Property talk...

Went to attend a property talk conducted by MyPaper last Sunday; not because I had too much time but because my mom paid for it... On another hand, I've strong interest in Financial Management, so it's not really big deal for me...

About the speakers
- Nicholas Mak from Knight Frank
- Marcus Chu from ERA/Hersing
- Kevin Lam from UOB

Anyway, some consolidated information that I got from the talk.
Most hot (read: popular) property districts in S'pore
- Area 1, Raffles
- Area 9, 10, 11 - Orchard/Newton
- Area 4 - Sentosa; due to IR effect
Mid-tier homes
- Bukit Timah, Balestier and Thomson (some more which I forget)

Singapore property is still playing catching up; it's entering the rising cycle, will be a while before it goes downslope. Possible upside of 3 - 30% compared to last peak in 1998

Basically, prices increases for year 2006 focused on the hot spots Area 9, 10, 11

A new trend emerged (read opportunity) is sub sales in luxury unit, still low at 4% compared to 28% in 1996. Eg. like The sail, a potential upside of more than 50% is possible; provided that you have the holding power (read lots of spare cash)


Number of foreign buyers increased from 20% to 26% with the majority from M'sia, Indonesia and Hong Kong.

Look out for new FreeHold(FH)/999 years units that are enblocked a few years back. FH / 999 years units also has a good rental yield, so they can possible good investments.

HDB Units prices are relatively decoupled from the private market but sales are still comparably higher than earlier years. It is anticipated that there will not be much fluctuation in the market due to the consistent supplies that the Govt provides.
4 room flats in good areas in Clementi, Bishan, Toa Payoh and Ang Mo Kio could ask for up to 10k above valuations though.

Private home is expected to rise 7 - 10% in 2007 (subject to location)
Key drivers of such increase
- Good labour market (lowest unemployment in recent years)
- Positive economic growth (5-7% predicted by Govt)
- IR (for projects near IR)
- Growing affluence of neighbouring countries
- Rise of global funds such as REITs

Possible Down Risks
- Diseases / Terrorism
- Volatile stock market
- Policies to curb speculation
- Capital gain tax
- CPF restrictions
- Effects from US market

Some financial talk for home buyers - do a financial checklist
Evaluate
- current financial
- assess financial objectives
are you a
- disciplined planner?
- opportunist?
- financial savvy?
- understand market product
- Learn to make use of bank products such as 0% home loan and cash rebate loans
- most importantly, do the homework

Tips on financial options
- Don't exhaust CPF resources
- Don't commit >35% of monthly income to service loan
- Know the regulations -> anticipate possible Govt moves
- Consult a financial planner/banker
- risk/gain factor for investment
- ability to customise loans
- seek in-principle approval before purchase
- Read the fine prints
- lock-in periods, redemptions / penalty clauses
- T&C
- Spend within means - exercise personal discipline
- Plan long term and expect short term uncertainty

Some common questions asked with regards to loans
Q1 The 2 extremes - pay in full or borrow the max
Ans : Depending on your comfort level, borrow the amount and timespan. Paying in full reduces your mortgage liability, but increases your risk in property market.

Q2 Is low interest rates more important?
Ans: No. There are also other things to watch out. Mainly cancellation fees, early redemption fee, penalties, interest servicing and re-structuring fees. These T&C however, can be discussed with the banker if you are borrowing a certain amount - like 100k and above.

Q3 Should I pay off as soon as possible?
Ans: Most desirable state but as said before, it exposes you to property market risks. The money can be put to better use.