Punggol East By-Election coming ? MP steps down
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JannettLee:
If you ONLY have 500k, then DON'T buy that $1m property and wipe out your cash position. DON'T do it. It is NOT affordable to to you. You need buffer, say another 300k. So now, in effect, you can ONLY afford to buy a 1m property if you have 800k cash. Before the start of the measures, there were people with ONLY 300k who will try to buy a $1m property. They are now priced out of the market. Get it? Property is now inaccessible to a larger number of people, the demand MUST drop, because now fewer people can afford. This is the intent of the measure, is not a side effect like you imply.Regarding your statement:
\"The point is to prevent the $1M dollar house from becoming a $1.2M house in a year from now. \"
\"How on earth are locals penalised? If they are buying for their own stay and dispose of their first property, they are not subject to the ABSD, are they? \"
I think you are barking up the wrong tree.
In fact, if property prices remain the same for the next few months, it means that they have in fact increased price paid by buyer by 7%, courtesy of the 7% ABSD! Now, some how the \"cooling measures\" actually become \"heating measures\" (just that it was not reflected in the transacted price as it has been siphoned off). :slapshead:
Also, if you want to talk about bubble, you should focus on the majority, that is, the 80% properties consisting of HDB flats. Many HDB flats owners are hogging HDB flats and another 1 or more private properties, thus causing shortage of supply in resale HDB flats. This causes resale HDB flats to shoot through the roof, with HDB flats selling at $900k! If this is not bubble, then what is it?
Instead, the govt is trying to implement cooling measures on the private property sector making up of 20% properties in singapore. How to cool the whole property market when they try to cool 20% and let the other 80% still running up like fire? Just an analogy: Can you put out a fire by just spray chemicals at 20% portion of it only while allowing the other 80% to add on petrol to burn fiercer? :?
So, you are barking up the wrong tree. The govt seems to be barking up the wrong tree too.
The garment is telling the people, DON'T be that guy that spends 500k to buy a $1m house and leave yourself with $0! Don't do it! Don't buy! Then you don't have to sell at a loss? You are making is sound as if people are being FORCED to part with their money. If I decide to sit tight and watch prices slide, have i paid the garment a single cent of ABSD? Have I sold at any loss to any foreigner? Who knows if that $1m house might only be 800k in 1 years time? Good right, for first time buyers with no house to sell?
You don't seem to understand the illustration I qouted don't you? The illustration I quoted refers to a person who has enough money to pay 50% of the property by cash even after the latest cooling measures (while still able to loan 50%). But does the cooling measures help in making this buyer more stable and safer from financial disaster in the future if property prices drop? Isn't the purpose of any cooling measure is to ensure new property buyers are financially stronger to endure bigger property price drop? The answer is NO, big NO. In fact, the latest cooling measures makes him from a previously STRONG property owner to become a VERY WEAK MARGINALIZED property owner even though he is still able to buy a property after the latest cooling measures. So, the latest cooling measures will exacerbate more property buyers into financial disaster in the future (since it leaves them with little cash buffer on hand). On the other hand, the person I quoted has suggested a perfectly good solution that is able to make strong property owner remain strong while removing the need for ABSD (but that may not be what some people intended isn't it?).
It is that simple, really. Even the opposition politicians did not hammer on this, why on earth do you think you are anywhere close to the truth?
Just because opposition politicians did not hammer on this means I and the other people are not getting close to the truth? What logic is this? :siao:JannettLee:
The latest cooling measures involving lower loan-to-valuation and much higher cash downpayment indeed causes more people to be marginalized even if they can afford to buy now. The reason is very simple, I learnt this from another forum which I will copy and paste here and I believe the writer of the below has great foresight indeed and has suggested a better solution with no hidden agenda than what the govt/MND has come out with:
(the latest cooling measures) they force many more property buyers/owners to become marginal owners/buyers because they end up with less cash on hand! This is a fact! This shows that you are just not a season investor. Let me put it simpler to you:
1) You buy a property for $1m. You have $500k. You pay $200k, loan $800k (i.e 80% LTV), hold cash $300k. Your $300k CASH can last you for a long time without rental, regardless of amount of loan instalment (even if you spread the loan out for only 15 years and have super high loan instalment!). You are not a marginal owner.
2) You buy a property for $1m. You have $500k. You are forced to pay $500k and can only loan $500k (i.e. 50% LTV). You end up with $0 cash on hand and you immediately become very very marginal owner! No rental only you go fly kite regardless of amount of loan instalment (even if you spread loan over 50 years to have lower loan instalment also useless!). Sell your property cheap cheap to foreigners!
Now, you are saying govt has no choice? That is stupid reply.
I can tell you, if I am them and I genuinely want to rid out margin buyer, I say can still can loan 80%, but please get a bank letter stating that you have liquid assets (or cash) equivalent to 20% of the value of the property you are buying and the liquid asset has been with the bank/brokerage/(whatever institution) for at least 1 year (to avoid last minute transfer for show only). So my suggested policy will still rid out marginal buyers without disadvantaging Singaporeans via lower LTV right? What ABSD? For milking revenue rather than genuine cooling measure? Isn't my \"cooling measure\" more citizens-friendly and make most property owners happy to vote for me? You see, because my suggested \"cooling measure\" policy has no hidden agenda, not trying to milk extra revenue via ABSD, and do not disadvantage local property owners, make them instantly become marginal property owners/buyers...3Boys:
The point is to prevent the $1M dollar house from becoming a $1.2M house in a year from now.
Why don't you get it??
How on earth are locals penalised? If they are buying for their own stay and dispose of their first property, they are not subject to the ABSD, are they?
It's not as if on if forced into buying a second property. If one has a place to stay or if one only wishes to upgrade, then the ABSD does not apply. The point is to discourage people in investing in property right now as the investment sentiment is too hot and there is a risk of a bubble, and that there may be people who enter in at LTV at 80% who may get burnt if the market turns.
The garment is telling the people, DON'T be that guy that spends 500k to buy a $1m house and leave yourself with $0! Don't do it! Don't buy! Then you don't have to sell at a loss? You are making is sound as if people are being FORCED to part with their money. If I decide to sit tight and watch prices slide, have i paid the garment a single cent of ABSD? Have I sold at any loss to any foreigner? Who knows if that $1m house might only be 800k in 1 years time? Good right, for first time buyers with no house to sell?
It is that simple, really. Even the opposition politicians did not hammer on this, why on earth do you think you are anywhere close to the truth?
Help me out here guys, am I not explaining properly somehow?? -
Harlequin:
She did say her children were already well set up and looked after.....JannetLee doesn't aware that the bank would call her to top up her mortgage loan margin if her property's price/valuation drop below her loan amount, lah.
Of course can loan, some countries can even loan up to 95%, that left bank with 5% buffer, property market crash or slide, bank will invite you go drink coffee already :evil:
Be patient with her, obviously she is quite fortunate in investing property. -
3Boys:
If you ONLY have 500k, then DON'T buy that $1m property and wipe out your cash position. DON'T do it. It is NOT affordable to to you. You need buffer, say another 300k. So now, in effect, you can ONLY afford to buy a 1m property if you have 800k cash. Before the start of the measures, there were people with ONLY 300k who will try to buy a $1m property. They are now priced out of the market. Get it? Property is now inaccessible to a larger number of people, the demand MUST drop, because now fewer people can afford. This is the intent of the measure, is not a side effect like you imply.JannettLee:
Regarding your statement:
\"The point is to prevent the $1M dollar house from becoming a $1.2M house in a year from now. \"
\"How on earth are locals penalised? If they are buying for their own stay and dispose of their first property, they are not subject to the ABSD, are they? \"
I think you are barking up the wrong tree.
In fact, if property prices remain the same for the next few months, it means that they have in fact increased price paid by buyer by 7%, courtesy of the 7% ABSD! Now, some how the \"cooling measures\" actually become \"heating measures\" (just that it was not reflected in the transacted price as it has been siphoned off). :slapshead:
Also, if you want to talk about bubble, you should focus on the majority, that is, the 80% properties consisting of HDB flats. Many HDB flats owners are hogging HDB flats and another 1 or more private properties, thus causing shortage of supply in resale HDB flats. This causes resale HDB flats to shoot through the roof, with HDB flats selling at $900k! If this is not bubble, then what is it?
Instead, the govt is trying to implement cooling measures on the private property sector making up of 20% properties in singapore. How to cool the whole property market when they try to cool 20% and let the other 80% still running up like fire? Just an analogy: Can you put out a fire by just spray chemicals at 20% portion of it only while allowing the other 80% to add on petrol to burn fiercer? :?
So, you are barking up the wrong tree. The govt seems to be barking up the wrong tree too.
The garment is telling the people, DON'T be that guy that spends 500k to buy a $1m house and leave yourself with $0! Don't do it! Don't buy! Then you don't have to sell at a loss? You are making is sound as if people are being FORCED to part with their money. If I decide to sit tight and watch prices slide, have i paid the garment a single cent of ABSD? Have I sold at any loss to any foreigner? Who knows if that $1m house might only be 800k in 1 years time? Good right, for first time buyers with no house to sell?
You don't seem to understand the illustration I qouted don't you? The illustration I quoted refers to a person who has enough money to pay 50% of the property by cash even after the latest cooling measures (while still able to loan 50%). But does the cooling measures help in making this buyer more stable and safer from financial disaster in the future if property prices drop? Isn't the purpose of any cooling measure is to ensure new property buyers are financially stronger to endure bigger property price drop? The answer is NO, big NO. In fact, the latest cooling measures makes him from a previously STRONG property owner to become a VERY WEAK MARGINALIZED property owner even though he is still able to buy a property after the latest cooling measures. So, the latest cooling measures will exacerbate more property buyers into financial disaster in the future (since it leaves them with little cash buffer on hand). On the other hand, the person I quoted has suggested a perfectly good solution that is able to make strong property owner remain strong while removing the need for ABSD (but that may not be what some people intended isn't it?).
It is that simple, really. Even the opposition politicians did not hammer on this, why on earth do you think you are anywhere close to the truth?
Just because opposition politicians did not hammer on this means I and the other people are not getting close to the truth? What logic is this? :siao:
[quote=\"JannettLee\"]The latest cooling measures involving lower loan-to-valuation and much higher cash downpayment indeed causes more people to be marginalized even if they can afford to buy now. The reason is very simple, I learnt this from another forum which I will copy and paste here and I believe the writer of the below has great foresight indeed and has suggested a better solution with no hidden agenda than what the govt/MND has come out with:
(the latest cooling measures) they force many more property buyers/owners to become marginal owners/buyers because they end up with less cash on hand! This is a fact! This shows that you are just not a season investor. Let me put it simpler to you:
1) You buy a property for $1m. You have $500k. You pay $200k, loan $800k (i.e 80% LTV), hold cash $300k. Your $300k CASH can last you for a long time without rental, regardless of amount of loan instalment (even if you spread the loan out for only 15 years and have super high loan instalment!). You are not a marginal owner.
2) You buy a property for $1m. You have $500k. You are forced to pay $500k and can only loan $500k (i.e. 50% LTV). You end up with $0 cash on hand and you immediately become very very marginal owner! No rental only you go fly kite regardless of amount of loan instalment (even if you spread loan over 50 years to have lower loan instalment also useless!). Sell your property cheap cheap to foreigners!
Now, you are saying govt has no choice? That is stupid reply.
I can tell you, if I am them and I genuinely want to rid out margin buyer, I say can still can loan 80%, but please get a bank letter stating that you have liquid assets (or cash) equivalent to 20% of the value of the property you are buying and the liquid asset has been with the bank/brokerage/(whatever institution) for at least 1 year (to avoid last minute transfer for show only). So my suggested policy will still rid out marginal buyers without disadvantaging Singaporeans via lower LTV right? What ABSD? For milking revenue rather than genuine cooling measure? Isn't my \"cooling measure\" more citizens-friendly and make most property owners happy to vote for me? You see, because my suggested \"cooling measure\" policy has no hidden agenda, not trying to milk extra revenue via ABSD, and do not disadvantage local property owners, make them instantly become marginal property owners/buyers...3Boys:
The point is to prevent the $1M dollar house from becoming a $1.2M house in a year from now.
Why don't you get it??
How on earth are locals penalised? If they are buying for their own stay and dispose of their first property, they are not subject to the ABSD, are they?
It's not as if on if forced into buying a second property. If one has a place to stay or if one only wishes to upgrade, then the ABSD does not apply. The point is to discourage people in investing in property right now as the investment sentiment is too hot and there is a risk of a bubble, and that there may be people who enter in at LTV at 80% who may get burnt if the market turns.
The garment is telling the people, DON'T be that guy that spends 500k to buy a $1m house and leave yourself with $0! Don't do it! Don't buy! Then you don't have to sell at a loss? You are making is sound as if people are being FORCED to part with their money. If I decide to sit tight and watch prices slide, have i paid the garment a single cent of ABSD? Have I sold at any loss to any foreigner? Who knows if that $1m house might only be 800k in 1 years time? Good right, for first time buyers with no house to sell?
It is that simple, really. Even the opposition politicians did not hammer on this, why on earth do you think you are anywhere close to the truth?
Help me out here guys, am I not explaining properly somehow??[/quote]No, you did a good job explaining.... however, I don't think she wants to or have any intention to want to understand :rotflmao: -
JannettLee:
You don't seem to understand the illustration I qouted don't you? The illustration I quoted refers to a person who has enough money to pay 50% of the property by cash even after the latest cooling measures (while still able to loan 50%). But does the cooling measures help in making this buyer more stable and safer from financial disaster in the future if property prices drop? Isn't the purpose of any cooling measure is to ensure new property buyers are financially stronger to endure bigger property price drop? The answer is NO, big NO. In fact, the latest cooling measures makes him from a previously STRONG property owner to become a VERY WEAK MARGINALIZED property owner even though he is still able to buy a property after the latest cooling measures. So, the latest cooling measures will exacerbate more property buyers into financial disaster in the future (since it leaves them with little cash buffer on hand).
In theory you are right. In practice, what happens given the current market exuberance is that the guy with $500,000 cash will not buy a $1m property, take a $800k loan and keep the $300k in the bank. What most will do is to buy a $2.5m property, take a $2m loan and have $0 in the bank.
That bank letter will not help. Because there is no telling what the guy is going to do with the money in the bank after he gets the mortgage. Of course, it's possible to require the bank to tie up that $300k by requiring it to be placed on FD with the bank and cannot be withdrawn. But then, you will be getting 0.5% interest on a 12 month FD on that $300k and paying 1.5% interest on that mortgage. Does that work for you?
And what happens to that 'prudent' investor if the value of that property drop from $1m to $500k? Maybe you haven't seen that happen before in Singapore, but I have. No, we don't need that systemic risk. Thank you very much. -
By the way, I own many properties and for so many years even when at time the property prices drop by more than 30%, I have never for once been called up by any of the banks to top up my mortgage loan. So you see, the truth and the myth is so much different.
Harlequin:
JannetLee doesn't aware that the bank would call her to top up her mortgage loan margin if her property's price/valuation drop below her loan amount, lah.
Of course can loan, some countries can even loan up to 95%, that left bank with 5% buffer, property market crash or slide, bank will invite you go drink coffee already :evil:
Be patient with her, obviously she is quite fortunate in investing property. -
3Boys:
She did say her children were already well set up and looked after.....
She thinks her children were already well set up and looked after. Of course, it's possible all her properties are already fully paid up. But I seriously doubt it given her obsession with the tightening of the LTV ratio. -
Safest way, don’t ever take up any mortgage from the bank! Theocratically.
So many people pok because of the over gearing! -
JannettLee:
What is your properties LTV like?By the way, I own many properties and for so many years even when at time the property prices drop by more than 30%, I have never for once been called up by any of the banks to top up my mortgage loan. So you see, the truth and the myth is so much different.
Harlequin:
JannetLee doesn't aware that the bank would call her to top up her mortgage loan margin if her property's price/valuation drop below her loan amount, lah.
Of course can loan, some countries can even loan up to 95%, that left bank with 5% buffer, property market crash or slide, bank will invite you go drink coffee already :evil:
Be patient with her, obviously she is quite fortunate in investing property. -
pirate:
Tio lah.3Boys:
She did say her children were already well set up and looked after.....
She thinks her children were already well set up and looked after. Of course, it's possible all her properties are already fully paid up. But I seriously doubt it given her obsession with the tightening of the LTV ratio. -
In the last financial crisis, I have a friend who owned close to double digit number of properties. Nearly half of the tenants pre-terminated their tenancy lease as they were either retrenched or posted back home. It was a short crisis that thankfully did not reach our shores and was generally painless for most.
Over the last few years, some of my friends were trading properties, buying properties like marketing - committing to 2 properties in 2 days after taking profit the day before. Why they are able to do this is because of leverage and the negligible interest costs. In the worst case scenerio, they just cut loss.
The current measures are necessary to bring sanity back to the market. Personally, I would have preferred if such decisive measures had been taken even earlier.
Even in the UK where property prices had increased substantially, there are also measures in place. In London, there are projects where there are buyers, no sellers and the owners are not even staying there. Holiday home.