The new generation is being priced-out of the market. Many young Singaporeans are worried they won’t have good-paying jobs in the future, let alone earn enough to afford a decent home. If the economy is not booming, then what’s keeping home prices up? Why haven’t the government cooling measures brought home prices back down to historical values? Why are interest rates on loans still near zero? Are there good reasons to want home prices to come down? Here are some things to consider.
Affordable and quality housing is one of the cornerstones of building social stability, and the sense of nationhood. Singapore’s public housing programme is no doubt one of the most successful public housing programmes in the world, resulting in low rates of homelessness, the elimination of slums, higher cultural and social integration, and lower crime rates. By comparison, in Los Angeles, when I grew up, public housing (aka the projects) was a hotbed for crime, drugs, gangs, violence, and disease, with little chance of upward mobility or even integration. Because homelessness results in a whole host of problems, keeping housing affordable and accessible, still remains one of Singapore’s top priorities. Though with all the various government schemes, it’s hard to keep track of what’s what. Here’s an attempt to help simplify the various public housing schemes available in Singapore:
The recent ease of the Singapore property cooling measure has made property transactions less costly for prospective buyers and sellers, and some companies are trying to further reduce that cost by cutting out one of the biggest transaction expenses – the agent’s commission. (more…)
In this new digital economy, middlemen are being reduced or completely bypassed, and technology is making it easier for producers/sellers and customers/buyers to deal directly with each other. The property market is no exception. In a previous article, I argued that unless property agents demonstrate value to their clients, their services will be more and more debased as technology makes transactions easier, more transparent, and so “boilerplate” that it’s possible for two parties to DIY the transaction. With Ohmyhome, this DIY route is made more feasible, and is completely free.
I recently moved to another home, and in the process of moving and documenting all my belongings, I realised that the majority of my furniture pieces were obtained FOC (free of charge). No, they were not given to me, at least not knowingly. I’ve never met any of the previous owners. In the course of 5 years, I’ve collected 14 pieces of furniture, which account for nearly 70% of all the furniture I have in total, along with a myriad of other knick-knacks that I’ve salvaged. What does this have to do with #OOTD? Well in my world, #OOTD stands for Out Of The Dumpster. Want to see my #OOTD collection? (more…)
Here’s the story/scenario that property agents or financial advisors tell you to convince you that investing speculating on a condo in Singapore to get rental income is always a smart thing to do. “If you buy a condo, then rent it to a ready and willing expat tenant, he/she will pay rent that will cover your mortgage payments and even give you some extra pocket money, and after the term of the loan (usually 25 or 30 years), the home will be yours free because the tenant will have paid it off for you all in passive income.” The story is often followed by the speaker giving you a wide-eye/gaping mouth look that suggests, “everyone is doing this, this is the only way to get rich, and you would be a complete fool if you don’t do it too.” Here’s where they’re wrong: (more…)
Imagine for a moment the Singapore property market without any property agents. Some would argue that this would make the industry disastrous; others would cheer and say that the industry would not only be more efficient but also be more value-driven. For years now, the internet has disrupted many industries, and the FIRE sector (finance, insurance, real estate) is no exception. Many believe that this sector is parasitic in nature, charging exorbitantly high fees and delivering little in terms of value while producing absolutely nothing. Just as we’ve seen the rise of Direct Purchase Insurance (DPI) through CompareFirst which started last year, now comes DirectHome, a portal in which you can buy, sell, and rent properties directly without the middlemen (i.e., the property agent), potentially saving you both time and money. (more…)
For the first time in decades, the SIBOR rates (these affect your mortgage loans) rose significantly higher than LIBOR rates (which implies that interest rates in Singapore can go up as a result of factors other than what the US Fed does). SIBOR stands for Singapore Interbank Offered Rate and is a daily reference rate based on the interbank interest rates at which banks lend to one another. At 1.06% (3-month April SIBOR), this key benchmark rate is 2.5 times higher than the 0.4% in 2014. As mortgage loans are priced according to SIBOR, this is causing many people to wonder if it’s time to refinance in hopes of seeking a lower interest rate. But you don’t get something for nothing (at least not typically in the financial industry) so you need to consider the costs versus the benefits. Lenders, loan officers, and bank advertisements will entice you with interest rates, but what they never advertise is all the fees and restrictions. Here’s a countdown of some things to consider before happily handing over your signed loan documents to an eager loan officer. (more…)
When Prime Minister Lee Hsien Loong listed the various ways in which a “cash poor” senior can get extra income from his/her home in retirement, he said, “It is better if you keep your property. Even if you rent out the whole flat, it does not matter, it is yours, and you can fall back on it for your old age, just in case anything happens.” I disagree, though I understand and appreciate where he’s coming from. He’s worried that many people who end up selling and cashing out their property would not be able to appropriately ration the lump sum earnings and make their windfall last throughout the remainder of their lifetime. This is why he put constraints on taking lump sum withdrawals of one’s CPF. Additionally, owning a home provides some assurance that you will have shelter, which is a basic need. But in the case of selling your own property, I believe if you are prudent with your money (perhaps you can buy an annuity with the proceeds, or just keep it liquid in an account), the option to cash out your property should be a viable consideration for seniors.
2. Housing: Housing (both renting and owning) is definitely cheaper in the vast majority of places in the US when compared to Singapore, but to get a more even comparison, we have to limit our scope to major metropolitan cities in the US, particularly those with limited land mass, such as New York City, Los Angeles, and San Francisco. In these places, current rental prices and monthly mortgage payments are actually quite comparable to Singapore. The lifestyle in these places are also similar, with more residents living in flats, instead of in landed property, and many flats offering additional amenities (e.g., pools, playgrounds, gyms, etc.). However, as with the previous post on the subject of food, it’s difficult to make a direct comparison without mentioning the various tradeoffs and the difference between public and private housing. (more…)