Invest in Singapore Property and impact of QE2 Quantitative Easing
Article contributed by: www.PropertyBuyer.com.sg
On the 3rd Nov, 2010, the federal reserve announced a US$600 billion bond buying. Quantitative Easing is euphemism for printing more money without a corresponding increase in economic output.
Since the last time, we highlighted in 2008, “The additional funding requirements total more than US$1 trillion (US$ 1000 billion) The concern is, how are they going to raise US$1 trillion in 2009? Bill Gates is worth around US$55 billion just to provide a benchmark. If they cannot raise this cash through increased taxes, (since both presidential candidates have declared they are not raising taxes), they will have to borrow from sovereign sources such as Japan, China, South Korea, Saudi Arabia who traditionally buys US treasury bonds. But going from an average borrowing of US$200-300 billion a year to US$1 trillion? This is an additional whopping US$ 700 to US$ 800 billion. Who’s buying? Even the sovereign funds do not have that much funds considering that much of their funds are already in US treasury bonds, Euro bonds and other investments. The US government may make up the short-fall through increasing money supply temporarily. If this increase of money supply is temporary, inflationary pressures may be controllable, if not, such increase in money supply is surely inflationary. In other words, inflationary pressure tends to force interest rates hike in the USA. ” (Source: http://www.propertybuyer.com.sg/articles/compare-singapore-home-loans-/Global-Economy-Credit-Crisis-and-Interest-Rates/)
So it has come true and it comes in the form of a US$600 billion fund to buy back long term treasury securities (Bonds with long maturity).
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By Property Buyer Singapore Mortgage Consultants and Broker
Not Simply Cheap, but what Fits. We Research, You Save!
Tel: 6100 – 0608
SMS: 9782 – 8606
Email: loans@propertyBUYER.com.sg
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Why Does Federal Reserve Want To Print US$600 Billion To Buy Back Treasury Securities?
The US federal government is in budget deficit since Republican Ronald Reagan came to power. Within 8 years he has single-handedly squandered America’s wealth. US turned from a net creditor nation into a net debtor nation. Since 2004 to 2008, the US government has been running consistent budget deficits in the US$ 200 to US$ 400 billion range. All these monies need to be financed by individuals, corporations from within America and sovereign states from outside of America.
Lately in 2010, the expected US federal government deficit is likely to be US$1.171 trillion with a total of US$14.078 trillion of debt. “The total deficit for fiscal year 2009 was $1.42 trillion, a $960 billion increase from the 2008 deficit.”
(source: http://en.wikipedia.org/wiki/2010_United_States_federal_budget)
The largest holders of US debt as at Nov 2010 are: -
(source: http://www.cnbc.com/id/29880401/The_Biggest_Holders_of_US_Government_Debt?slide=16)
1. Federal Reserve and Intra-governmental holdings – US$5.345 trillion
2. Other investors and Savings bonds – US$1.266 trillion
3. China – US$868.4 billion
4. Japan – US$836.6 billion
5. Mutual Funds – US$648.6 billion
6. Pension Funds – US$643.8 billion
7. State and Local Governments – US$534.7 billion
8. United Kingdom – US$448.4 billion
9. Depository Institutions – US$273.7 billion
10. Insurance Companies – US$260.6 billion
11. Oil exporters – US$226.6 billion
12. Brazil – US$165 billion.
13. Caribbean Banking Centres – $159.1 billion
14. Hong Kong – US$137.8 billion
15. Taiwan – US$130.2 billion
Looking at foreign governments, China, Japan, UK, Oil exporter countries, Brazil, Hk and Taiwan held US$2.813 trillion in US federal debt. The Federal Reserve and various government actually hold the most of the federal government debt.
“From December 2008 to March 2010, the Fed bought $1.7 trillion of Treasury and mortgage-backed securities.” (Source: AP, http://www.msnbc.msn.com/id/39954647) that explains the high federal reserve holdings.
Looking at foreign governmental reserves (Source: http://en.wikipedia.org/wiki/List_of_countries_by_foreign_exchange_reserves): -
1. PROC (China) - 2.4543 Trillion USD Sep 2010
2. Japan - 1.050235 Trillion USD Jun 2010
3. Eurosystem - 753.642 billion Sep 2010
4. Russia - 501.1 billion Oct 2010
5. Saudi Arabia - 410.3 billion Dec 2009
6. India - 300.21 billion Nov 2010
7. Republic of Korea - 293.35 billion Oct 2010
8. Brazil - 287.206 billion Nov 2010
9. Hong kong - 266.100 billion Sep 2010
10. Switzerland - 249.556 billion Aug 2010
11. Singapore - 221.398 billion Oct 2010
With the budget shortfall of US$1.17 trillion, this is the amount that must be borrowed in 2010. So this large amount is unlikely to find supporters amongst foreign sovereign funds. So a large part of this debt needs to be absorbed internally or by foreign corporations and mutual funds.
In any one year, there would be demand on US Treasury debt, but putting out such a large amount would totally overrun all or any potential lenders or buyers of the Treasury securities. In order to fully reach this borrowing quantum, the coupons being offered will have to rise in order to meet the dwindling demand.
If the coupons being issued is the 30 years treasury bonds, then this would raise long term interest rates. And it may also hit shorter tenor treasury bonds indirectly.
So the natural way to NOT saturate this demand for US dollar treasury bonds is to not issue so many, but since the US runs a huge deficit, it has to issue treasury bills.
In this case, the US federal government issues more currency (Print more money) to the tune of US$600 billion and use this money to buy back longer tenor treasury bills. This has the effect of freeing up money into the economy.
Intention 1 – Reduce Long Term Interest Rates To Facilitate Recovery
The intentions are to reduce long term interest rates. Like we mentioned previously, the US federal government cannot set interest rates and then do nothing about it, else a black market will form. They can set target interest rates and then put the money where the mouth is so as to achieve that.
Intention 2 – Print More Money To Reduce The Currency Exchange Rate
This is to devalue the US dollar versus trading partners so that it provides a competitive edge to the US exporters. The other side of it is also to reduce the imports and reduce the trade deficit.
Intention 3 – Pump Cash Into The Market
The third intention is to pump cash into the US market. With this money being used to redeem treasury bonds, money goes into the hands of bond holders.
Could The US Government Achieve The Desired Effect?
Throughout history, countless countries and countless times have economies defaulted or devalued their currency in order to get out of trouble. Since most debt are in US dollars, devaluing the dollar devalues the debts as well. So it is no big deal when this happens if the situation is dire.
As we stressed previously, the interest rates do not just go to the rate the Federal Reserve wants it to go. Businesses need funding and are willing to bid for the funds at a rate they can afford. The only way interest rates can go down is for the Federal Reserve to flood the money market with money in excess of borrowing demands therefore reducing rates.
Federal Reserve should reduce interest rates long enough so that the US economy has a chance to recover.
However there are major risks such as inflation within the US as purchasing power drops. This could hurt US consumers hard and hurt consumption if inflation becomes serious. It could have the opposite effect of what the US federal reserve wants, instead of stimulating the economy, it ends up killing the economy.
On The Money Printing (Quantitative Easing)
On top of that, it pumps US$600 billion into the market, of which at least 60% (www.propertyBuyer.com.sg’s guesstimates by looking at the 15 largest holder of Treasury bills) are expected to stay within the US and begin to re-inflate the economy judging by the composition of bond holders. The global economy is inter-connected, leakage is expected in an open economy such as the US. Thus some portion of this money is expected to find it’s way into other countries.
We believed that the US economy should be able to hold out a few months even without this round of US$600 billion of quantitative easing even while the Bureau of Economic Analysis has been publishing report of a weakening US economy.
By some possibility, the US economy could even recover without any of this quantitative easing. So we see this as election economics. This is pump priming to make sure that unemployment reduces to an acceptable level in 2 years, ready for the next presidential election.
We have no opinion about the US presidential elections, but for the good of the world economy, we need a strong USA until some other country takes over as the engine of growth and consumption. So between war mongering Republicans and Democrats, Democrats are the lesser of the two evils.
On US Currency Devaluation (By Default)
The US dollar will naturally weaken due to this extra money supply. This extra money supply will with returned to the holders of such treasury bonds and until they are withdrawn will end up in the banking system as deposits.
The availability of such deposits will enable banks to lend out more money. As the USA practices fractional reserve (reference: http://en.wikipedia.org/wiki/Fractional-reserve_banking), by making available this US$600 billion, the broad money supply could by multiplied by up to 10 times, if it is fully leveraged. The US sets it’s fractional reserve at 10% of deposits, but for depository institutions (smaller banks or thrifts) having less than $55.2m the reserve requirement is reduced thereby leading to more leverage potentially.
“A cash reserve ratio (or CRR) is the percentage of bank reserves to deposits and notes. The cash reserve ratio is also known as the cash asset ratio or liquidity ratio. In the United States, the Board of Governors of the Federal Reserve System requires zero percent (0%) fractional reserves from depository institutions having net transactions accounts of up to $10.7 million.[3] Depository institutions having over $10.7 million, and up to $55.2 million in net transaction accounts must have fractional reserves totaling three percent (3%) of that amount.[3] Finally, depository institutions having over $55.2 million in net transaction accounts must have fractional reserves totaling ten percent (10%) of that amount.[3] However, under current policy, these numbers do not apply to time deposits from domestic corporations, or deposits from foreign corporations or governments, called “nonpersonal time deposits” and “eurocurrency liabilities,” respectively. For these account classes, the fractional reserve requirement is zero percent (0%) regardless of net account value.[3]”
(Source: http://en.wikipedia.org/wiki/Reserve_requirement)
Printing US$600 billion and pouring it into narrow money supply M1 is quite a lot and could cause the market to re-inflate definitely. But much of these money will likely end up in Broad money supply. And because of the complicated way in which currency is created using Fiat money (money issued by central banks and sovereign nations as legal tender. It is based on faith in the country’s ability to repay the note), then the effects of how much devaluation it should do to the US currency will be very hard to compute.
And most people, even very seasoned economists will be hard pressed to predict or calculate how much the US dollar should depreciate given this excess currency. Given that it is so complex, the large majority of the people may trade one way or the other given the sentiments therefore rendering the best economist speechless. Therefore, the extend of the US dollar depreciation will be largely a matter of sentiment and consumer and business confidence level of the US economy as a whole. Hence the whole currency may stay under-valued or over-valued for extended periods of time.
When the market goes down, the market always predict that it will always go down. But when the market sentiment improves, the US dollar may yet appreciate in a few years. But nobody knows.
ON JOB CREATION AND US EXPORTS BY CURRENCY DEVALUATION
The US export sector is only US$ 1.057 trillion (year 2009) out of the total economy of around US$14 trillion. By devaluing it’s currency, even if it increases it’s exports by US$300 billion (illustration), it is expected that job creation will be marginal. Dropping $300 billion into a population base of 300million is like dropping US$1000 per person. Assuming that 70% of this extra US$300 billion GDP goes into wages, the rest taxes and profits. This is just an extra US$210 billion in national income. US domestic economy is in the magnitude of US$9 trillion range, therefore it may only have limited impact. And not to forget, by dropping the currency value, it can be a zero sum game as components and raw materials that are imported and necessary for finished products will cost more too.
On Economic Leakage Of This US$600 Billion Quantitative Easing
We estimate that easily up to 30 to 40% of this money could end up in other countries. So excess US cash will not all stay within the US boundaries. But US$180 to US$240 billion money inflow is not a big deal for the world, unless it is concentrated within a few countries.
Also, with quantitative easing, the US dollar is expected to fall in value thereby mitigating the impact of inflow of such money. Unless for countries whose currencies are pegged to the US dollars. In such a scenario, it makes sense for the other countries to alter the exchange rates in view of the true and reduced value of the US dollar, but that is not the only way.
In addition to the leakage coming from the Quantitative Easing (Printing money), low interest rates environment will also export credit to the rest of the world. In view of anemic economic growth in the US, some smart money will search for higher yielding assets overseas. This leakage will form what is known as a Carry Trade in which investors acquire cheap funding in USD and immediately transfer this money into foreign assets with a higher yield. It will be extremely hard to estimate this impact as we mentioned earlier in the article, quantitative easing leads to increase in broad money supply and due to fractional reserve system, there could be a large multiplier effect by making available funds to borrowers. Such money may be the more scary force.
Such HOT money or Smart money will find it’s way into the more open economies of the world.
China has already raised the reserve ratio for it’s banks to 17.5% to 18% (Source: http://www.chinadaily.com.cn/china/2010-11/10/content_11530809.htm), so any potential extra hot money is partially buffeted.
More countries who are likely to receive such hot monies may impose some form of regulation either on the banking side or on the housing side or on the stock market side. Let us just hope that these countries do not over-react and kill the market.
Some countries may impose rules making it harder for foreign companies to own properties or for foreign individuals to buy properties.
Some of these HOT money will arrive into some countries causing some form of inflation which may force the local governments to act.
How Much Is Expected Of This US$600 Billion To Come To Singapore?
However, for Singapore’s case, the strengthening of the Singapore Dollar versus the US dollar will mitigate to some extent these money inflows.
International Financial centers around the world will usually get a bigger share of this money.
“The main forex trading center is London, but New York, Tokyo, Hong Kong and Singapore are all important centers as well. “ (Source: http://en.wikipedia.org/wiki/Foreign_exchange_market) therefore these centers could also see an influx of funds. Other major financial, trading or commodity centers may also see an influx of short term investments.
If part of these US$600 billion quantitative easing funds is withdrawn and immediately transferred to Singapore markets, then surely Forex markets liquidity will suddenly rise will be the first to get this funding followed by equities.
What Is The Likely Effect Of Singapore Property Prices?
Some funds may start to buy up commercial properties, retail malls, offices buildings and industrial centers in Singapore. Individuals and some smaller funds may engage in carry trade leading to HOT money buying up shares. However we cannot then assume that Singapore’s economy as a whole will be fine, in fact higher risks awaits in 2011 on the economic front as global consumption has not yet recovered.
Equity Has An Impact On Property Sentiments.
It is important that landed properties in Singapore is still restricted to Singaporeans and Singapore PR, a prestige class of property assets otherwise foreign funds can corner the Singapore Property market.
The existing super rich may seek to become Permanent Resident to get into the landed market in Singapore buying up good class bungalows.
The other classes of properties such as Condominiums and apartments are all subject to the usual speculative forces. Cluster landed developments may see renewed interests.
There are currently no rules against foreigners purchasing property in Singapore therefore some funds may flow towards this sector.
It is very hard to estimate what effects such funds may impact on Singapore property market, but in case there is more statistic showing asset price inflation, we guess that the regulators can reduce the leverage by reducing the lending loan to valuation percentage.
Singapore Banks also have quotas limiting the percentage of loans they are allowed to make for investment properties, therefore limiting access to credit.
Whichever way the funds go, whatever effects it may have on the Singapore properties, if you are buying a residential property to stay in, do so at your own affordability and do not try to guess too much which direction it is heading.
POSSIBLE SCENARIOS FOR SINGAPORE INVESTMENTS
If inflation can be maintained in Singaore and controlled despite US currency devaluation. The US economy recovers and starts to resume it’s role and help global consumption. We would have survived another scare. However a more multi-polar world will emerge with China taking a larger share of the world’s economy. China Yuan will also become more dominant. However China still has some way to go before it’s export driven economy can upgrade, therefore China will continue to make sure that any currency increase vis-à-vis the US dollar will be moderate so as to allow time for China’s industries to upgrade.
What is almost certain is, the world’s economy will enter a period of higher risk and volatility. Growth and bust cycles may become shorter and the likelihood of anyone losing their jobs is higher.
In the short term however, equities may see increased volatility including sharp rallies and immediate pull backs. There is a likelihood that equities will rally and if sustained, will lead to improving property sector sentiments. The average P/E of Singapore equities may increase, leading to it being more overvalued as fundamentals have yet to catch up.
If such a scenario holds true, the property prices going up is not due to fundamentals but due to increased liquidity. Therefore property buyers will be faced with even elevated risks. You can check out Property buying versus renting in our article section.
And don’t rule out the US returning to the forefront of the global economy yet.
Showing posts with label housing loan singapore. Show all posts
Showing posts with label housing loan singapore. Show all posts
Saturday, December 11, 2010
Monday, August 9, 2010
Singapore's Macro Economy
Singapore's Macro Economy
Singapore economy is coming from a low base since the recession but still showed high GDP growth. The real strength of the economy is still uncertain. The GDP of Singapore would be pretty much the same. However, the increasing expatriates and immigrants needing housing, schools, food, services, etc, their massive immigration, has been affecting the growth of the overall nominal GDP values.
The condition implies that we would be expecting a slow rate ascent of the real property prices towards the end of 2010. However, the risks of the property buyers will continue to increase. A property buyer planning to purchase a property still needs to make a good decision based on research and other information.
A Singapore property investor looking for real estate property to invest should wait a few more years to experience a market flooded with properties developed by the government of Singapore. The government has been trying to develop properties in relation to their present massive land sales program. There is no speculation of a market crash since the Singapore government could always resort to bring in more foreigners to boost demand for housing, which will support high land prices.
Singapore economy is coming from a low base since the recession but still showed high GDP growth. The real strength of the economy is still uncertain. The GDP of Singapore would be pretty much the same. However, the increasing expatriates and immigrants needing housing, schools, food, services, etc, their massive immigration, has been affecting the growth of the overall nominal GDP values.
The condition implies that we would be expecting a slow rate ascent of the real property prices towards the end of 2010. However, the risks of the property buyers will continue to increase. A property buyer planning to purchase a property still needs to make a good decision based on research and other information.
A Singapore property investor looking for real estate property to invest should wait a few more years to experience a market flooded with properties developed by the government of Singapore. The government has been trying to develop properties in relation to their present massive land sales program. There is no speculation of a market crash since the Singapore government could always resort to bring in more foreigners to boost demand for housing, which will support high land prices.
Friday, August 6, 2010
Invest in singapore property: Risks involved in market swings
Invest in Singapore property: Risks involved in market swings
The high-end properties as well as the mid to high-end properties risks largely depends on the demonstrated price volatility during market swings. The Singapore mass market condominiums are presently facing the challenge of a market affordability risks. With the present elevated market price levels, a new benchmark for prices could be formed provided the employment figures remain stable. The new prices could hold up for awhile depending on the employment factors. The HDB supports the condition of the mass market condominium. The HDB is the basis for mass market condominium pricing. The HDB is currently experiencing shortage of supply.
Availability of housing loan services
The only limitation that an individual may face is the availability of housing loan services that ignores cash down payment or owner’s cash equity part. Normally, housing loans require owner’s cash equity. The owner’s cash equity will serve as the down payment for the purchase of the property. The fact that the savings and cash holdings are not homogeneous across all income groups of the country, it would be impractical and misleading to use the national savings as a guide. To simplify the analysis, the cash down payment funding portion is ignored in the following computation.
Sample computation using condominiums such as Shenton Way
• 76 Shenton – between $1,900 - $2,400 psf.
• The Sail @ Marina Bay - between $2,000 - $3,300 psf
• International Plaza - $1,100 range
• Icon - $1,600 - $1,700 psf
• Some parts of China town, Tiong bahru, etc….
• Leonie Hill, Leonie Studio - $1,500 to $1,900
• Grange residences - $2,500 to $2,800 psf
• Ardmore park - $3,000 - $3,600 psf
• Balmoral - $1,500 - $1, 800 psf
• Cyan Bukit timah (New development) - $1,800 - $2,400 psf
• Aspen heights - $1,400 - $1,600 psf
• Rivergate - $1,600 to $1,900 psf
• 5th Avenue Condominium - $1,200 to $1,400 psf
Singapore BANKS CREDIT stance
Banks have generally been more careful in managing their loan portfolios, investments, and loan or credit facility offers. Banks such as Citibank that were greatly affected during the worldwide recession or sub-prime crisis are aggressively introducing the credit facility package Sibor with trend showing about + 0.5% ascending to 0.9% in June 2010. HSBC responded with the competition and started to campaign aggressively for their credit facilities. The Bank of East Asia eventually entered offering consumers the residential housing loan packages. This time, the banks learn to lend more freely and aggressively to regular households.
The high-end properties as well as the mid to high-end properties risks largely depends on the demonstrated price volatility during market swings. The Singapore mass market condominiums are presently facing the challenge of a market affordability risks. With the present elevated market price levels, a new benchmark for prices could be formed provided the employment figures remain stable. The new prices could hold up for awhile depending on the employment factors. The HDB supports the condition of the mass market condominium. The HDB is the basis for mass market condominium pricing. The HDB is currently experiencing shortage of supply.
Availability of housing loan services
The only limitation that an individual may face is the availability of housing loan services that ignores cash down payment or owner’s cash equity part. Normally, housing loans require owner’s cash equity. The owner’s cash equity will serve as the down payment for the purchase of the property. The fact that the savings and cash holdings are not homogeneous across all income groups of the country, it would be impractical and misleading to use the national savings as a guide. To simplify the analysis, the cash down payment funding portion is ignored in the following computation.
Sample computation using condominiums such as Shenton Way
• 76 Shenton – between $1,900 - $2,400 psf.
• The Sail @ Marina Bay - between $2,000 - $3,300 psf
• International Plaza - $1,100 range
• Icon - $1,600 - $1,700 psf
• Some parts of China town, Tiong bahru, etc….
• Leonie Hill, Leonie Studio - $1,500 to $1,900
• Grange residences - $2,500 to $2,800 psf
• Ardmore park - $3,000 - $3,600 psf
• Balmoral - $1,500 - $1, 800 psf
• Cyan Bukit timah (New development) - $1,800 - $2,400 psf
• Aspen heights - $1,400 - $1,600 psf
• Rivergate - $1,600 to $1,900 psf
• 5th Avenue Condominium - $1,200 to $1,400 psf
Singapore BANKS CREDIT stance
Banks have generally been more careful in managing their loan portfolios, investments, and loan or credit facility offers. Banks such as Citibank that were greatly affected during the worldwide recession or sub-prime crisis are aggressively introducing the credit facility package Sibor with trend showing about + 0.5% ascending to 0.9% in June 2010. HSBC responded with the competition and started to campaign aggressively for their credit facilities. The Bank of East Asia eventually entered offering consumers the residential housing loan packages. This time, the banks learn to lend more freely and aggressively to regular households.
Friday, July 30, 2010
Risks involved in Singapore property market swings
Risks involved in Singapore property market swings
By Shirley Tan - Property Buyer Singapore Mortgage Consultants
The high-end properties as well as the mid to high-end properties risks largely depends on the demonstrated price volatility during market swings. The mass market condominiums are presently facing the challenge of a market affordability risks. With the present elevated market price levels, a new benchmark for prices could be formed provided the employment figures remain stable. The new prices could hold up for awhile depending on the employment factors. The HDB supports the condition of the mass market condominium. The HDB is the basis for mass market condominium pricing. The HDB is currently experiencing shortage of supply.
Availability of housing loan services
The only limitation that an individual may face is the availability of housing loan services that ignores cash down payment or owner’s cash equity part. Normally, housing loans require owner’s cash equity. The owner’s cash equity will serve as the down payment for the purchase of the property. The fact that the savings and cash holdings are not homogeneous across all income groups of the country, it would be impractical and misleading to use the national savings as a guide. To simplify the analysis, the cash down payment funding portion is ignored in the following computation.
Sample computation using condominiums such as Shenton Way
* 76 Shenton – between $1,900 – $2,400 psf.
* The Sail @ Marina Bay – between $2,000 – $3,300 psf
* International Plaza – $1,100 range
* Icon – $1,600 – $1,700 psf
* Some parts of China town, Tiong bahru, etc….
* Leonie Hill, Leonie Studio – $1,500 to $1,900
* Grange residences – $2,500 to $2,800 psf
* Ardmore park – $3,000 – $3,600 psf
* Balmoral – $1,500 – $1, 800 psf
* Cyan Bukit timah (New development) – $1,800 – $2,400 psf
* Aspen heights – $1,400 – $1,600 psf
* Rivergate – $1,600 to $1,900 psf
* 5th Avenue Condominium – $1,200 to $1,400 psf
Singapore BANKS CREDIT stance
Banks have generally been more careful in managing their loan portfolios, investments, and loan or credit facility offers. Banks such as Citibank that were greatly affected during the worldwide recession or sub-prime crisis are aggressively introducing the credit facility package Sibor with trend showing about + 0.5% ascending to 0.9% in June 2010. HSBC responded with the competition and started to campaign aggressively for their credit facilities. The Bank of East Asia eventually entered offering consumers the residential housing loan packages. This time, the banks learn to lend more freely and aggressively to regular households.
By Shirley Tan - Property Buyer Singapore Mortgage Consultants
The high-end properties as well as the mid to high-end properties risks largely depends on the demonstrated price volatility during market swings. The mass market condominiums are presently facing the challenge of a market affordability risks. With the present elevated market price levels, a new benchmark for prices could be formed provided the employment figures remain stable. The new prices could hold up for awhile depending on the employment factors. The HDB supports the condition of the mass market condominium. The HDB is the basis for mass market condominium pricing. The HDB is currently experiencing shortage of supply.
Availability of housing loan services
The only limitation that an individual may face is the availability of housing loan services that ignores cash down payment or owner’s cash equity part. Normally, housing loans require owner’s cash equity. The owner’s cash equity will serve as the down payment for the purchase of the property. The fact that the savings and cash holdings are not homogeneous across all income groups of the country, it would be impractical and misleading to use the national savings as a guide. To simplify the analysis, the cash down payment funding portion is ignored in the following computation.
Sample computation using condominiums such as Shenton Way
* 76 Shenton – between $1,900 – $2,400 psf.
* The Sail @ Marina Bay – between $2,000 – $3,300 psf
* International Plaza – $1,100 range
* Icon – $1,600 – $1,700 psf
* Some parts of China town, Tiong bahru, etc….
* Leonie Hill, Leonie Studio – $1,500 to $1,900
* Grange residences – $2,500 to $2,800 psf
* Ardmore park – $3,000 – $3,600 psf
* Balmoral – $1,500 – $1, 800 psf
* Cyan Bukit timah (New development) – $1,800 – $2,400 psf
* Aspen heights – $1,400 – $1,600 psf
* Rivergate – $1,600 to $1,900 psf
* 5th Avenue Condominium – $1,200 to $1,400 psf
Singapore BANKS CREDIT stance
Banks have generally been more careful in managing their loan portfolios, investments, and loan or credit facility offers. Banks such as Citibank that were greatly affected during the worldwide recession or sub-prime crisis are aggressively introducing the credit facility package Sibor with trend showing about + 0.5% ascending to 0.9% in June 2010. HSBC responded with the competition and started to campaign aggressively for their credit facilities. The Bank of East Asia eventually entered offering consumers the residential housing loan packages. This time, the banks learn to lend more freely and aggressively to regular households.
Thursday, June 24, 2010
Invest in singapore property: Can single person use CPF to buy property?
Invest in Singapore property: Can single person use CPF to buy property in Singapore?
by www.PropertyBuyer.com.sg Singapore mortgage consultants
Text (sms) : 9782 8606
We know that this topic is often asked and searched. The fact that many of our customers ask this question goes to show that this knowledge is not easily searched and found. In fact the answer can be found at CPF's website. So let us broadcast the message a bit wider.
" Q: I am single. Can I jointly use my CPF to buy a property under Residential Properties Scheme (RPS) with my friend/cousin?
A: Yes. You can use your CPF jointly with your friend/cousin to buy the property so long as both of you are single, divorced with Decree Nisi Absolute/Final Judgment(divorce) or widowed and not using CPF for any existing properties currently."
(Source: http://mycpf.cpf.gov.sg/CPF/News/InTouch/NL_082005.htm and http://ask-us.cpf.gov.sg/hybrid/Themes/CPF/related.asp?MesId=6169998&FolderID=0&Selected=2&CSRId=&SourceId=0)
If in doubt, please always check with CPF board and/or your lawyer prior to any property purchase, as regulations do change. We cannot be held responsible for any losses or damages arising from reading this article.
If you do not want to engage a lawyer and still want to find out prior to a property purchase, you can contact us at: -
go to --> http://www.PropertyBUYER.com.sg/contactus.php
Tel: 6100 0608
Sms: 9782 8606
Email: loans@propertyBUYER.com.sg
by www.PropertyBuyer.com.sg Singapore mortgage consultants
Text (sms) : 9782 8606
We know that this topic is often asked and searched. The fact that many of our customers ask this question goes to show that this knowledge is not easily searched and found. In fact the answer can be found at CPF's website. So let us broadcast the message a bit wider.
" Q: I am single. Can I jointly use my CPF to buy a property under Residential Properties Scheme (RPS) with my friend/cousin?
A: Yes. You can use your CPF jointly with your friend/cousin to buy the property so long as both of you are single, divorced with Decree Nisi Absolute/Final Judgment(divorce) or widowed and not using CPF for any existing properties currently."
(Source: http://mycpf.cpf.gov.sg/CPF/News/InTouch/NL_082005.htm and http://ask-us.cpf.gov.sg/hybrid/Themes/CPF/related.asp?MesId=6169998&FolderID=0&Selected=2&CSRId=&SourceId=0)
If in doubt, please always check with CPF board and/or your lawyer prior to any property purchase, as regulations do change. We cannot be held responsible for any losses or damages arising from reading this article.
If you do not want to engage a lawyer and still want to find out prior to a property purchase, you can contact us at: -
go to --> http://www.PropertyBUYER.com.sg/contactus.php
Tel: 6100 0608
Sms: 9782 8606
Email: loans@propertyBUYER.com.sg
Monday, June 21, 2010
Invest in Singapore: Be careful of tricks property agents play on Option to purchase
Invest in Singapore: be careful Tricks agents play on Option to purchase in Singapore
Option to purchase OTP in Singapore. An option to purchase is a prelude to buying a property in Singapore. An option to purchase gives the purchaser the right to buy a property within a given time window at an agreed price, but not the obligation to do.
Bad Property deal Practices by dishonest Property agents regarding OTP Option to purchase
We treat any act that puts the interest of the buyer and seller last as unethical and bad practices.
Some Bad Singapore Property agents want the seller to sign an Option to Purchase document leaving out the date and the price unfilled. This puts the seller at risks of selling accidentally below cost and gives a potential dishonest property agent a chance of a quick sale which could costs the Owner hundreds of thousands of dollars.
On the buying side , the unethical property agents trick the property buyers into making an offer, believing that the price is agreed.
In this scenario , Dishonest agent dupes buying into believing that the deal is sealed at $1.23m, and this is the agreed asking price.
So the Property buyer makes an offer and pays a deposit for the option to purchase of $12,300 for the property. The Dishonest property agent then banks this cheque into the property owner bank account . He/she forces or sweet talk the Seller into agreeing to the deal.
In case the Property seller refuses, the property buyer is stuck while his/her cheque is already cashed by the property seller. Then the Property agent uses delay tactics to delay returning the money.
This causes buyers much worry. When they are most anxious , the dishonest property agent will offer a solution to help negotiate with the seller.
Be really angry if you will because , during this time, the crooked property agent may ask for some fee for "doing you a favour".
In case this does not work, he/she may come back telling you that the property selling wants $1.31m instead of $1.23m. And since your Option to purchase money is stuck and the Dishonest property agent has no intention of returning you the money easily (even if it is not them who kept the money), some buyers may be tricked into paying more. BINGO, the deal is done! The deal is closed!!!
We are no match for the Dishonest Singapore Property agent, they are smooth
The common man or woman on the street is usually no match for the dishonest property agents as even very senior executives get cheated. Nothing to be ashamed of, because these people have an innocent face and are genuinely cunning. But of course, there are a small fraction of honest singapore agents out here, you just have to look very hard.
A new bad development in our opinion. This practice stems from a botched deals where smart buyers discovered last minute that something is not quite right and cancelled the cheque.
Since these buyers actually do outsmart the property agents and agencies, something needs to be done to protect the interests of the Property agencies and property agents.
So they came up with a document called OFFER TO PURCHASE. An offer to purchase may hold legal weight or it may simply function more like an acknowledgement slip. But the terms of the offer needs to be carefully evaluated.
Do check through on the terms and make sure that they are reasonable for an Offer to purchase and that you have the right to rescind the offer should it not be accepted within 3 days. If possible, post date your cheque. And that you must also specify your rights such as "the offer is valid upon a reasonable and satisfactory terms stated within the Option to purchase" or words to that effect.
What if a Buyer offers to purchase and it is accepted and the subsequent Option to purchase comes, but with terms that are UNFAIR and not acceptable? Does that mean that the Property Buyer has also accepted the terms and conditions of the Option to Purchase?
Will Dishonest property agents show you an Option to purchase OTP document for your review?
Try asking them to provide you a copy of the Option to purchase, 9 out of 10 will be most reluctant to show you. Since the agencies drafted the Option to purchase documents, it usually favours the agencies and the agents and sometimes to the detriment of the Property seller and buyers. Those rare agent who may be willing to show you may be new to the trade.
So if a Singapore Property agent asks you to offer a cheque and sign an OFFER to purchase, ask them to send you both documents for your review first. And have the terms and conditions of an Option to purchase included in the offer to purchase. Otherwise you may be signing a blank cheque.
If worried , you can sms Property Buyer Singapore Mortgage Consultants at +65 - 9782-8606 in Singapore or email them at loans@propertybuyer.com.sg to guide you through the minefield of Dishonest Singapore Property agents. They have crossed swords with property agents in protecting buyer's and seller's interests in many occasions.
Should the Property Buyer sign the Option to Purchase?
Only the rightful sellers needs to sign the option to purchase. There is no need for property buyers to sign the Option to purchase. The property buyer only needs to have the original signed copy of the option to purchase in their possession. Do not leave the original copy with the Property agent!!!
Beware of letting your agent handle your original option to purchase document. They can easily sub-sale your property without you knowing about it, simply by filling in the name of the buyers if it is not filled in.
During property hype , we have heard that some agents who held copies of the original option to purchase managed to flip the properties for higher price making the difference. When the original buyers wanted to exercise option, they did not want to HAND OVER the ORIGINAL option to purchase. The buyers have no recourse as they do not have the original OTP and cannot exercise the option.
Some of the option to purchase contains a section called "And / or nominees". If the names of the buyer and the and /or nominee section is NOT filled up, then the BUYER needs to hold the original copy of the option to purchase OTP.
Some crooked Singapore Property agents may take your original OTP , make copies and then submit it to many banks to try and secure property loans from their favourite bankers and lawyers from which they have an under-table deal. These rogued lawyers then over-charge you and pay the dishonest agent a commission , which is illegal.
Is your Singapore Property agent too eager to introduce to you a bank, a banker to you? RUN for your life.
Is your property realtor too eager to recommend a lawyer or law firm? RUN for your life.
Is your Singapore property agent too keen to recommend you a contractor? RUN for your life.
Singapore property agents don't do things for free, just try asking them to give you some comparisons and some paperwork, they will try all ways to turn it away. Many are lazy and yet want to make money. If they are too keen, something's fishy. Just tell them firmly, NO thank you. We will find our own contractors, our own bankers, our own mortgage consultants and our own lawyers. Check with your close friends who are not agents to find out.
Many people in Singapore do not buy property regularly , so naturally, you may need a Singapore Mortgage Consultant at loans@propertyBuyer.com.sg who has no stake and no commission in property buying. Propertybuyer.com.sg offers free mortgage advice and property buying guidance for free. They offer their services for free to property buyers in selecting home loans as they fill the role of independent and unbiased outsourced bankers. Banks would need to incur staffing cost if not for mortgage consultants, therefore this service is offered to you free of charge at sms (text) +65 9782 8606.
Option to purchase OTP in Singapore. An option to purchase is a prelude to buying a property in Singapore. An option to purchase gives the purchaser the right to buy a property within a given time window at an agreed price, but not the obligation to do.
Bad Property deal Practices by dishonest Property agents regarding OTP Option to purchase
We treat any act that puts the interest of the buyer and seller last as unethical and bad practices.
Some Bad Singapore Property agents want the seller to sign an Option to Purchase document leaving out the date and the price unfilled. This puts the seller at risks of selling accidentally below cost and gives a potential dishonest property agent a chance of a quick sale which could costs the Owner hundreds of thousands of dollars.
On the buying side , the unethical property agents trick the property buyers into making an offer, believing that the price is agreed.
In this scenario , Dishonest agent dupes buying into believing that the deal is sealed at $1.23m, and this is the agreed asking price.
So the Property buyer makes an offer and pays a deposit for the option to purchase of $12,300 for the property. The Dishonest property agent then banks this cheque into the property owner bank account . He/she forces or sweet talk the Seller into agreeing to the deal.
In case the Property seller refuses, the property buyer is stuck while his/her cheque is already cashed by the property seller. Then the Property agent uses delay tactics to delay returning the money.
This causes buyers much worry. When they are most anxious , the dishonest property agent will offer a solution to help negotiate with the seller.
Be really angry if you will because , during this time, the crooked property agent may ask for some fee for "doing you a favour".
In case this does not work, he/she may come back telling you that the property selling wants $1.31m instead of $1.23m. And since your Option to purchase money is stuck and the Dishonest property agent has no intention of returning you the money easily (even if it is not them who kept the money), some buyers may be tricked into paying more. BINGO, the deal is done! The deal is closed!!!
We are no match for the Dishonest Singapore Property agent, they are smooth
The common man or woman on the street is usually no match for the dishonest property agents as even very senior executives get cheated. Nothing to be ashamed of, because these people have an innocent face and are genuinely cunning. But of course, there are a small fraction of honest singapore agents out here, you just have to look very hard.
A new bad development in our opinion. This practice stems from a botched deals where smart buyers discovered last minute that something is not quite right and cancelled the cheque.
Since these buyers actually do outsmart the property agents and agencies, something needs to be done to protect the interests of the Property agencies and property agents.
So they came up with a document called OFFER TO PURCHASE. An offer to purchase may hold legal weight or it may simply function more like an acknowledgement slip. But the terms of the offer needs to be carefully evaluated.
Do check through on the terms and make sure that they are reasonable for an Offer to purchase and that you have the right to rescind the offer should it not be accepted within 3 days. If possible, post date your cheque. And that you must also specify your rights such as "the offer is valid upon a reasonable and satisfactory terms stated within the Option to purchase" or words to that effect.
What if a Buyer offers to purchase and it is accepted and the subsequent Option to purchase comes, but with terms that are UNFAIR and not acceptable? Does that mean that the Property Buyer has also accepted the terms and conditions of the Option to Purchase?
Will Dishonest property agents show you an Option to purchase OTP document for your review?
Try asking them to provide you a copy of the Option to purchase, 9 out of 10 will be most reluctant to show you. Since the agencies drafted the Option to purchase documents, it usually favours the agencies and the agents and sometimes to the detriment of the Property seller and buyers. Those rare agent who may be willing to show you may be new to the trade.
So if a Singapore Property agent asks you to offer a cheque and sign an OFFER to purchase, ask them to send you both documents for your review first. And have the terms and conditions of an Option to purchase included in the offer to purchase. Otherwise you may be signing a blank cheque.
If worried , you can sms Property Buyer Singapore Mortgage Consultants at +65 - 9782-8606 in Singapore or email them at loans@propertybuyer.com.sg to guide you through the minefield of Dishonest Singapore Property agents. They have crossed swords with property agents in protecting buyer's and seller's interests in many occasions.
Should the Property Buyer sign the Option to Purchase?
Only the rightful sellers needs to sign the option to purchase. There is no need for property buyers to sign the Option to purchase. The property buyer only needs to have the original signed copy of the option to purchase in their possession. Do not leave the original copy with the Property agent!!!
Beware of letting your agent handle your original option to purchase document. They can easily sub-sale your property without you knowing about it, simply by filling in the name of the buyers if it is not filled in.
During property hype , we have heard that some agents who held copies of the original option to purchase managed to flip the properties for higher price making the difference. When the original buyers wanted to exercise option, they did not want to HAND OVER the ORIGINAL option to purchase. The buyers have no recourse as they do not have the original OTP and cannot exercise the option.
Some of the option to purchase contains a section called "And / or nominees". If the names of the buyer and the and /or nominee section is NOT filled up, then the BUYER needs to hold the original copy of the option to purchase OTP.
Some crooked Singapore Property agents may take your original OTP , make copies and then submit it to many banks to try and secure property loans from their favourite bankers and lawyers from which they have an under-table deal. These rogued lawyers then over-charge you and pay the dishonest agent a commission , which is illegal.
Is your Singapore Property agent too eager to introduce to you a bank, a banker to you? RUN for your life.
Is your property realtor too eager to recommend a lawyer or law firm? RUN for your life.
Is your Singapore property agent too keen to recommend you a contractor? RUN for your life.
Singapore property agents don't do things for free, just try asking them to give you some comparisons and some paperwork, they will try all ways to turn it away. Many are lazy and yet want to make money. If they are too keen, something's fishy. Just tell them firmly, NO thank you. We will find our own contractors, our own bankers, our own mortgage consultants and our own lawyers. Check with your close friends who are not agents to find out.
Many people in Singapore do not buy property regularly , so naturally, you may need a Singapore Mortgage Consultant at loans@propertyBuyer.com.sg who has no stake and no commission in property buying. Propertybuyer.com.sg offers free mortgage advice and property buying guidance for free. They offer their services for free to property buyers in selecting home loans as they fill the role of independent and unbiased outsourced bankers. Banks would need to incur staffing cost if not for mortgage consultants, therefore this service is offered to you free of charge at sms (text) +65 9782 8606.
Saturday, September 5, 2009
Invest in Singapore property using CPF
Singapore Property Investor and CPF funds for second property
CPF is abbreviation for Central Providend fund. It is similar to the American 301k plan. CPF funds are supposed to be saved for retirement.
Every Singaporean must contribute 20% of their income into CPF. Therefore Singapore’s CPF has billions of dollars of funds. Singapore property investor and Singapore property buyer also have lots of fund and liquidity, unlike other markets. The Singapore market is more about confidence than about liquidity.
About Property Buyer Contact Property Buyer
www.PropertyBUYER.com.sg
We are a Research-focused Singapore Mortgage Consultant which helps you compare Singapore Home loans either for new home loans or refinancing, we balance risks versus rewards for each home loan to match your risk profile and financing needs.
Buying property is a serious affair, we do NOT advocate a Greed based buying approach, we emphasize that you need to check your affordability and do your sums right. If you are unsure, we are happy to help you check.
Not Simply Cheap, but what Fits. We Research, You Save!
Tel: 6100 - 0608
SMS: 9782 - 8606
loans@propertyBUYER.com.sg
CPF causes you to overpay?
Singapore government likes to get maximum value for its land. If too many people can afford Housing, it is time to raise prices. In other circumstances, we can say it’s market forces or free market as supply and demand are determined by private enterprise. But not in this case.
HDB Government Housing market is Not a free market
But in Singapore’s case, government housing (HDB) is a controlled market, www.propertybuyer.com.sg is often critical of the way some policies are dished out, to the disadvantaged of the Singapore property buyers.
Many people along with us also see the setting of prices as arbitrary, because the government controls much the state land and there is no question of supply, but rather that of demand and affordability. The government can freely control supply to set prices.
CPF funds adds to affordability
Allowing the use of CPF funds for HDB and property in general raises the affordability.
With this new found liquidity, the government can then raise the selling prices of HDB, by putting in more frills and of course enhancing the construction industry producing more value add.
Of course, ultimately the home buyers and the Singapore property investors are the ones that pay for it through sapping up their retirement funds in CPF.
Raising prices of HDB flats is a means to sap liquidity out of the individual’s CPF account into the government coffers through land sales.
Since the Singapore property investor – buyer may have limited cash, the Singapore government allows the use of individual’s CPF funds to pay for their government “subsidized” housing. As a result properties become more and more expensive, effectively becoming an indirect tax.
Coupled with more funds (through the use of CPF) money, plus low interest rate environment, many Singapore banks cannot reduce rates much more rather they start to come out with newer terminology and features. Comparing Singapore Home loan has become much more tedious exercise, it is prudent to engage www.PropertyBUYER.com.sg mortgage consultants to help. They can be contacted at +65-6100-0608.
Refinancing home loan can also be tedious.
Singaporeans have lesser and lesser CPF money for retirement
Singaporeans have lesser and lesser CPF monies left for their retirement as they pay for ever more expensive properties. At some stage, we have to say, “Mr. Government, stop eying our CPF money!!!”
Since so many people are resigned to the fact that they will never really see their CPF money as cash as more and more rules are put in place to tap into their CPF.
Even after retirement age at 55 years, there is the minimum sum that you have to set aside. Currently (as at 2009) the minimum sum is $117,000 for retirement. This is the minimum sum that a person must have in the account. You can only withdraw any CPF funds in excess of the minimum sum upon retirement age.
Many Singaporeans have already given up on hoping to see their CPF money. As a result, many Singaporeans and PR used CPF to buy their second property before 1st July, 2006.
Can I use my CPF to purchase more than one property?
(Source: www.cpf.gov.sg)
Yes, you may use your CPF to purchase more than one property.
However, if you already own a property (HDB flat or private property) bought with your CPF savings and wishes to buy another property with CPF savings from 1 July 2006, you will be able to do so only after setting aside in your Ordinary and Special Accounts (including the amount used for investment from the Special Account) the prevailing Minimum Sum cash component if you are below 55 years, or the Minimum Sum cash component shortfall if you are aged 55 and above.
If you currently own more than one property bought with CPF savings before 1 July 2006, you need not set aside the prevailing Minimum Sum cash component unless you subsequently buy another property using your CPF savings on or after 1 July 2006.
Please note that this is not applicable if you are applying to use your CPF to purchase a second or subsequent property with non-related singles. Non-related singles can only jointly use their CPF to purchase their one and only property (private property or HDB flat).
Your first property can be used as a pledge for half the monies required under the Minimum sum. This means that if you with to use CPF for your second property (as at 2009), you must have at least $58,500 ($117,000 x 50%). Any CPF above $58,500 can be used for your second property.
Is Singapore Market over Leveraged?
Although Singapore is no where near as dangerous as other markets where there are plentiful “no cash down” home loans. With CPF being allowed to make up the 15% down-payment on the purchase price and only 5% is cash down-payment, we at www.PropertyBUYER.com.sg would consider the Singapore market rather leveraged compared to the early say 5 years ago or pre-2000.
The current property boom in 2009 lacks fundamentals (Refer to Property Buyer update July 2009 in the article section of www.PropertyBUYER.com.sg/articles/article.php) as its underpinnings, so it is still hard to say whether sentiments will change the economic fundamentals or economic fundamentals will eventually bring the sentiments back in line.
There are good and bad deals in every property cycle, please exercise your own good judgement.
About Property Buyer Contact Property Buyer
www.PropertyBUYER.com.sg
We are a Research-focused Singapore Mortgage Consultant which helps you compare Singapore Home loans either for new home loans or refinancing, we balance risks versus rewards for each home loan to match your risk profile and financing needs.
Buying property is a serious affair, we do NOT advocate a Greed based buying approach, we emphasize that you need to check your affordability and do your sums right. If you are unsure, we are happy to help you check.
Not Simply Cheap, but what Fits. We Research, You Save!
Tel: 6100 - 0608
SMS: 9782 - 8606
loans@propertyBUYER.com.sg
CPF is abbreviation for Central Providend fund. It is similar to the American 301k plan. CPF funds are supposed to be saved for retirement.
Every Singaporean must contribute 20% of their income into CPF. Therefore Singapore’s CPF has billions of dollars of funds. Singapore property investor and Singapore property buyer also have lots of fund and liquidity, unlike other markets. The Singapore market is more about confidence than about liquidity.
About Property Buyer Contact Property Buyer
www.PropertyBUYER.com.sg
We are a Research-focused Singapore Mortgage Consultant which helps you compare Singapore Home loans either for new home loans or refinancing, we balance risks versus rewards for each home loan to match your risk profile and financing needs.
Buying property is a serious affair, we do NOT advocate a Greed based buying approach, we emphasize that you need to check your affordability and do your sums right. If you are unsure, we are happy to help you check.
Not Simply Cheap, but what Fits. We Research, You Save!
Tel: 6100 - 0608
SMS: 9782 - 8606
loans@propertyBUYER.com.sg
CPF causes you to overpay?
Singapore government likes to get maximum value for its land. If too many people can afford Housing, it is time to raise prices. In other circumstances, we can say it’s market forces or free market as supply and demand are determined by private enterprise. But not in this case.
HDB Government Housing market is Not a free market
But in Singapore’s case, government housing (HDB) is a controlled market, www.propertybuyer.com.sg is often critical of the way some policies are dished out, to the disadvantaged of the Singapore property buyers.
Many people along with us also see the setting of prices as arbitrary, because the government controls much the state land and there is no question of supply, but rather that of demand and affordability. The government can freely control supply to set prices.
CPF funds adds to affordability
Allowing the use of CPF funds for HDB and property in general raises the affordability.
With this new found liquidity, the government can then raise the selling prices of HDB, by putting in more frills and of course enhancing the construction industry producing more value add.
Of course, ultimately the home buyers and the Singapore property investors are the ones that pay for it through sapping up their retirement funds in CPF.
Raising prices of HDB flats is a means to sap liquidity out of the individual’s CPF account into the government coffers through land sales.
Since the Singapore property investor – buyer may have limited cash, the Singapore government allows the use of individual’s CPF funds to pay for their government “subsidized” housing. As a result properties become more and more expensive, effectively becoming an indirect tax.
Coupled with more funds (through the use of CPF) money, plus low interest rate environment, many Singapore banks cannot reduce rates much more rather they start to come out with newer terminology and features. Comparing Singapore Home loan has become much more tedious exercise, it is prudent to engage www.PropertyBUYER.com.sg mortgage consultants to help. They can be contacted at +65-6100-0608.
Refinancing home loan can also be tedious.
Singaporeans have lesser and lesser CPF money for retirement
Singaporeans have lesser and lesser CPF monies left for their retirement as they pay for ever more expensive properties. At some stage, we have to say, “Mr. Government, stop eying our CPF money!!!”
Since so many people are resigned to the fact that they will never really see their CPF money as cash as more and more rules are put in place to tap into their CPF.
Even after retirement age at 55 years, there is the minimum sum that you have to set aside. Currently (as at 2009) the minimum sum is $117,000 for retirement. This is the minimum sum that a person must have in the account. You can only withdraw any CPF funds in excess of the minimum sum upon retirement age.
Many Singaporeans have already given up on hoping to see their CPF money. As a result, many Singaporeans and PR used CPF to buy their second property before 1st July, 2006.
Can I use my CPF to purchase more than one property?
(Source: www.cpf.gov.sg)
Yes, you may use your CPF to purchase more than one property.
However, if you already own a property (HDB flat or private property) bought with your CPF savings and wishes to buy another property with CPF savings from 1 July 2006, you will be able to do so only after setting aside in your Ordinary and Special Accounts (including the amount used for investment from the Special Account) the prevailing Minimum Sum cash component if you are below 55 years, or the Minimum Sum cash component shortfall if you are aged 55 and above.
If you currently own more than one property bought with CPF savings before 1 July 2006, you need not set aside the prevailing Minimum Sum cash component unless you subsequently buy another property using your CPF savings on or after 1 July 2006.
Please note that this is not applicable if you are applying to use your CPF to purchase a second or subsequent property with non-related singles. Non-related singles can only jointly use their CPF to purchase their one and only property (private property or HDB flat).
Your first property can be used as a pledge for half the monies required under the Minimum sum. This means that if you with to use CPF for your second property (as at 2009), you must have at least $58,500 ($117,000 x 50%). Any CPF above $58,500 can be used for your second property.
Is Singapore Market over Leveraged?
Although Singapore is no where near as dangerous as other markets where there are plentiful “no cash down” home loans. With CPF being allowed to make up the 15% down-payment on the purchase price and only 5% is cash down-payment, we at www.PropertyBUYER.com.sg would consider the Singapore market rather leveraged compared to the early say 5 years ago or pre-2000.
The current property boom in 2009 lacks fundamentals (Refer to Property Buyer update July 2009 in the article section of www.PropertyBUYER.com.sg/articles/article.php) as its underpinnings, so it is still hard to say whether sentiments will change the economic fundamentals or economic fundamentals will eventually bring the sentiments back in line.
There are good and bad deals in every property cycle, please exercise your own good judgement.
About Property Buyer Contact Property Buyer
www.PropertyBUYER.com.sg
We are a Research-focused Singapore Mortgage Consultant which helps you compare Singapore Home loans either for new home loans or refinancing, we balance risks versus rewards for each home loan to match your risk profile and financing needs.
Buying property is a serious affair, we do NOT advocate a Greed based buying approach, we emphasize that you need to check your affordability and do your sums right. If you are unsure, we are happy to help you check.
Not Simply Cheap, but what Fits. We Research, You Save!
Tel: 6100 - 0608
SMS: 9782 - 8606
loans@propertyBUYER.com.sg
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