In Singapore, dont your savings should not be in cash as your cash purchasing value will drop. You can buy less assets with your cash savings. Use your cash to buy property as your cash will increase in value in the future. Property prices will rise but cash will be worth less and less.

Totally agree. Last time COE was $15K for big cars now almost $100K. If you did not buy last time and keep your cash, your cash now cannot buy many things. I agree buying property is best use of cash, esp if you buy a landed property. Your savings converted to investments in property.

i know of a relative who bought a terrace house in Westwood for $1.1 million, now he is so happy as it is now valued at $1.45 million now. He said it will surely go to $ 2 million plus.

Crap! Cant buy any houses! I am praying for another 1996-1997 hehehe

Fat hope. There are many people hoping for a crash, with so many people wanting to buy, prices will not fall, in fact likely to rise.

Then it will crash when these people are all burnt.

Billions of dollars are literally wiped out in a small stock market crash. Property will be worse because people buy using leverage.

you are just one of the many who wants the market to crash to buy cheap.

when there is so much fear of market crashing, this means market will continue to go higher.

So let's wait for the time when there's no fear. What goes up must come down. Subprime crisis started with people giving out warnings too but others fearlessly ignored the tell tale signs.

Obviously you are delusional. Don't compare Singapore with the US. In the US there were a lot of scams, people with no income got loans, MBS were packaged into AAA securities even though they contain toxic assets, etc. Singapore's system is more prudent. No nonsense and the government has taken many cooling measures which have worked in ensuring prices did not rise too much, too fast.

You can continue to build your castle in the air.

Just curious are these landed props supported by good rental yield? How much rental can you get for a 1.5 million landed? How about a 1.5 million condo?

And the 199x Singapore home crash did not happen either. At that time the Government was even more prudent because it did not allow the use of CPF to buy homes.

For anyone thinking whether housing prices are too high/too low, please do your own research. One of the most important factors is the housing price/income ratio. EVERY SINGLE CRASH has been precipitated because eventually someone can not even pay the interest on the loan. If income seems to be keeping pace with prices, then yes home prices would not be overvalued. A corollary to this is whether income can take the hit when interest rates eventually rise when there is a crisis, and yes it will rise next time because banks will scramble to replace their capital ASAP.

So do you think the current price/income ratio is high?

I think you dont understand Singapore's economy well enough. If a condo or landed property is high, that doesnt mean it is overvalued. In Singapore there are the low income, middle income, upper midle and very high income groups.

So if you cant afford, it is you not the price.

Most Singaporeans can afford a home as more than 90% of households are home owners. The BTO is made affordable to first time buyers. If a condo or landed is too high for a middle income family, then so be it. There are many rich families who can afford.

Work harder and smarter and you can one day achieve your dream condo or landed. Or just stay happy living in your HDB flat for the commons.

ninrsit James
 

Latest update from propertyguru - the 5 terraces houses in Westwood selling at $1.5m now left only 2. I think these will be gone in a week's time and then prices will move up to $1.65m to $1.8m soon.

The best savings in Singapore is to buy property. You buy a property and every month when you pay your mortgage, treat the monthly payment as your savings. And best thing, your property will triple in value at least over 30 years. Say you buy a $500k property and you pay mortgage of $1500 every month over 30 years, you would have paid $540k in total. At the end of the 30 years, you will own the property which then will be valued at $1.5million. If you had just saved cash, you get $540k in cash after 30 years whereas if you buy the property, your $540k cash payment would give you a property which is worth 3 times your cash payment.

I'm now saving for downpayment for a landed property, somewhere in the Jurong Lake District.

I'm 40, living in a fully paid 5 room HDB flat worth $600k.

My savings is now $200k. Planning to sell my HDB flat to buy a $1m condo.

Must upgrade cos all my friends from Uni are living in condos or landed.

It is about time. With HDB prices now rising, it is a good chance for people to upgrade to a private property. I got my flat direct from HDB at a very low price and managed to gain a substantial profit after selling to a PR couple. I used the profits to upgrade to a condo and enjoying a much happier and luxurious lifestyle. Thank you HDB for making my dream come true.

Posts like the above are very misleading.

Reality is that if you sell your hdb and buy a private condo at the same time, you are inevitably paying through your nose because your hdb would not have appreciated as much as the private housing did.

Reality is probably "... and luxurious lifestyle although my house area is now halved... or although I had to move from bishan hdb to sengkang or jurong west condo .. etc"

I sold my 5 room in Queenstown and bought a condo in Jurong. My loan is only $300k which I will pay over 10 years. Whats wrong with that? A condo is still a much higher status than living in hdb flats. I have no regrets at all. I enjoy using the condo facilities and my condo has in fact appreciated in value a lot.

i have no idea what you write because it is of such high standard english. i know this because you actually use the word corollary. however, i support your analysises!

hahaha. you r so cute. dun worry, the word collorery is not so cheem. it is a disease that people with poor toilet habits get.

Yes and if you believe that, i hv a gold mine in Africa I'd like to sell you.

Whatever possesses you to think prices will go up 3x in the next 30yrs when reality is that many people who bought their condo in 1997 have not even broken even today... In the highest housing market we hv seen ever, and the lowest interest rate environment we hv ever seen?

Housing appreciation is no longer a given. Yes there is money to be made, as with every asset class, but timing is key. The days of mindless Buy and wait for appreciation are gone.

If you buy today, when prices are at an all time high, interest rates are at an all time low, when the govt is coming out w a new measure every few weeks to bring prices down, when price to income ratio is at an all time high, and where we are expecting to see the largest ever glut of TOP both in the private and public housing sectors over the next 5 yrs, AND are expecting a 3 fold increment, all I can say is : can I sell you my house ?

I believe with the guy who said property price will triple in value over the next 30 years.

5 room HDB flats in 1980 cost about $80k and now the 30 plus old flat is worth $700k plus, that's about 9 times appreciation.

So a triple in value over the next 30 years is not impossible, bearing in mind that the value of paper money depreciates with inflation, ie over the years the purchasing power of your paper money is lower and lower every year.

I myself just bought a condo costing me $1.2m, very cheap given its upside potential.

That's true HDB has appreciated a lot since 1980s, but then again, its because of the below stimuli:-

1) Reasonable price to income ratio: In 1980s, HDB was about $80k, but starting salary of a fresh grad was about $1.3k. So that's about $2.6k assuming a graduate couple, or about $31k per annum. So, that's about a 2.6x price to income ratio ($80k divided by $30k), well within the recommended 3x. Today, the same ratio is about 4.2x ($300k divided by $72k, or a couple each earning $3k per month), which is about the level we saw in the US right before the subprime bubble burst.

2) Interest Rate: Back in the 1980s, we routinely saw interest rates close to, and sometimes above 10%. Today rates are sub 1%. Not much room to go down further.

3) Third world to first: Then, we were 3rd world, with 3rd world prices and plenty of room to grow. Today, we are first world, with one of the highest GDP per capita in the world.

4) Arbitrage: In 1980s, a person working in Australia earned 5 times the salary of a person in Singapore. Easy for people overseas to come here to buy properties. Today, Singaporeans in the same role earn more than Australians on a tax adjusted basis, and are happy (or rather, in most cases, have no choice but) to pour all the excess cash into property.

So, to be frank, which of the above stimuli do you still see ? Where do you see the driver for this big upside you are hoping for ?

If you bought in 2006, well, you are well on your way to achieving 3x, but if you just bought your property, good luck with that target.

You brought up good points but unable to see that those points exactly are the reasons why property prices will appreciate in the long run. Your price to income ratio approach is incorrect as that does not look at the ease of financing. Even though the price to income ratio today is higher at 4.2x compare to 2.6x in 1980, the fact that today's interest rates is so low compared to in the 1980's mean that with the low interest rates, the monthly mortgage payments constitute a smaller proportion to monthly income.

We all know that our population will continue to grow. I won't be surprised over the next 30 years, the population could grow to 10 million or more. Also there are new developments across the island that will be new engines of growth. When the marina bay project was developed, prices across the island went up. Now with new projects in Jurong lake, we can expect the same. So keep a look out for the surge in property prices in the Jurong area.

I would grudgingly agree if you could lock in interest rates for 30-yrs. But reality is, you cannot.

People that are buying today, are buying on the basis of sub 1 percent interest rates. What happens when the interest rates normalise to 4%? Or hit the 10% we saw in the 1980s?

People are buying today on the basis of positive carry - I pay $4000 in mortgage and I collect $5000 in rental, but forget that there's an historically high number of TOP coming onstream within the next 3 to 5 years, and rental may not hold while mortgage will almost definitely go up as interest rates normalise.

People are buying today, without fully understanding that property prices go in cycles. And that no matter how bullish the current cycle is, it is part of a cycle. In the US, there was never a national downturn, until the subprime crisis. In Spain, housing prices went up for 26 years straight, until 2007. Even in Singapore, we have seen multiple cycles, each round we saw an average decline of 30%+, with a decline of 50%+ from 1997 to 2002.

The only thing one can say is, this time is different. But is it really ?

Well, I say to each his own. But I will play the probabilities.

Yes property moves in cycle. As you pointed out, prices dropped time and again. This is healthy. But one thing for sure, you can't predict how long this bullish up cycle will last. It can end this year or continue over the next 20 years. Just manage your risk and you will be fine. I don't take big mortgage. Only 40% loan and 60% cash downpayment. Buy and hold, don't speculate to flip.

Thanks all experts for the discussion. While this topic asks how much savings do you have, what is more important is how you eventually deploy your savings.

The discussion on property is relevant and important as many people save to buy some thing eventually and saving for a downpayment is something many are doing. My friends are all saving their monthly income and bonuses so that they can afford the downpayment for a small condo, these people dont want to live in hdb flats due to their status.

TBH realistically for sinkies besides betting on property what else can they invest to make it big? Even if property got cycle, not ideal, depend on timing etc... What other alternatives are there? Property is still the surest way to make money compare to all others.

Fix Deposit, Bank Savings, Strucutred Deposit etc - All pathetic interest guaranteed to lose to inflation

Stocks - Full of consters, scandal, crappy IPOs. Stocks is the kind you always hear about someone somewhere make big money, but its never you. Besdies the money you can borrow for stock punting is much lower and higher interest rate than whacking property. You look at the Sunday Times invest section where they interview rich people, most tycoons are either start own business or play property, stock people are like super rare

Bonds - Retail bonds are now a joke with maturty yields averaging 1.5-2.5%. Those with higher yields are either open only to accreditied investors or trade at blocks of $250,000.

Unit Trust - All those professional manage funds charge high fees, pay this pay that and in the end most underperform and even if you lucky to get some better ones, they are only slightly better, not enough to make it big.

ETF - Supposedly safer because of diversification, but returns are so so, cannot really borrow money. Most expose to USD which keep depreciating against SGD. Probably a good way if people are discipline and invest regulary, but very hard to get rich or retire early.

Endowment / ILP - Always hear of people selling these junk, but never heard of anyone getting rich through a ILP except for the insurance agent

Commodities like gold, silver, diamond - Really just high volatile price. Pure 100% gambling, again compared to property cannot borrow as much, sometimes high sometimes low. Property is more like 80% of the time high and 20% low.

Forex / Option / Future trading - Just like stock, always hear rumor about someone somewhere make it big, but those who make it big super rare. This is the favorite of newbie fresh grads with little money but want to dream of retire at 40. Usually loose money through leverage until blur blur then give up and go back to a 9-5 job.

Alternative Investment - Wine, art, farm, gold rebate scheme, land banking, MLM whatever. Most require special expertise or just con jobs waiting to explode.

Best analysis I've read.

Good summary.

I also want to add that property to most Sgeans is mostly about condos. Landed, office and retail properties are too ex for most to even pay the downpayment. Industrial was hot for a few months, but now kena clam down by government so the market for small timers is almost dead. I have a few friends who use to shout that as long as buy blue chip shares is safe until they got burn backside by big companies like Capitaland, NOL, SGX, Wilmar, DBS etc. Already >5 years still sitting on big paper losses.

did the govt clam down on industrial?
i thought all the cooling measures only for residential?

Yes, the clam down is even worse than residential. Now all leasehold industrial land max is 30 years and small units <1500 sqf permits very strict. Many small timers not interested because 30 yrs is just too short for collecting rent for retirement. Some small timers end up need to join other owners to sell off the space together to make it marketable, otherwise the units are too small to get good rent. All the good industrial projects are taken up by institutions and those left for the public are usually garbage.

3 counter points.

1. Not necessary to stay invested at all times - now is a particularly tricky time to be invested in any asset class. Understand that inflation is a concern, but buying property has at a high is no hedge (i.e. if you bought a property in 1997, you may not have broken even in NOMINAL terms even today).

2. Leverage is the primary advantage AND disadvantage for property
- obviously many generations of Singaporeans have made it rich by buying property due to the effect of leverage. But this is a double edged sword.
- if you buy a $2mn property today, using your hard earned $400k as downpayment, and we see a 'normal' downturn with a 30% drop in prices, you would lose $600k and be in negative equity territory
- I know its only a paper loss if you can hold on to the property, but isn't it better to wait until it drops to $1.4mn before you buy ?

3. Policy risk
- We are seeing more policy risk now than ever, as the govt is coming up with round after round of policy measures - there's no end to this
- If you look at what the govt has done, they have effectively taken away foreign buyers (10% stamp duty), speculators (16% sellers tax within 1st yr) and reduced mortgage tenors (35yr / 65 yr old rule)
- historically such policy measures have a lag effect, but they WILL eventually gain traction (this has been proven throughout history and across geographies), so why buy now?
- its damn hard to make money now i.e. my 3 to 5-yr outlook is more negative than positive (against the backdrop of continued policy risk, weak global environment, property prices at an all time high, interest rates at an all time low, record TOPs coming onstream in the next 3 yrs) and if i want to flip, i buy a $2mn property now and pay 3% stamp duty, 1% agent commission, 16% seller's tax, 2% agent commission to sell my current house --> means I have to sell at above a 22% profit in order just to break even !

so in summary, why property and why now ?

3 to 5 years is a very long time. so what do you suggest we do now? keep cash?

Thanks for your point.

All the points you mention everybody already know, but the thing is if not property what else is there? At least for property only those suay enough to enter at 1997 got backside burn, but alternatives like stock market don't know how many people got burn how many times from 1997 to now. Put in FD is like confirm chop guarantee loose 5% to inflation every year.

Property is not good investment, but just the best among all other possible alternatives in sgland.

Property may drop 30% or more.

stocks will likely climb 12.2 percent more before dropping 45% over next 3.5 years. 15 million companies worldwide will go bankrupt.

commercially bred chickens through genetic selection technology will become 67.5% bigger in the future and Singaporeans will no longer be able to consume an average of 2.8 pieces per set meal; this figure will drop to 2.1.

i love pulling figures out of my ass too!

No need to make up figures. Look at URA property price index for residential non landed condominium. Can find this on Bloomberg.

12/1997 - 144.0
12/98 - 100.0 (-31%)

6/00 - 141.5
6/04 - 111.4 (-22%)

6/08 - 178.7
6/09 - 132.2 (-26%)

Hdb resale index fell from 136.9 in q4 96 to 95.5 in q1 02 or down 30%.

All this is public info.

Or you can check caveats. District 10 freehold semi d in Greenleaf. $3m in 97. $1.4m in 2003.

i bought a condominium unit in D9 in 1996 at a high, it went down by 40% due to the asian crisis and SARs. i held on until today. today's price is now 20% higher than my purchase price. as long as you are able to hold, property is still the best investment.

i bought some blue chip stocks and some of these stocks dropped 90% of its value and never recovered.

so i believe in Singapore property.