Affordability?

[OMG]

you're returning to Vulcan?

[Pray tell me]

Comfortable, quiet and serene!!! V you got to be joking. Before you ask the inevitable question..... yes I have, for several years, possibly longer than you. Additionally as a engineer in the construction field I am of the opinion that HBD leads private housing in poor standards, poor design and terrible value for money.

The one thing good about HDB for the government is the ability to control the population. Try being a vocal opposition to the government and find out what problems occur in your "ownership". Try voting in an opposition MP and hear the threats from the government that if they are succesful your estate will not be upgraded but if you vote in an opposition MP it will not. And what about new HDB blocks, the faithful grassroots supporters always get first choice.

It is a political tool, nothing more, nothing less and somewhere along the way someone (maybe the government) is making a lot of money out of it.

[Foreign$]

I'm willing to put down $200k as a deposit and with my income (close to $20k a month) I would be willing to pay $5k a month in mortgage. From my calcs, I could borrow about $1m for that so the purchase price of condos in my budget are $1.2m. I need 3-beds and I'm not willing to live out in Yishun or Woodlands or that kind of place. Looked around for some time but can't find anything that meets my requirements. So, I'm renting and I'm not making long-term plans here. I'll prefer to return home where housing is more affordable. Sorry Singapore, you're too expensive for me!   

[Sing Expensive]

We've been here nearly 10 years now and started to get tired of the place for this very reason: - affordability. We're earning well enough compared to local average, over $40k/mo, banks offered to loan us to buy a 3-4 mill condo - but the thought of having to pay it over 30 years for poorly built over-priced properties here???! We couldn't find anything we like at the price we could comfortably afford. We never thought we'd be tired of this place but now have found ourselves feeling and thinking just as Mouse Lab and Foreign$. We've now stopped looking for a property here and have set our eyes back home. Life as Mouse Lab described it has becoming more and more attractive.

[Comparisons]

The local average income buys you an HDB

To buy a condo is a central area you need above average.

What I see above is posters deciding what they want to spend (30% of net income) and then determining they cannot afford what they wish (size, location etc). Most first time buyers (ie those putting down a min deposit) pay far more than 30% of their net income on housing. Think back to your younger days we all did it.

There are plenty of reasons for Singapore property to remain strong and to increase further.

Comparisons to back home only count if you live in a large capital city with good growth prospects and a strong financial sector.

[Lab Mouse]

The local average income buys you an HDB

To buy a condo is a central area you need above average.

What I see above is posters deciding what they want to spend (30% of net income) and then determining they cannot afford what they wish (size, location etc). Most first time buyers (ie those putting down a min deposit) pay far more than 30% of their net income on housing. Think back to your younger days we all did it.

There are plenty of reasons for Singapore property to remain strong and to increase further.

Comparisons to back home only count if you live in a large capital city with good growth prospects and a strong financial sector.

I'm trying to understand this post. Are you saying that it doesn't make sense to set a budget for the purchase of a home, based on your needs and your ability to pay for a home? I personally think it's a very sensible move. There is no reason to overpay and yet settle for less than what you need, but unfortunately, that is generally the real estate situation in Singapore where home prices are both expensive and lacking in options and variety. This is not the case in many countries. It is still possible to find a decent, affordable house in a nice and safe suburb and there are usually lots of options that fit different pockets. In Singapore, there is practically no option...neighbourhoods are merely superficially different and pricing is generally a function of distance from the city, and it goes from expensive (compared to general wages, and as PP pointed out, it is rather normal to spend over 30% of your net income servicing a mortgage of 30years or more) to ridiculously expensive. It is not true that huge financial centres or capitals equate to grossly unaffordable homes. There are several I can think of the US that doesn't fit the description.

It's important to remember that a home is a form of consumption with residual value. It should not be our pension plan. Besides, we form emotional attachments to our homes because it is very much a part of our lives. Buying within one's means is still a good decision.

[Comparisons]

Lab Mouse - What I meant was when first buying a property it's normal to push yourself a little - rely on future pay rises, forgo holidays etc. That's what I did 25 years ago when I bought my first house (which cost 4x my salary and was a 1hr commute to work btw). Of course it's rational to set a budget but it's not rational to then complain you cannot afford something nice/convenient.

I don't think Singapore property is expensive in comparison to NY, San Fran, London, HK or Shanghi when comparing like for like.

[You mean]

What I see above is posters deciding what they want to spend (30% of net income) and then determining they cannot afford what they wish (size, location etc).

sensible posters.

[Surely not true]

Kubes: "Singaporeans have amongst the lowest spending power in the region"

How so?

[Nail on head]

Very interesting thread with a lot of good points made by various posters.

I got interested in Singapore real-estate 3 years ago when I moved here. Seeing myself staying for some time, I thought it would be a good idea to purchase a place rather than pay a rent so I did study the market as thoroughly as I could, visited a number of places, met a banker for a loan, etc.

But my experience has been that the more I learnt about Singapore real estate, the less it made sense to buy. Why?

1) because the prices are so disconnected from economic fundamentals (rental yields)

2) because the quality of all the condos I have visited is atrocious compared to the asking price

Which lead me to conclude that there just wasn't any long term value in real estate here, it's a pure speculative play in a market that's totally artificial.

Consider this:

- the floor of the market is set by HDB prices, which are totally manipulated by the Government for political gain. Obviously, prices keep climbing to provide the illusion that, as a nation, everyone's getting richer

- the top end market (the so called "luxury segment") is essentially a vehicle for foreigners from neighboring countries (think Indonesians) to evade their country's tax system or launder dirty money. So the rental yields are absolutely not a concern. It's not even a concern if their value drops, as it is assumed that any laundering scheme would carry a cost

- the rest of the private properties is sandwiched between these two inflated extremes

The above beeing compounded by a casino approach to real estate, as one PP put it, and this unbelievable herd mentality locally known as "kiasu".

So I draw the conclusion that it was better for me to keep renting, bargain hard for the rental so as to minimize my costs while I'm here, and maximize the savings allowed by the low tax environment.

I've got excess cash at this stage in time and I am looking to real estate as a way to diversify for the long run, plus I do not want to have to rent a place when I retire. So I am in the process of buying a place back in Europe, which is a sensible decision as this is where I want to retire.

It was very interesting to speak with a banker back home while studying the possibilities of a loan to finance the said property: he litterally opened eyes like saucers when I told him the prices / yields offered by real-estate in Singapore. First word to cross his lips (and this is a guy that does real estate financing for a living) was: "Speculation!". Back there, the minimum yield for a sensible investment was about 4.5%, compared to what, 2 - 2.5% currently in Singapore?

The other thing that was staggering was the actual quality of construction in buildings 100+ years old I visited there, compared to what you get in condos 10 years old here. I know some people (read: Singaporean agents) will make the point about condo facilities vs. absence thereof in an older European building, but the price difference is so huge that you could afford the fees for the best gym + club of the region for several lifetimes. Before the usual village idiot (you know who you are) makes the point that it must be in a small town in the middle of nowhere, it's not: it's a 500,000+ city located in one of the wealthiest region of continental Europe with excellent infrastructure / connectivity, dynamic universities and a good cultural life.

[Lab Mouse]

When I was in Singapore, I was always playing catch up. At no stage in my life did I feel I could reasonably afford my dream home even though my income grew steadily. Eventually, I packed up, liquidated most of my assets in Singapore and moved to Monterey, California to take on a part time consulting job that pays only half my last-drawn salary. I now have twice the free time (good for a middle-age folk like me with 3 young children), regular vacations which I never had time for, and that home that I've been dreaming about for the best part of my life. Does this make any sense? I can only conclude that in Singapore, apart from the high cost of living, most the wealth are locked up in our homes, leaving not much to spend on other things.

[Speculator]

With prices of so called high end condos set to go through the roof the Singapore private property market is a once in a lifetime opportinity not to be missed.

Of course if you are one of those '30% of salary guys' you will never make anything.

Speculate to accumulate.

[Lab Mouse]

With prices of so called high end condos set to go through the roof the Singapore private property market is a once in a lifetime opportinity not to be missed.

Of course if you are one of those '30% of salary guys' you will never make anything.

Speculate to accumulate.

That's what they said about Dubai..but then again, they haven't got HDB to maintain the floor for home prices. Well, I would readily admit that I'm one of those who would never speculate with my own money. If there is one thing I've learnt, is that it's always better to speculate with someone else's money and earn a fee for doing so...

[yes,]

speculate just like Dubai....

[the future]

Its weathered the storm and then some. It probably is the best place to be for the forseeable future

Housing market in UK is set for a major crash according to the news and this is predicted to hit in Jan 2011 so next year is not looking pretty in the west.  

I am sure that here it will be a different story ?