Gross floor area calculation methods
Have you ever wondered how your Gross floor area is being calculated?
If you are an investor in Singapore property (properties), you would probably want to learn about plot ratio. As a consequence of plot ratio, you might want to read up on gross floor area.
URA has a handbook written specifically for that. You will also know that it has instituted Green space within high rise buildings by exempting green landscaping areas from Gross floor area (GFA) calculation.
This is important because when a developer builds a condominium, what happens is that they have a plot ratio for any given land plot.
Plot ratio = Gross floor area (GFA) / Land size
If some of the features or landscaping do not count as GFA, that means the developer can build nice features and landscaping and green space to enhance the property while not costing it Gross floor area (GFA). This means that it is not losing floor area which it can sell.
So kudos to URA for excellence in city planning.
http://www.ura.gov.sg/circulars/text/dcdgfahb_d0e4.htm
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Saturday, March 20, 2010
Sunday, March 14, 2010
Singapore Property Buyer forecast for 2010 and 2011
Singapore Property BUYER forecast for 2010 and 2011.
Recently the government has done the people a favour by releasing land and stopping the property prices from going out of hand.
We felt that the error was created in the first place because there was a squeeze in the HDB supply side. HDB was building massively inadequate supply for annual demand.
Although HDB can say that there is nobody queueing up for their BTO flats, but it could also be that the flats are priced too expensive due to benchmarking it to resale prices. Therefore if people cannot afford HDB flats, does it mean that there is no demand for it?
So the supply shortage in HDB is leading to a bottom up rise in prices of HDBs. This is pushing a wave of HDB upgrades into Private housing and condominium.
This demand is then pushing upwards and depleting supplies in the lower end of the private property segment (at least for this year 2010 and maybe next 2011) leading to massive demand for land. (Strangely so, as the supply in the pipeline is still some 60,000 units at at March 2010, equal to easily 6 to 7 years supply)
We can only speculate that perhaps it is because: -
1. Those supply of property in the pipeline is concentrated mainly amongst the big players.
2. Those supply of property in the pipeline is concentrated in certain districts or in certain price ranges, while demand is coming from the "MASS segment".
With increased demand for land due to HDB's miscalculation of demand by under-building, this leads to huge demand for land. Property developers seeing a possible opportunity may want to get in on the act by bidding for land.
Singapore government is happy to release land for sale
Singapore government is in turn happy, because it can be seen to be doing the public a favour by releasing land and cooling the market, whilst at the same time, the property developers are frantically meeting the land reserve price and starting a bidding war for land.
Our guess can only be that Property developers see this as a start of a price hike in land and therefore property prices. What this means is that if the Property developers bid and win at the early part of this property supply imbalance cycle, design and launch the properties quickly (say within 1 year), they can get out at the peak of the market or before the peak of the market. While during this time, the property prices are rising, so by the time they launch for sale, they could be sitting on massive profits.
But not all property developers will be lucky. Some smaller ones and those that mis-time their purchase can go bankrupt. While if again it is the big property developers who win, Singaporeans and Singapore property buyers will be unlucky. This is because with their holding power, they will then be able to continue to set new price benchmarks.
Will Singapore land supply catch up fast enough?
The supply of land will need around 2 to 4 years to be ready. So during this time, the property prices will continue to be squeezed from the mass market end all the way pushing up to the mass and mid market Private housing.
Singapore government and it's coffers are the major beneficiaries
So this time round, the Singapore government is the major beneficiary as it yet again was able to release land for sale at very high prices on the run up to the peak. And it is sparing no effort to sell much land to maximize land productivity.
Recently the government has done the people a favour by releasing land and stopping the property prices from going out of hand.
We felt that the error was created in the first place because there was a squeeze in the HDB supply side. HDB was building massively inadequate supply for annual demand.
Although HDB can say that there is nobody queueing up for their BTO flats, but it could also be that the flats are priced too expensive due to benchmarking it to resale prices. Therefore if people cannot afford HDB flats, does it mean that there is no demand for it?
So the supply shortage in HDB is leading to a bottom up rise in prices of HDBs. This is pushing a wave of HDB upgrades into Private housing and condominium.
This demand is then pushing upwards and depleting supplies in the lower end of the private property segment (at least for this year 2010 and maybe next 2011) leading to massive demand for land. (Strangely so, as the supply in the pipeline is still some 60,000 units at at March 2010, equal to easily 6 to 7 years supply)
We can only speculate that perhaps it is because: -
1. Those supply of property in the pipeline is concentrated mainly amongst the big players.
2. Those supply of property in the pipeline is concentrated in certain districts or in certain price ranges, while demand is coming from the "MASS segment".
With increased demand for land due to HDB's miscalculation of demand by under-building, this leads to huge demand for land. Property developers seeing a possible opportunity may want to get in on the act by bidding for land.
Singapore government is happy to release land for sale
Singapore government is in turn happy, because it can be seen to be doing the public a favour by releasing land and cooling the market, whilst at the same time, the property developers are frantically meeting the land reserve price and starting a bidding war for land.
Our guess can only be that Property developers see this as a start of a price hike in land and therefore property prices. What this means is that if the Property developers bid and win at the early part of this property supply imbalance cycle, design and launch the properties quickly (say within 1 year), they can get out at the peak of the market or before the peak of the market. While during this time, the property prices are rising, so by the time they launch for sale, they could be sitting on massive profits.
But not all property developers will be lucky. Some smaller ones and those that mis-time their purchase can go bankrupt. While if again it is the big property developers who win, Singaporeans and Singapore property buyers will be unlucky. This is because with their holding power, they will then be able to continue to set new price benchmarks.
Will Singapore land supply catch up fast enough?
The supply of land will need around 2 to 4 years to be ready. So during this time, the property prices will continue to be squeezed from the mass market end all the way pushing up to the mass and mid market Private housing.
Singapore government and it's coffers are the major beneficiaries
So this time round, the Singapore government is the major beneficiary as it yet again was able to release land for sale at very high prices on the run up to the peak. And it is sparing no effort to sell much land to maximize land productivity.
Wednesday, March 10, 2010
Singapore government shows hand in wanting to make smaller HDB flats
Singapore government wants to make smaller flats - essentially raising prices.
Commentary by www.PropertyBUYER.com.sg
"SINGAPORE: Instead of reducing the HDB flat lease of 99 years to make the flats more affordable, the government prefers to use other methods to help those with a lower income own a flat, said National Development Minister Mah Bow Tan.
Mr Mah told Parliament the HDB now provides additional grants to the lower-income group and builds smaller flats that are priced more affordably. Another way is to make sure higher-income flat applicants do not compete with them for the same flat - this is why the HDB has a income ceiling for applicants of two-and three-room flats. "With all these in place, we do not see any problem in making HDB flats affordable for first time lower-income families."
Having shorter leases of 60 years for young couples could also be an issue with time - "we are going to run into trouble especially when that particular family grows old", said the minister."
Mr Mah was also asked by MP Cedric Foo if Singaporeans are not buying the flats situated in poorer locations because they are not "priced correctly".
(TODAY, Ong Dai Lin, Grants, smaller flats instead of shorter lease tenure, 9 March 2010)
Voila, Singapore Government finally shows hand in one of the most blunt admission that it is building ever smaller flats. We predicted this in many earlier articles in Q4, 2009 and early this year that the government land sales program will lead to 2 possible outcomes.
One outcome is that the property prices quantum rise. If affordability is not there, the developer will instead sell a smaller size unit at higher per square feet (PSF) to maintain their margins after paying through their nose for land.
Another outcome is that property developers will sell a lesser lease. As seen in quite a few developments already, the property developer maintains a master lease of Freehold or 999 years leasehold and sells the property as a 103 years lease hold.
Now even HDB wants to it's flats at rock solid prices. If you cannot afford those properties at the prices HDB is asking, then HDB will help you afford it.
HDB will offer you smaller size flats.
Isn't this great? At least you will not be left behind.
HDB is indeed benevolent.
www.PropertyBUYER.com.sg Singapore Mortgage Consultants
Tel : 6100 0608
SMS : 9782 8606
SKYPE: propertybuyersg
email: loans@propertyBUYER.com.sg
Commentary by www.PropertyBUYER.com.sg
"SINGAPORE: Instead of reducing the HDB flat lease of 99 years to make the flats more affordable, the government prefers to use other methods to help those with a lower income own a flat, said National Development Minister Mah Bow Tan.
Mr Mah told Parliament the HDB now provides additional grants to the lower-income group and builds smaller flats that are priced more affordably. Another way is to make sure higher-income flat applicants do not compete with them for the same flat - this is why the HDB has a income ceiling for applicants of two-and three-room flats. "With all these in place, we do not see any problem in making HDB flats affordable for first time lower-income families."
Having shorter leases of 60 years for young couples could also be an issue with time - "we are going to run into trouble especially when that particular family grows old", said the minister."
Mr Mah was also asked by MP Cedric Foo if Singaporeans are not buying the flats situated in poorer locations because they are not "priced correctly".
(TODAY, Ong Dai Lin, Grants, smaller flats instead of shorter lease tenure, 9 March 2010)
Voila, Singapore Government finally shows hand in one of the most blunt admission that it is building ever smaller flats. We predicted this in many earlier articles in Q4, 2009 and early this year that the government land sales program will lead to 2 possible outcomes.
One outcome is that the property prices quantum rise. If affordability is not there, the developer will instead sell a smaller size unit at higher per square feet (PSF) to maintain their margins after paying through their nose for land.
Another outcome is that property developers will sell a lesser lease. As seen in quite a few developments already, the property developer maintains a master lease of Freehold or 999 years leasehold and sells the property as a 103 years lease hold.
Now even HDB wants to it's flats at rock solid prices. If you cannot afford those properties at the prices HDB is asking, then HDB will help you afford it.
HDB will offer you smaller size flats.
Isn't this great? At least you will not be left behind.
HDB is indeed benevolent.
www.PropertyBUYER.com.sg Singapore Mortgage Consultants
Tel : 6100 0608
SMS : 9782 8606
SKYPE: propertybuyersg
email: loans@propertyBUYER.com.sg
Sunday, March 7, 2010
INVEST IN SINGAPORE PROPERTIES: PRICES GONE MAD
INVEST IN MAD SINGAPORE PROPERTY PRICES?
Contributed by www.PropertyBUYER.com.sg Singapore Mortgage Consultants
"The measures that were announced by the Singapore government on February 19 do not address the root cause of the problem yet. The root cause of the problem is a short-term supply crunch at the lower end of the market, but it definitely helps mitigate the risk of bubbles being formed in the future." (Channel NewsAsia, 2 Mar 2010, Asian property prices expected to continue to rise despite govt measures, Karamjit Singh)
We read Mr. Karamjit Singh's comments and we did a bit more research. So here is what we found.
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Singapore's population (in '000s) according to the Singapore department of statistics are: -
Year Total Singapore
Residents
2000 --- 4,027.9 --- 3273.4
2001 --- 4,138.0 --- 3,325.9
2002 --- 4,176.0 --- 3,382.9
2003 --- 4,114.8 --- 3,366.9
2004 --- 4,166.7 --- 3,413.3
2005 --- 4,265.8 --- 3,467.8
2006 --- 4,401.4 --- 3,525.9
2007 --- 4,588.6 --- 3,583.1
2008 --- 4,839.4 --- 3,642.7
2009 --- 4,987.6 --- 3,733.9
The population growth in 2006 over 2005 is a net increase of 135,600
The population growth in 2007 over 2006 is a net increase of 184,000
The population growth in 2008 over 2007 is a net increase of 250,800
The population growth in 2009 over 2008 is a net increase of 148,200
There is a nice table at
http://tankinlian.blogspot.com/2010/01/hdb-flats-and-population-growth.html
which shows the relative growth rates of HDB.
We are not against importing talent.
But we think Singapore is over-doing importing talent, signifying a lack of ideas for growing the economy. This could be a harbinger for long term negative prospects for Singapore's economic growth. Growing the economy through immigration policy is considered a brute force economic strategy.
Not even the USA have such a huge foreign talent import quota and they are a country of 300 million people.
We are worried that the government has run out of ideas to grow the economy and is resorting to brute force economic growth.
Based on household size of 3.5 people (Source: Singstat), this would translate into a potential housing demand of: -
2006 - 38,743 units
2007 - 52,571 units
2008 - 71,657 units
2009 - 42,342 units
"In year 2006, we were building about 2,400 new flats. This year, we are
building about 8,000-plus new flats. Supply has gone up to meet demand. That's
why HDB prices have gone up but they have not gone through the roof." (Source: Straits times)
MASS MARKET HDB BEING PROPPED UP
Many of these new supplies were "Built-to-order" flats which can take 3 to 4 years to complete adding to acute shortages of HDB flats.
LOCAL demand from Household formation (Marriages) come in at a range of 23,000 to 25,000.
These newly married couples surely need somewhere to stay.
Why didn't the HDB anticipate the demand?
Marriage rates is something which is very easy to estimate and very consistent over the years. Why didn't HDB anticipate the demand?
Although not all immigrants are granted Permanent resident (PR) status and may not impact resale values immediately, these people must surely end-up staying somewhere. This drives up rental yields.
WHAT IS THE LIKELY EFFECT OF MASSIVE IMMIGRATION?
Rental rates are being pushed up.
HDB property prices are being pushed up.
Without much choice, Fussy Singaporeans will be forced to choose undesirable locations such as Punggol which in the past has excess units. Not only that, some may not wait and instead go directly to buy private housing if they can afford it.
HDB flat owners whose valuations have risen and are sitting on profits will now consider to sell their HDB. After they sell, and look for a replacement unit, they will find that it is meaningless to buy another HDB. They very soon may end up buying a private unit instead.
There is currently no shortgage of supply of Private properties at around 60k units over several years (Refer to earlier article). This is easily 7 to 8 years of supply based on the average consumption trend.
The end effect is that a greater proportion of people will end up living in Condominiums and private apartments. This will gradually deplete supplies and bring smiles to property developers in Singapore.
The Singapore government on the other hand will be happy that prices of land will rise and reach the land's minimum reserve price to trigger a bidding process. More land sales equal more revenues for the government. And more developers bidding for land means higher prices. These higher prices are then translated into higher priced condominiums. Singaporeans will have to work even harder and hopefully earn more to pay for such private apartments or condominiums of which the major price component is the land price.
MICRO MANAGEMENT OF SINGAPORE PROPERTY MARKET???
Although it is a market driven economy, various policy levers which the government has access to means that it is not a full market driven economy.
Singapore has perfected the art of micro-management.
At $8000 household income, HDB income ceiling, you cannot buy HDB flats.
At $10,000 you reach the Executive Condominium ceiling, you are not eligible to buy Executive condominium anymore.
At a household income of $10,000 onwards, the Singapore government strongly encourage you to move upwards in consumption.
Consumptions helps increase tax revenues (annual property tax, stamp duty, transaction fees for property agents which translate into taxes, sale of furniture, construction, work for lawyers, etc.), and helps the economy in creating jobs.
WHAT THIS MEANS FOR THE SINGAPORE PROPERTY BUYERS AND THEIR HOUSING LOANS?
If you are Singapore Property Buyers, you have to be mindful that there is a gradual shift in Singapore Government policy in play. The government is the largest land-owner, it can regulate supply to influence prices. Being an honest and efficient Singapore government bent on maximising land productivity, you can expect land prices to continue to rise and set new benchmarks. If you already own land, good for you, if you do not own any property, you could be price out (at least in the short term), until the next recession sets in.
These subtle or not so subtle policy directions will either enrich or impoverish you. And when you consider your Singapore housing loans, you ought also to take care to choose the right loans structure to capitalize on these unwritten government policies or mis-calculations.
We do not support or reject any government policies, we only highlight such policies to the attention of our readers so that they can find ways to benefit from these policies or outcomes of government's miscalculations.
Tel: 6100 - 0608
SMS: 9782 - 8606
Email: loans@propertyBUYER.com.sg
Monday, March 1, 2010
Singapore property Buyers - Investors Beware : MM Lee says HDB prices should rise
Singapore Property Buyers - Investors Beware: MM Lee says HDB prices should rise
Contributed by: www.PropertyBUYER.com.sg
MM Lee's words often move markets. Afterall, MM Lee is often see as the supreme commander of Singapore.
Singapore Property Buyers may want to note that MM Lee often practice tough love. If you want property prices to stay low or drop, then prepared to have a third world Singapore.
If he positions thing this way, then the answer is, we want the economy to grow. And as a consequence we are wishing that property prices grow.
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Contact Property Buyer Singapore Mortgage Consultants
www.PropertyBUYER.com.sg
Tel: 6100 - 0608
SMS: 9782 - 8606
Email: loans@propertyBUYER.com.sg
All articles are the intellectual property of www.PropertyBuyer.com.sg. If you want to reproduce all or part of our articles, you must provide an active and working link back to http://www.propertyBuyer.com.sg
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HDB flats will be more expensive. “HDB flat value will rise as long as economy grows: MM Lee, By Asha Popatlal, Channel NewsAsia 13 December 2009”
“Responding to questions later on about young couples who are concerned about flat affordability, Mr Lee said this is linked to the country's growth - if the country is doing well, property prices will go up.
But if the economy goes down, unemployment goes up but incomes and property values decline.”
So you can almost forget about HDB prices staying cheap and affordable. Poor people can have harder lives if they can't keep up.
SUPPLY AND DEMAND OF HDB FLATS IN SINGAPORE
If the total number of physical properties remain the same and consumers are making more money, and you do not build more HDBs then you have a problem.
More money and people needing housing chasing after a limited number of will end up in HDB prices shooting up in price.
So if you finally earn much more and everyone else is also earning much more, then the extra money you have will not be able to buy you more goods and services. This is because of inflation. If it is not HDB prices being more expensive, then it is others, food, fancy restaurants, cars, travel, foreign goods, etc.
HDB as a result wants to be able to price their homes using resale properties as standard.
PRIVATE Property House owners Investing in HDB Sustains HDB VALUE
Have you any idea that property owners who own private condomimiumns can buy HDB flats?
By allowing Singapore property buyers who owns private estates to buy HDB flats, the prices of HDB should improve. Though there is at the moment no meaningful date to evaluate. The segment of private property owners buying HDB flats may still be insignificant, as our contacts with many property buyers and people who refinance with us did not show us such cases.
We really hope that HDB, together with it's land issuing body can keep close to it's Social charter to provide cheap and affordable housing to Singaporeans and not view itself as a profit and loss centre.
HDB gives the impression that it is keen to get in on the hot property action and maximize profits.
Despite the fact that in most economies, it is normal to increase prices when you earn more. We were hopeful that things could be different and more compassionate in Singapore.
The next issue, we will look at whether HDB supply is enough in the face of massive increase of foreign immigration into Singapore.
What is our worry for Recent Property Purchasers?
In the case of a new graduate couple making a total domestic income of $4000. The HDB real estate charges for a four room HDB flat is easily $400,000. This is 8.33 times of yearly income.It is essential for salary to keep pace along with the raise in HDB property prices.
Not only does HDB seem interested in your money, dishonest property agents are also on stand-by to sell you stuff.
After that, there are hundreds of Singapore property loans to sort through. Sometimes dishonest property agents even bring you home loan application forms and tie up with bankers as well as lawyers which will give them a commission. These conveyancing lawyers having to pay the dishonest property agents, then make it back from you by charging higher conveyancing prices for your home loans.
Contributed by: www.PropertyBUYER.com.sg
MM Lee's words often move markets. Afterall, MM Lee is often see as the supreme commander of Singapore.
Singapore Property Buyers may want to note that MM Lee often practice tough love. If you want property prices to stay low or drop, then prepared to have a third world Singapore.
If he positions thing this way, then the answer is, we want the economy to grow. And as a consequence we are wishing that property prices grow.
-------------------------------------------------------------------------------
Contact Property Buyer Singapore Mortgage Consultants
www.PropertyBUYER.com.sg
Tel: 6100 - 0608
SMS: 9782 - 8606
Email: loans@propertyBUYER.com.sg
All articles are the intellectual property of www.PropertyBuyer.com.sg. If you want to reproduce all or part of our articles, you must provide an active and working link back to http://www.propertyBuyer.com.sg
-------------------------------------------------------------------------------
HDB flats will be more expensive. “HDB flat value will rise as long as economy grows: MM Lee, By Asha Popatlal, Channel NewsAsia 13 December 2009”
“Responding to questions later on about young couples who are concerned about flat affordability, Mr Lee said this is linked to the country's growth - if the country is doing well, property prices will go up.
But if the economy goes down, unemployment goes up but incomes and property values decline.”
So you can almost forget about HDB prices staying cheap and affordable. Poor people can have harder lives if they can't keep up.
SUPPLY AND DEMAND OF HDB FLATS IN SINGAPORE
If the total number of physical properties remain the same and consumers are making more money, and you do not build more HDBs then you have a problem.
More money and people needing housing chasing after a limited number of will end up in HDB prices shooting up in price.
So if you finally earn much more and everyone else is also earning much more, then the extra money you have will not be able to buy you more goods and services. This is because of inflation. If it is not HDB prices being more expensive, then it is others, food, fancy restaurants, cars, travel, foreign goods, etc.
HDB as a result wants to be able to price their homes using resale properties as standard.
PRIVATE Property House owners Investing in HDB Sustains HDB VALUE
Have you any idea that property owners who own private condomimiumns can buy HDB flats?
By allowing Singapore property buyers who owns private estates to buy HDB flats, the prices of HDB should improve. Though there is at the moment no meaningful date to evaluate. The segment of private property owners buying HDB flats may still be insignificant, as our contacts with many property buyers and people who refinance with us did not show us such cases.
We really hope that HDB, together with it's land issuing body can keep close to it's Social charter to provide cheap and affordable housing to Singaporeans and not view itself as a profit and loss centre.
HDB gives the impression that it is keen to get in on the hot property action and maximize profits.
Despite the fact that in most economies, it is normal to increase prices when you earn more. We were hopeful that things could be different and more compassionate in Singapore.
The next issue, we will look at whether HDB supply is enough in the face of massive increase of foreign immigration into Singapore.
What is our worry for Recent Property Purchasers?
In the case of a new graduate couple making a total domestic income of $4000. The HDB real estate charges for a four room HDB flat is easily $400,000. This is 8.33 times of yearly income.It is essential for salary to keep pace along with the raise in HDB property prices.
Not only does HDB seem interested in your money, dishonest property agents are also on stand-by to sell you stuff.
After that, there are hundreds of Singapore property loans to sort through. Sometimes dishonest property agents even bring you home loan application forms and tie up with bankers as well as lawyers which will give them a commission. These conveyancing lawyers having to pay the dishonest property agents, then make it back from you by charging higher conveyancing prices for your home loans.
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