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Have you looked at your housing loan agreement recently?

- February 24, 2015 1 Comment

The wife and I decided to take another peek into the loan agreement for our apartment today. We have been receiving calls from mortgage brokers over the past months asking if we wish to refinance our mortgage. And since our existing mortgage was taken back in 2011, neither of us can recall exactly what we had signed up for.

Flipping through the agreement (again), we realized that certain terms are quite different from what we remembered/assumed it to be:

1. We were under the impression that our interest rate was on "reducing" basis. But we realized that it was actually a perpetual "fixed premium" (0.75%) over the 3-month SIBOR rate.

2. We thought that there was a "lock-in" period (3 years) as per our previous mortgages. However, our current loan actually does not have a lock-in.

And since our loan is tied to SIBOR - similar to many mortgages taken by homeowners in recent years - the next question on our minds was what the current 3-month SIBOR rate is. This comes up to be 0.6786%, which is up some 40% from when we first took the loan. However, the actual interest rate that we are currently paying at 1.43% is still lower than the 1.49% fixed-rate (fixed for 2 years) that the mortgage brokers are offering. Having said that, the wife and I will have to pay closer attention to the SIBOR rate movements from now onward, and probably should start exploring refinancing options.

We are sharing this story because there are probably quite a few homeowners out there that are like us - seldom/never revisit the loan agreement after you signed it, relying purely on memory when comes to the terms of the loan (rather than double-checking), and not bothering to monitor the movement of interest rates or proactively managing your loan options. Such "inertia" may result in you paying substantially more interests on your home loan than you necessarily have to.

So... have you looked at your housing loan agreement recently?

Average size of ECs have become smaller over the years ...

- February 22, 2015 No Comments
The average size of executive condominium units has become smaller over the years, say property analysts. And the trend is likely to continue as developers struggle between maintaining their bottom lines and keeping units affordable for buyers.

Executive condominiums (ECs) were introduced about 20 years ago, and since then, unit sizes have been shrinking.

According to property firm SLP International, the average size of a three-bedroom unit ranged between 1,200 and 1,300sqft when the first batch of ECs was launched in the 1990s. But it has since gone down to less than 1,100sqft in the last five years.

Data provided by Savills Singapore showed a similar trend. The average size of an EC unit "was about 1,200 to 1,300sqft for those launched in the era of 1990s", said Alan Cheong, senior director of Savills Singapore's Research and Consultancy team. "Today, we are getting about 1,050 to about 1,200. So the range has already shifted down."

Nicholas Mak, executive director of research and consultancy at SLP International Property Consultants, said: "The main reason is really profit motivation. In order to increase the price per square foot and still keeping the price quantum at a fairly affordable level for EC buyers, developers are actually reducing the size of the EC units."

Some property analysts say the units are likely to get smaller. Not just that, there are now two-bedroom units. The two-bedroom units entered the market as early as 2005, according to property analysts. And today, some measure about 700sqft each.

EC developers are not required to keep to a minimum size for each unit, although there is a cap on the maximum number of dwelling units allowed in a project. The number is calculated through a formula based on the site area of the EC development.

But analysts say there is a limit to how small units can go. "Because ECs are more for own use - for the first five years' minimum occupation period. And then to build anything smaller, developers will be taking risks that buyers there are not going to start an average family with children, or even with a maid. So building more two-room units will be pushing the limits and they are going into uncharted waters," Mr Cheong said.

Analysts say most EC buyers have children and are currently living in an HDB flat, and they are likely to go for units that are under $1 million. This is because the household income of EC buyers is capped at $12,000 a month.

In addition, with the introduction of mortgage servicing ratio rules in 2013, those who purchase EC units directly from developers can only borrow up to 30% of their monthly income. And those who have an HDB flat and want to buy an EC unit at future launches, will also be required to pay a levy of up to $50,000.
Source: CNA

The wife and I would have thought that the "shrinking EC" phenomenon over the past few years (and going forward) is a given, as such projects are built by private developers. Since we have already seen smaller and smaller condo units being built over the years primarily for profit reasons, why should the EC market be any different?

And contrary to professional belief, we reckon that unless the government steps in with added regulations on EC unit sizes, developers will continue to build smaller and smaller units as they have done with private condos. This is based on two premises:

1. The continual belief of most homeowners that migrating from a HDB to an EC is a "step up" on social status - irrespective of the fact that their liveable space is actually reduced, sometimes quite substantially.

2. The notions of DINKs (Double Income No Kid) or "small nucleus family" - 1 kid plus a domestic helper so at most 4 people living under one roof in total - are very deeply entrenched in those who are getting married/starting a family these days. So they might feel that a 1- or 2-bedroom unit is all they need, especially given the myriad of facilities (and not to mention prestige) that an EC provides over your typical HDB flat.

On this first day of the Year of the Goat...

- February 19, 2015 No Comments
Here's wishing one and all:

And for our Mandarin-speaking readers and friends:

New project info: Kingsford Waterbay open for viewing this weekend!

- February 18, 2015 1 Comment
Chinese-owned Kingsford Development will introduce its riverfront project, Kingsford Waterbay, to the public this weekend. 

This 1,165-unit project is being built on the amalgamated site of two adjoining government land sales (GLS) plot totalling 27,292sqm that it won in November 2013.

The 99-year leasehold private residential project is located near the junction of Hougang Ave 8 and Upper Serangoon Road, and is within walking distance of the new integrated transport hub at Hougang MRT Station. A complimentary shuttle bus service will also be provided to Hougang Central.

Units offered comprise 1,157 units of one to five-bedroom apartments, six units of strata terrace houses, and two units of strata semi-detached houses. The development is self-contained with its own childcare centre and six commercial shops.

By combining the two adjoining sites, Kingsford Waterby will have approximately 400-metre direct frontage of Sungei Serangoon. This allows for half of the development to enjoy the riverfront views while the other half will have views of the development's extensive range of water-themed recreational facilities.

Its showflats open on Feb 21. Prices are not yet available, as sales will begin only in early March after the developer has gauged buyer interest.

Consultants had earlier estimated that selling prices will start at $1,000 - 1,050psf.

According to SRX, in the vicinity, new units at Riversails sold at a median price of $961psf over the past year, while new units at Riversound Residence sold at a median $863psf. Boathouse Residences' new units sold for $1,065psf, while those at Midtown Residences sold at a heftier $1,309psf.

Info Source: BT

GuocoLand doing a cupid today..?

- February 14, 2015 2 Comments

Trying to match-up buyers with units in their latest project, that is...

According to a report in ST today, GuocoLand is putting out their latest city-fringe project, Sims Urban Oasis located at Sims Drive, on sale today. 

Indicative pricing for the first phase is from $628,000 for a 440sqft one-bedroom unit to $1.48 - $1.55 million for a 990sqft four-bedroom "compact"unit.

The prices translate to a psf equivalent of more than $1,400 for the smaller units and in excess of $1,500 for the larger units. 

The wife and I remembered the $1,400psf number being floated "for discussion purposes" during the concept discussion & feedback session organized by GoucoLand sometime in August of last year. We did say at that time that the number cannot be suggested without prior consideration and more importantly approval from management. Looks like we were correct on that one.

The plot of land that Sims Urban Oasis sits on was acquired by GuocoLand in April 2014 at a price of $687.88psf ppr. Market analysts have estimated then that the break-even cost for the project would be around $1,090 - $1,130psf with a possible launch price of $1,220 - $1,300psf. So the developer looked to have upped the ante by launching the project at a price that is above market expectation. Having said that, we are unsure about what sort of discount GuocoLand will be giving to entice buyers - a 10% discount (which is not unlikely) will bring prices more in line with previous estimates. 

But given the state of the new private home market these days, the wife and I will be especially keen to see what the take-up will be for this project, which even at $1,400psf, is rather over-priced (in our humble opinions as always)...

Click on the link below to read our thoughts after attending the concept discussion for Sims Urban Oasis:

January resale price index dips 0.2%: SRX

- February 11, 2015 No Comments

The resale market for non-landed private homes continued to languish in January, SRX Property's latest flash estimates released on Tuesday show.

Its overall resale price index for non-landed private homes continued to slip month on month in January. The overall median transaction over X-value (TOX) remained at negative $10,000. Resale volumes also hovered around the 300-plus level for the third consecutive month.

But market watchers expect resale volumes to pick up after February.

SRX Property's overall resale price index for non-landed homes dipped 0.2% month on month in January. Year on year, the index eased 6.5%.

The flash estimates showed resale prices of non-landed private homes in Core Central Region and Outside Central Region posting 1.7% and 1.1% month-on-month declines respectively. However, prices in city-fringe locations, or Rest of Central Region, rose 1.5%.

R'ST Research director Ong Kah Seng forecasts resale prices of non-landed private homes to ease by up to 7% this year, assuming none of the cooling measures are removed in the second half. Any scale-back of cooling measures in H2 2015 would not result in a rapid rise in resale private home prices. Investors understand that there is a substantial amount of private home completions that will intensify competition for tenants."

Based on URA data, 19,941 private homes (both landed and non-landed) received TOP last year, up 51.6% from 13,150 units in 2013.

The vacancy rate for non-landed private homes climbed to 9.1% as at end-Q4 2014 from 7.1% a year earlier.

Private home completions this year are forecast to rise to 21,359 units, followed by a further 20,919 units in 2016 - based on information provided by developers to the URA.

Nicholas Mak, executive director of SLP International, predicts that total resale volumes for private homes (both landed and non-landed) could stage a modest recovery this year to around 5,200 - 7,000 units - up from 4,860 units last year. "Some bargain-hunting investors and home buyers could be attracted to the secondary property market as the resale property prices continue to remain soft... The real recovery will occur only after a major relaxation of the existing property curbs."
Info source: BT

We can almost hear the Weather Girls singing "It's raining condo, hallelujah..."

airbnb in your estate?

- February 4, 2015 No Comments
Much has been said (and debated) so far about the pros and cons of allowing "short-term rentals" in private estate.

Now you can have your opinion heard in a survey that URA is conducting.

As far as the wife and I are concerned, we are not particularly thrilled with the idea of our estate being turned into a B&B/Motel/Hostel of sorts. But since we are but 1 strata-titled owner out of 240, we do not have much say if majority of the other homeowners deem it appropriate to open up their homes for short-term rentals. But the least we will expect is for such a majority to be sought via a vote during the AGM.

And in the event that the "short-term rental" motion gets passed, the wife and I will also expect that:

1. Registration of homeowners who are renting their homes for short-term stay with the Estate Management be made compulsory, so that they know who these households are.

2. Additional maintenance fee to be agreed during the AGM and levied on "short-term rental" homeowners for usage of common amenities and facilities by their guests - it is only equitable for these homeowners to pay for the "inconveniences" (plus the quicker wear-and-tear) that we are subjected to by having more people using the lifts in our block or having to contend with more (foreign) bodies dipping in our swimming pool.

3. All "short-term rental" homeowners to be directly liable for the actions and especially misdeeds of their guests - if a guest decides to use the common walls in our block to express his/her creativity or throws up into the pool after having one too many drinks, the homeowner concerned should be held accountable to make good on the cost to rectify the problem. Portals such as airbnb claimed that they have a very robust process of vetting their prospective hosts and tenants, but so did Uber... enough said!

So what's your views on letting airbnb (and the like) into your estate?


- February 2, 2015 No Comments

According to a News @9 report tonight, the 3-month SIBOR has hit 0.67863% today - the highest in more than 6 years and 50% up since January.

This continual SIBOR rally in recent months has pushed the home mortgage rate to between 1.5 - 2%. This is more than double compared to just one year ago.

However, market analysts have said that the current home mortgage rate is still comparatively low and unlikely to reach pre-2008 crisis high (where SIBOR was hovering at around 3.5%) over the next 5 years. So the SIBOR rally should not pose any major hardship to the "buy for rental" investors in the short to medium term, despite the higher monthly repayment expected.

Sounds reassuring... until one recalls the 20,000-some new homes that are expected to hit the market this year and another 20,000 come next year. And not to mention the already falling rental market (3% down in 2014), which every father-mother-son and even their cat are saying will worsen much further this year...