How much savings do you have?

Originally Posted by Unregistered

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.

Originally Posted by Unregistered

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.

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.

Originally Posted by Unregistered

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.

Originally Posted by Unregistered

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.

Originally Posted by Unregistered

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.

Originally Posted by Unregistered

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.

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.