamed Ismail, CEO of PropNex Realty.

Price Correction

“It is projected that there will be a price correction of approximately 15 – 20% in the central core region and 10 -15% in the mass market segment for the next six months. Potential buyers (Singaporeans and foreigners) will now wait out to see the impact of this latest cooling measure and its correction before entering the market again.

A foreign buyer of a private property here in Singapore will have to take a very bold move in investing amidst the global crisis and a grim economic outlook in 2012,” remarked Mr Mohamed Ismail, CEO of PropNex Realty.

Question on your mind is, is this really such good a deal?

If the deal is so good, why aren’t the locals buying them, why market them all the way here?

What you need to know

Where is the location really

What is the surrounding? Property is not like stock investments.

Every property is unique. From the level to the facing to even what is situated right next to it affects the property’s value.

For instance, in general, a corner terrace is higher in value compared to a non corner terrace unit because it has only 1 adjoining neighbour.

Everyone else has 2 neighbors.

But if the corner terrace is right beside a power generator, the value drops.

It is details like this that allows investors in Singapore make a good decision when equipped with the right information

What is the country’s policy?

In Australia, you are only allowed to sell the property back to a local.

You will need your agent to market your property in Australia and negotiate the deal.

Is the negotiation going to be done over skype? You flying over?

How are you going to check on the property?

Hire a manager? Fly there?

Do you understand the bank’s interest rates policy when you invest overseas?

Due to currency exchange rate fluctuation, you could be asked to top up a difference with an advanced noticed of only 7 days.

With a 1% increase in the currency, you could be asked to make up $5000 for a $500K loan in 7 days.

In the long term, it is just less stressful to let your money work for you in Singapore.

But understand that I am just one opinion of several.

You have the resources to make up your own mind.

Unfortunately for the common folk, we cannot guess. We must know.

Most of time we have only 1 precious lump sum of capital that cannot be lost.

You need to learn what the decision factors are so you won’t be conned by knowledgeable salespersons or get emotional at showroom

What to consider

Take a look at the surrounding property of the region you are considering to invest in.

Let me share 2 of the 16 factors we consider when researching if the property is right for investment

1. Is there a good potential profit in the long term
2. Is the unit below market value?

Is there a good potential profit in the long term?

For this we need to use data of a group of private property projects.

I use “Powersearch” software by Hiwire (www.hiwire.com.sg/) to chart this for me. You could get your property advisor to provide you these data or buy the software yourself.

Here I use the data of properties in Jurong Lakeside, which is an area I recognise as an investment hotbed.

From the chart you can see the difference in prices Caspian was sold at in comparison with Lakefront Residences.

Lakefront Residences is not going to be ready for moving in till 2015.

Since you are buying Caspian at $200 psf below Lakefront, when it is time to liquidate your Caspian, you can confidently price your property $200 psf lower than Lakefront, couldn’t you?

This way, the comparison with Lakefront helps you let go of your Caspian with relative ease.

This helps ensure that in the long term, regardless of the market situation, you can let go of your property easier than people who bought Lakefront.

The property market in Singapore has a general upward trend in the long term.

The price that Lakefront is selling at gives  proof showing that the market is willing to pay that amount in that region.

Lakefront buyers are in uncharted waters now, because they are leading the charge on how much the market is willing to pay them when they choose to let go.

Can you see why it is risky to invest in Lakefront and more assuring to invest in a Caspian unit?

Is it below market value?

To find out if unit is below market value, we first need to know what the market value of that project is.

Looking at the selling price from ads is not entirely accurate since the negotiations would change the final transaction price.

You can search the reports from Private Residential Property with Caveats Lodged in URA.gov.sg (http://bit.ly/sfY7pC)

That will tell you how much people really bought the property for.

Here is the screenshot of the website.

Now you will notice that there will be a 3 week delay between the actual transaction and the data reflected on this site.

You are also not able to tell which unit number is actually sold. Since where the unit faces influences the price to a certain degree, you cannot put 100% confidence into this chart.

I use software to show me the actual units and my property team provides data  in real time of which units are transacted at what price at any given moment.

It helps that my team accounts for 12% of all private property transactions in Singapore. That allows me to give the most time sensitive information to you.

From this chart, you can tell to a certain degree how much the market value of Caspian is.

The key now is to hunt for a property below that value.

That way, you are assured of higher profit potential.

Action steps

1. Pick an area you’ll like to invest in
2. Do the comparison of average selling prices for the past 3 months of that region
3. Find out the market value of the project you’ve recognized as profitable
4. Find below market value units

With market noises and uncertainty, below market value properties emerge.

These properties would not be found in good times or stable times. In 2008 during the Lehman Brothers crash, many of our investors picked up properties like pebbles on a beach. Picking the nicest ones with little competition and price haggling. But many folks also stayed away, thinking the worst is yet to come.

In 2009 – 2010, our investors let go of their property despite seller stamp duties simply because they bought their property so cheap, that their profits were still substantial with the measure in place.

But many folks still did not let go their properties, saying prices are too high now for them to buy another. Bottom line is this, the tide comes and goes and the unprepared ones stay stranded. Here’s some steps you can take to be prepared and take advantage of the market noises.

• Get educated on the inside tips and tricks to invest in property
• Get acquainted with property consultants who can provide you with updates of the best opportunities
• We contact our best clients with insider information all the time
• Desperate sellers rarely bang the gong and advertise they need to let go
• They come to trusted consultants like us
• Yes, people sometimes bite off more than they can chew
• Be poised to act

Be one of the envied ones. Friends and family will likely say… wow… you were really lucky huh?