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Showing posts with label mortgage. Show all posts
Showing posts with label mortgage. Show all posts
Monday, August 19, 2013
Wednesday, August 14, 2013
Monday, July 8, 2013
How A Mortgage Broker Can Help You?
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Tuesday, June 4, 2013
How Do I Compare Home Loans in Singapore?
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Tuesday, May 7, 2013
If Your Home Loan is Turned Down, ...
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Thursday, April 18, 2013
Thursday, April 11, 2013
A Quick Guide to Being a Guarantor for a Home Loan
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Thursday, February 28, 2013
SIBOR vs. SOR Based Home Loans in Singapore
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Wednesday, February 27, 2013
A Quick Guide to Approval-in-Principle (AIP) for Home Mortgages
By SUSAN TEO
Approval-in-principle (AIP) for home loans, or mortgage prequalification, are conditional approval. AIP can be sought for loans of private residential properties or HDB flats. Such loans are known as pre-approved loans. The time between submitting an application for an AIP and knowing the outcome can be as fast as 15 to 60 minutes. The validity period of the AIP varies between 14 to 30 days. During this period, financial documents have to be submitted to obtain a formal offer. After which, a Letter of Offer will be issued if the loan is approved. If the required documents are not submitted within this period, you can still re-apply for the AIP.
Having an AIP lets you know the loan quantum you are eligible for and the monthly repayment amount.
An AIP is non-binding for both the applicant and the financier; therefore you are allowed to change financiers even after obtaining an approval-in-principle loan from the financier. You may even change loan package with the same financier that you have obtained the AIP from.
If you are confused about AIP, you can have a FREE discussion with a Singapore home loan consultant.
and lay down the booking fee, before you have obtained the loan.
But this may not be the best course of action as you may not be able to obtain an ideal loan with a favourable rate, or even if you do it may be with a lower loan quantum. In the latter case, the deal may fall through if you do not have sufficient cash or CPF fund to top up the shortfall.
Should the deal fall through, you will have to forfeit part or all of the booking fee (The booking fee and forfeit amount will depend on whether it is a private house or HDB flat and if it new or resale).
In another scenario, you may be able to obtain the maximum loan-to-value ratio (LTV), but the valuation of the property has fallen during the interval in which you had signed the option and obtained the loan.
For example, the purchase price you agreed on is $1.5m, but when you have obtained the loan the valuation of the property has dropped to $1.2m. Assuming that you are eligible for a 80% LTV, you thought you could obtain financing up to $1.2m, but because of the lower valuation you can only secure $960,000. If you do not have the means to make up for the $240,000 difference, you cannot seal the transaction. However, such situations are extremely rare and only happen during financial crises.
Just because an AIP is provisional does not mean you should randomly select a bank from which to obtain an AIP, thinking you can secure the same loan quantum from other banks later. That particular bank may be offering uncompetitive rates and loan features. And you may later discover that you are not eligible for the same quantum from other banks.
Read more articles at
PropertyBuyer.com.sg/articles
SingaporeHomeLoan.net/blog/
iCompareLoan.com/resources/category/faq/
Approval-in-principle (AIP) for home loans, or mortgage prequalification, are conditional approval. AIP can be sought for loans of private residential properties or HDB flats. Such loans are known as pre-approved loans. The time between submitting an application for an AIP and knowing the outcome can be as fast as 15 to 60 minutes. The validity period of the AIP varies between 14 to 30 days. During this period, financial documents have to be submitted to obtain a formal offer. After which, a Letter of Offer will be issued if the loan is approved. If the required documents are not submitted within this period, you can still re-apply for the AIP.
Having an AIP lets you know the loan quantum you are eligible for and the monthly repayment amount.
An AIP is non-binding for both the applicant and the financier; therefore you are allowed to change financiers even after obtaining an approval-in-principle loan from the financier. You may even change loan package with the same financier that you have obtained the AIP from.
If you are confused about AIP, you can have a FREE discussion with a Singapore home loan consultant.
Why you should have an AIP?
Narrow down the property search
Having an AIP lets you zero in on the property you know you can afford to buy. Thus you will not be wasting time viewing properties that you later find to be out of your budget when you apply for that loan. This also explains why some property agents only work with buyers who already obtained an AIP.Fast commitment
Being certain that you can afford that property allows you to commit immediately when you have found your ideal property. There is no waste in time between obtaining the loan and closing the transaction. Indeed during that interval, some other buyers may beat you in buying the property.Forfeit of booking fee
To prevent other buyers from buying, you may choose to sign the option to purchase (OTP)and lay down the booking fee, before you have obtained the loan.
But this may not be the best course of action as you may not be able to obtain an ideal loan with a favourable rate, or even if you do it may be with a lower loan quantum. In the latter case, the deal may fall through if you do not have sufficient cash or CPF fund to top up the shortfall.
Should the deal fall through, you will have to forfeit part or all of the booking fee (The booking fee and forfeit amount will depend on whether it is a private house or HDB flat and if it new or resale).
In another scenario, you may be able to obtain the maximum loan-to-value ratio (LTV), but the valuation of the property has fallen during the interval in which you had signed the option and obtained the loan.
For example, the purchase price you agreed on is $1.5m, but when you have obtained the loan the valuation of the property has dropped to $1.2m. Assuming that you are eligible for a 80% LTV, you thought you could obtain financing up to $1.2m, but because of the lower valuation you can only secure $960,000. If you do not have the means to make up for the $240,000 difference, you cannot seal the transaction. However, such situations are extremely rare and only happen during financial crises.
Things to be cautious about
As an AIP is provisional, the bank still can reject the application if there are any changes to your financial status. So avoid taking other loans or changing jobs before the Letter of Offer is issued.Just because an AIP is provisional does not mean you should randomly select a bank from which to obtain an AIP, thinking you can secure the same loan quantum from other banks later. That particular bank may be offering uncompetitive rates and loan features. And you may later discover that you are not eligible for the same quantum from other banks.
Read more articles at
PropertyBuyer.com.sg/articles
SingaporeHomeLoan.net/blog/
iCompareLoan.com/resources/category/faq/
Monday, February 18, 2013
Tips for Interest Saving on Your Home Loan
by SUSAN TEO
This article highlights some ways to lower the interest payable on your loan.
Loan quantum or loan tenure
The most straightforward way to save on interest payment is to opt for a loan with a lower loan quantum or a shorter loan tenure. The downside is that there will be greater financial outlay (either CPF or cash).
Because with a lower loan quantum, you will have to make greater upfront payment. Whereas with a shorter loan tenure you will have to incur higher monthly installment payment.
The logic is simple. For a lower principal, the interest chargeable falls because it is a percentage of the former, and a higher monthly installment payment will reduce the principal faster.
Partial prepayment
You can make prepayment above the monthly agreed amount. This will effectively lower the principal, and hence interest payable. But many loans come with a lock-in period (aka. reimbursement period), typically the first 2 to 5 years of the loan tenure, during which partial or full repayment could involve a penalty of usually at most 1.5% of the re-payed amount. However, some loans do not have a lock-in period or its penalty only applies to full repayment.
(Note: For the aforementioned points, it will involve greater cash outlay; hence if there are other investments you can make with the monies you should weigh carefully if the potential gains can exceed the interest savings from paying off your mortgage faster or opting for a lower loan amount.)
Loan type
HDB or bank loan
Keep abreast of interest rate conditions and the economic policies of Singapore's major trading partners. These will affect the interest rates of loans.
As a rule of thumb:
During a low interest rate environment, it might be best to select a bank loan rather than a HDB loan if it happens that you are purchasing public housing. A bank loan will normally offer lower interest rate compared to a HDB loan in a low interest rate climate. But besides the interest payment, there are other deciding factors in taking a loan. For a more detailed comparison between the two, read these:“Explaining the Advantages of HDB Loans versus Bank Loans” and “A Quick Look at the Drawbacks of HDB Loans”.
Bank loans
For private properties, you can only finance them with bank loans.
With bank loans, you can choose from a selection of loan types. The most common being the fixed rate loan and floating (variable) rate loan.
In general, the rates on a floating (variable) rate loan is lower than for a fixed-rate loan because bankers need to hedge against the risks of keeping rates unchanged. However, during a high interest rate environment, it is possible than the upswings in rates for a floating (variable) rate loan result in greater interest payable compared to a fixed-rate loan. To decide between the two types of loans, you may want to read “Fixed-Rate Versus Floating Rate Home Loan Packages in Singapore: Which is Right for You?”.
Specifically, for a floating (variable) rate loan, to lower interest rate, you can consider a shorter tenure SIBOR or SOR. As shorter tenure usually has lower rates than the longer tenure ones.
However, shorter tenure comes with faster changes to the rates. For example, for a 1-month SIBOR, banks revise it at 1-month or 3-month interval. Whereas for a 12-month tenure, it is only revised every 12 months.
So when interest rates start to climb, you can end up with higher rate for the 1-month SIBOR. Below illustrates this
Initially:
1-month SIBOR = 0.31%
12-month SIBOR = 0.57%
3 months later:
1-month SIBOR = 0.80%
12-month SIBOR = 0.57%
But, at the end of the day, which will cost you more in interest payment will also depend on the spread. Because the interest rate always has a margin added to the SIBOR or SOR. The interest rate payable then is actually X-tenure SIBOR + spread, or X-tenure SOR + spread.
Another way to reduce interest payment is to select an interest offset loan. This is suitable for people with a large amount of idle cash in the bank. A portion of this deposited sum will earn a special interest rate that exceeds what is normally offered for bank deposits. The earned interest can then be used to offset the interest payable on the housing loan.
Loan features
Some floating (variable) rate loans have special features like an interest rate cap. This will translate into cost saving in case of an interest spike.
Refinancing or repricing
If you currently already have a housing loan, you can always terminate the existing loan and apply for a new one. The aforementioned points can serve as guidelines in your new loan selection.
An ideal time to switch loan package is after the lock-in period, as you will not have to incur a penalty. Your current financier may offer a free one-time conversion (i.e. repricing) to a package you are eligible for. Or they may charge a conversion fee.
Conversely, you can refinance, which means changing into a mortgage with a different financier.
For a detailed discussion of what to look out for in refinancing, check out our other article: “A Guide to Housing Refinancing in Singapore”. This article also illustrates the cost saving you can enjoy with refinancing, even during the penalty period.
Read more articles at
PropertyBuyer.com.sg/articles
SingaporeHomeLoan.net/blog/
iCompareLoan.com/resources/category/faq/
This article highlights some ways to lower the interest payable on your loan.
Loan quantum or loan tenure
The most straightforward way to save on interest payment is to opt for a loan with a lower loan quantum or a shorter loan tenure. The downside is that there will be greater financial outlay (either CPF or cash).
Because with a lower loan quantum, you will have to make greater upfront payment. Whereas with a shorter loan tenure you will have to incur higher monthly installment payment.
The logic is simple. For a lower principal, the interest chargeable falls because it is a percentage of the former, and a higher monthly installment payment will reduce the principal faster.
Partial prepayment
You can make prepayment above the monthly agreed amount. This will effectively lower the principal, and hence interest payable. But many loans come with a lock-in period (aka. reimbursement period), typically the first 2 to 5 years of the loan tenure, during which partial or full repayment could involve a penalty of usually at most 1.5% of the re-payed amount. However, some loans do not have a lock-in period or its penalty only applies to full repayment.
(Note: For the aforementioned points, it will involve greater cash outlay; hence if there are other investments you can make with the monies you should weigh carefully if the potential gains can exceed the interest savings from paying off your mortgage faster or opting for a lower loan amount.)
Loan type
HDB or bank loan
Keep abreast of interest rate conditions and the economic policies of Singapore's major trading partners. These will affect the interest rates of loans.
As a rule of thumb:
During a low interest rate environment, it might be best to select a bank loan rather than a HDB loan if it happens that you are purchasing public housing. A bank loan will normally offer lower interest rate compared to a HDB loan in a low interest rate climate. But besides the interest payment, there are other deciding factors in taking a loan. For a more detailed comparison between the two, read these:“Explaining the Advantages of HDB Loans versus Bank Loans” and “A Quick Look at the Drawbacks of HDB Loans”.
Bank loans
For private properties, you can only finance them with bank loans.
With bank loans, you can choose from a selection of loan types. The most common being the fixed rate loan and floating (variable) rate loan.
In general, the rates on a floating (variable) rate loan is lower than for a fixed-rate loan because bankers need to hedge against the risks of keeping rates unchanged. However, during a high interest rate environment, it is possible than the upswings in rates for a floating (variable) rate loan result in greater interest payable compared to a fixed-rate loan. To decide between the two types of loans, you may want to read “Fixed-Rate Versus Floating Rate Home Loan Packages in Singapore: Which is Right for You?”.
Specifically, for a floating (variable) rate loan, to lower interest rate, you can consider a shorter tenure SIBOR or SOR. As shorter tenure usually has lower rates than the longer tenure ones.
However, shorter tenure comes with faster changes to the rates. For example, for a 1-month SIBOR, banks revise it at 1-month or 3-month interval. Whereas for a 12-month tenure, it is only revised every 12 months.
So when interest rates start to climb, you can end up with higher rate for the 1-month SIBOR. Below illustrates this
Initially:
1-month SIBOR = 0.31%
12-month SIBOR = 0.57%
3 months later:
1-month SIBOR = 0.80%
12-month SIBOR = 0.57%
But, at the end of the day, which will cost you more in interest payment will also depend on the spread. Because the interest rate always has a margin added to the SIBOR or SOR. The interest rate payable then is actually X-tenure SIBOR + spread, or X-tenure SOR + spread.
Another way to reduce interest payment is to select an interest offset loan. This is suitable for people with a large amount of idle cash in the bank. A portion of this deposited sum will earn a special interest rate that exceeds what is normally offered for bank deposits. The earned interest can then be used to offset the interest payable on the housing loan.
Loan features
Some floating (variable) rate loans have special features like an interest rate cap. This will translate into cost saving in case of an interest spike.
Refinancing or repricing
If you currently already have a housing loan, you can always terminate the existing loan and apply for a new one. The aforementioned points can serve as guidelines in your new loan selection.
An ideal time to switch loan package is after the lock-in period, as you will not have to incur a penalty. Your current financier may offer a free one-time conversion (i.e. repricing) to a package you are eligible for. Or they may charge a conversion fee.
Conversely, you can refinance, which means changing into a mortgage with a different financier.
For a detailed discussion of what to look out for in refinancing, check out our other article: “A Guide to Housing Refinancing in Singapore”. This article also illustrates the cost saving you can enjoy with refinancing, even during the penalty period.
Read more articles at
PropertyBuyer.com.sg/articles
SingaporeHomeLoan.net/blog/
iCompareLoan.com/resources/category/faq/
Thursday, December 6, 2012
SDP Proposes New Housing Policy: Non-open Market (NOM) Flats
By SUSAN TEO
The Singapore Democratic Party (SDP) - an opposition party in Singapore - has comes up with a new policy to address Singapore's housing affordability issue. In their whitepaper “Housing A Nation: Holistic Policies For Affordable Homes”, the SDP put forth a new category of housing in the public housing market: Non-open Market (NOM) Flats. These flats will exist alongside HDB flats, but the purpose of the former is to provide a more affordable housing option for Singaporeans who are not looking to reap capital gains from their homes. Below is the pricing scheme for NOM.
Under this scheme, the lower selling price is make possible because land cost is excluded. However, the restrictions for NOM flats include
According to SDP, NMO flats fulfill the function of housing as a social good. The rationale for having such flats being that it frees up financial resources.
SDP argues that due to Singapore's high housing prices, households have a huge mortgage liability. For example, with a monthly median household income of S$5,600, taking a 30-year loan for a five-room unit at an average price of S$380,000 will require installment payments of 25 percent of their income.
However, for a NMO flat, a household can expect to settle its housing loan in 9 to 15 years' time, using at most 20 percent of its income. This will allow households to utilise the savings for other purposes. The SDP believes that these savings will be channelled to other activities that can stimulate the economy. Singaporeans, in the process, will enjoy a higher living standard as they will not be burdened by huge mortgages.
In addition, under this scheme, current owners of HDB flats that have been bought directly from HDB will be given the option to convert their houses into NMO ones, within a year after NMO flats are launched. Owners will get to continue living in their houses while being refunded an amount based on a formula.
But, as with any other policy, flaws exist. A key shortcoming, pointed out by experts, is its socially divisive effect, as it creates a group (NMO flat owners) who cannot make capital gains from their properties versus a group who can. For a more detailed read of the comments by 4 experts, please go to Singapolitics.
Read more articles at
PropertyBuyer.com.sg/articles
SingaporeHomeLoan.net/blog/
iCompareLoan.com/resources/category/faq/
References
1. Singapore Democratic Party, “Housing A Nation: Holistic Policies For Affordable Homes”, Web <http://yoursdp.ucoz.org/_ld/0/7_Housing_a_Natio.pdf>
2. Singapore Democratic Party, “SDP Proposes Non-open Market Flats in Housing Policy”, 4 November 2012, Web
<http://yoursdp.org/news/sdp_proposes_non_open_market_flats_in_housing_policy/2012-11-04-5430>
3. Wong Tessa, “SDP's Non-Open Market flats: Experts Give Their Take”, The Straits Times: Singapolitics 6 November 2012, Web
<http://www.singapolitics.sg/news/sdps-non-open-market-flats-experts-give-their-take>
The Singapore Democratic Party (SDP) - an opposition party in Singapore - has comes up with a new policy to address Singapore's housing affordability issue. In their whitepaper “Housing A Nation: Holistic Policies For Affordable Homes”, the SDP put forth a new category of housing in the public housing market: Non-open Market (NOM) Flats. These flats will exist alongside HDB flats, but the purpose of the former is to provide a more affordable housing option for Singaporeans who are not looking to reap capital gains from their homes. Below is the pricing scheme for NOM.
Under this scheme, the lower selling price is make possible because land cost is excluded. However, the restrictions for NOM flats include
- Flats can only be re-sold to HDB, after a Minimum Occupancy Period (MOP) of 5 years, “at the current price of an equivalent new NOM flat (less grants) minus the value of the consumed lease.” Thus no capital gains can be made.
- Only Singapore citizens are eligible to purchase these flats.
- Owners of flats are not allowed to own private property or HDB flats.
- Renting of flats is prohibited, except under extenuating circumstances.
According to SDP, NMO flats fulfill the function of housing as a social good. The rationale for having such flats being that it frees up financial resources. SDP argues that due to Singapore's high housing prices, households have a huge mortgage liability. For example, with a monthly median household income of S$5,600, taking a 30-year loan for a five-room unit at an average price of S$380,000 will require installment payments of 25 percent of their income.
However, for a NMO flat, a household can expect to settle its housing loan in 9 to 15 years' time, using at most 20 percent of its income. This will allow households to utilise the savings for other purposes. The SDP believes that these savings will be channelled to other activities that can stimulate the economy. Singaporeans, in the process, will enjoy a higher living standard as they will not be burdened by huge mortgages.
In addition, under this scheme, current owners of HDB flats that have been bought directly from HDB will be given the option to convert their houses into NMO ones, within a year after NMO flats are launched. Owners will get to continue living in their houses while being refunded an amount based on a formula.
But, as with any other policy, flaws exist. A key shortcoming, pointed out by experts, is its socially divisive effect, as it creates a group (NMO flat owners) who cannot make capital gains from their properties versus a group who can. For a more detailed read of the comments by 4 experts, please go to Singapolitics.
Read more articles at
PropertyBuyer.com.sg/articles
SingaporeHomeLoan.net/blog/
iCompareLoan.com/resources/category/faq/
References
1. Singapore Democratic Party, “Housing A Nation: Holistic Policies For Affordable Homes”, Web <http://yoursdp.ucoz.org/_ld/0/7_Housing_a_Natio.pdf>
2. Singapore Democratic Party, “SDP Proposes Non-open Market Flats in Housing Policy”, 4 November 2012, Web
<http://yoursdp.org/news/sdp_proposes_non_open_market_flats_in_housing_policy/2012-11-04-5430>
3. Wong Tessa, “SDP's Non-Open Market flats: Experts Give Their Take”, The Straits Times: Singapolitics 6 November 2012, Web
<http://www.singapolitics.sg/news/sdps-non-open-market-flats-experts-give-their-take>
Tuesday, February 3, 2009
Population Swings and Your Property Prices in Singapore
Success is a thought process
TOTAL POPULATION
Singapore Citizens + PR + Expats (employment passes) + Working Permit
holders.
SINGAPORE RESIDENTS
Singapore Citizens + PR
SYPNOSIS
As you can see, there are only about 3.2m Singaporeans and the annual
growth rate last year was 1%. Most of this 1% growth, I would attribute it to
new births, with maybe a 20% of this 1%, or 0.2% coming from PR
converting to become Singapore Citizens.
The growth rate of Singapore citizens have been fairly stable at a low rate of
1%.
Last year, there were 4.8m of total population, a 5.5% growth rate over the
previous year.
By looking at the chart, you will see that years 1987 and 2003, total
population growth (In BLUE) was negative.
IN 1987 - PROPERTY PRICE CRASH?
In 1987, the total population drop reflects the exodus of working permit
holders and Expats on employment passes. Singaporeans and PR growth
slowed, but still in the positive ~1.5% range.
IN 2003 - PROPERTY PRICE CRASH?
In 2003, the total population drops, coupled with a drop of Singaporeans and
PR. Most Citizens usually stay put in Singapore. In 2003, it is suspected that
even PRs are leaving Singapore in droves coupled with Expats and working
permit holders leaving.
WHY IS THIS STATISTIC EVEN IMPORTANT?
I think it is important because from a historical standpoint, Foreigners who
come to our shores to work do not have strong emotional attachments to this
land. Many come for work or follow their spouses here. In the scenario of
reduction in jobs, many expats will be the 1st to leave the country. If they
leave, it represents an immediate vacation of the properties they used to
occupy.
From the data, it shows that PR while more likely to stay in Singapore are
not immune to leaving when push comes to shove.
MAGNITUDE
1.2m of the population are foreign, that means 1 in 4 person on the street is
foreign.
From a Property Demand stand-point, this is significant because we are
talking about a Foreign population of 1.2m people of which an estimated
400,000 are expats, some 800,000 are workers or various types.
For expats, if we assume 2 person per household, we are talking about
200,000 units in housing demand.
For the rest 800,000, an estimated 400,000 are domestic helpers (who
stayed with their employers), while the rest are lower educated workers
working factories, service outlets, etc.
These 400,000, assuming 3 person per household, will take up 133,333
units of housing, or in the form of room rentals (1 per room), HDB rentals,
lower end condominiums shared amongst several person.
Our Private property housing has been built with a view to catering to foreign
demand. The growth in Supply of housing has exceeded the 1.5% growth
rate of Singapore citizens and Singapore PRs in the past few years.
Therefore this makes the entire property market more volatile and
susceptible to price movements with the IN and OUT flow of foreign
population in Singapore.
MOST SINGAPOREANS OWN (Mortgage) their homes
Most Singaporeans own their homes. So the rental market is largely catered
to migrant and expat population. Sudden IN flows of foreign population
forces the Rental rates to go UP and an exodus leads to rental rates to go
DOWN.
Rental has a BIG and very direct correlation to the property prices, therefore
POPULATION SWINGS in the forms of Expats COMING and LEAVING the
country will subject first our rental prices to swing, followed closely by
property prices.
IN 2009???
In 2009, the total population has run up a lot while Singapore Citizens and
PRs have only grown at 1+%. Given that the foreign population in Singapore
now numbers 1.2 million, any exodus will immediately impact the rental
market as it is assumed that very few expats own the properties which they
stayed in and the rental market will impact the property prices.
Read more Articles
TOTAL POPULATION
Singapore Citizens + PR + Expats (employment passes) + Working Permit
holders.
SINGAPORE RESIDENTS
Singapore Citizens + PR
SYPNOSIS
As you can see, there are only about 3.2m Singaporeans and the annual
growth rate last year was 1%. Most of this 1% growth, I would attribute it to
new births, with maybe a 20% of this 1%, or 0.2% coming from PR
converting to become Singapore Citizens.
The growth rate of Singapore citizens have been fairly stable at a low rate of
1%.
Last year, there were 4.8m of total population, a 5.5% growth rate over the
previous year.
By looking at the chart, you will see that years 1987 and 2003, total
population growth (In BLUE) was negative.
IN 1987 - PROPERTY PRICE CRASH?
In 1987, the total population drop reflects the exodus of working permit
holders and Expats on employment passes. Singaporeans and PR growth
slowed, but still in the positive ~1.5% range.
IN 2003 - PROPERTY PRICE CRASH?
In 2003, the total population drops, coupled with a drop of Singaporeans and
PR. Most Citizens usually stay put in Singapore. In 2003, it is suspected that
even PRs are leaving Singapore in droves coupled with Expats and working
permit holders leaving.
WHY IS THIS STATISTIC EVEN IMPORTANT?
I think it is important because from a historical standpoint, Foreigners who
come to our shores to work do not have strong emotional attachments to this
land. Many come for work or follow their spouses here. In the scenario of
reduction in jobs, many expats will be the 1st to leave the country. If they
leave, it represents an immediate vacation of the properties they used to
occupy.
From the data, it shows that PR while more likely to stay in Singapore are
not immune to leaving when push comes to shove.
MAGNITUDE
1.2m of the population are foreign, that means 1 in 4 person on the street is
foreign.
From a Property Demand stand-point, this is significant because we are
talking about a Foreign population of 1.2m people of which an estimated
400,000 are expats, some 800,000 are workers or various types.
For expats, if we assume 2 person per household, we are talking about
200,000 units in housing demand.
For the rest 800,000, an estimated 400,000 are domestic helpers (who
stayed with their employers), while the rest are lower educated workers
working factories, service outlets, etc.
These 400,000, assuming 3 person per household, will take up 133,333
units of housing, or in the form of room rentals (1 per room), HDB rentals,
lower end condominiums shared amongst several person.
Our Private property housing has been built with a view to catering to foreign
demand. The growth in Supply of housing has exceeded the 1.5% growth
rate of Singapore citizens and Singapore PRs in the past few years.
Therefore this makes the entire property market more volatile and
susceptible to price movements with the IN and OUT flow of foreign
population in Singapore.
MOST SINGAPOREANS OWN (Mortgage) their homes
Most Singaporeans own their homes. So the rental market is largely catered
to migrant and expat population. Sudden IN flows of foreign population
forces the Rental rates to go UP and an exodus leads to rental rates to go
DOWN.
Rental has a BIG and very direct correlation to the property prices, therefore
POPULATION SWINGS in the forms of Expats COMING and LEAVING the
country will subject first our rental prices to swing, followed closely by
property prices.
IN 2009???
In 2009, the total population has run up a lot while Singapore Citizens and
PRs have only grown at 1+%. Given that the foreign population in Singapore
now numbers 1.2 million, any exodus will immediately impact the rental
market as it is assumed that very few expats own the properties which they
stayed in and the rental market will impact the property prices.
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