60% loan to valuation!!!

[Topspin70]

Did I hear the news correctly? With this ruling, it'll be a while before I can invest in property.

Anybody has any views to share about this change? Is it likely to last?

[serenecsc]

Did I hear the news correctly? With this ruling, it'll be a while before I can invest in property.

Anybody has any views to share about this change? Is it likely to last?

To add on to this, my brother has paid the 1% deposit for his new condo (he is currently renting a condo for his own stay) just immediately before this announcement. I think this new measures will have a big impact on the ppty price, especially mass market. He is wondering whether to proceed with the purchase or forego his deposit. Can anyone provide you views on this?
Thks

[RTan]

If he intend to buy the new condo to stay, then it's all right; provided he's not heavily leverage.

If not, prepare for a downside risk of property adjusting downwards by 5% to 20% for the next 1 - 2 years and the SSD of 4% to 16% if unable to hold more than 4 years.

As mentioned elsewhere in this forum by Dennis, this stop-gap measure is to prevent hot$ from flowing in.

If can wait, wait until the demand dry up first, and after SSD rules have been relaxed first, then go in.

[Dennis Ng]

Actually, Singapore government is trying to be in line with China and Hong Kong. In China, max financing is 50%, and for Hong Kong, property investment financing also 50%.

Singapore has lowered financing to 60%. This is to prevent hot money from diverting from China and Hong Kong market to Singapore.

The latest measures are the most drastic in the total of 4 rounds of measures announced. How will the Singapore property market be affected? Will prices fall? I think quite difficult to assess as of this moment.

In my seminars recently sharing on outlook for year 2011, I did say that the outlook for property is unclear becos we don't know what else would Mah Bow Tan announce...and this time, he has done it again, "surprised" us.

[RTan]

The goal post keep on shifting. Looking forward to the property seminar to learn from shi fu how to invest in property. Hope Dennis will share the skill applicable to the current situation on 60%LTV limit and SSD of 4% - 16%. Looks to me the days where Dennis has made his millions through property investment are a bit far fetched for me now.

[Dennis Ng]

The goal post keep on shifting. Looking forward to the property seminar to learn from shi fu how to invest in property. Hope Dennis will share the skill applicable to the current situation on 60%LTV limit and SSD of 4% - 16%. Looks to me the days where Dennis has made his millions through property investment are a bit far fetched for me now.

Hi RTan,
no worries. Such measures are Temporary by nature, which are likely to be removed when the Threat of Hot Money is gone...so there'll be a time when you can get 70% to 80% financing for property investments again, some time in future.

What is Luck? My definition of Luck is when Preparation Meets Opportunity. Opportunity will always come. The question to ask yourself is, when the Opportunity comes, are you Prepared? Do you have the Knowledge to "see" the Opportunity and most importantly, grab the Opportunity.

Opportunity favours the prepared.

In the meantime, we can make one Round of money in the Stock Markets, as the Hot money with nowhere to go, is likely to go into the Stock Markets.

[boonseah]

Hi Dennis,

If someone's current property mortgage balance is, say $100k.
And he intends to get a 2nd property, say $1m.
Under the new rules, he needs to fork out $400k for the deposit and assume he has this $400k.
Does it make financial sense to use $100k to clear the 1st property mortgage so that he only need to pay $200k for the 2nd property deposit & use the remaining $100k for other investment?

[Dennis Ng]

Hi Dennis,

If someone's current property mortgage balance is, say $100k.
And he intends to get a 2nd property, say $1m.
Under the new rules, he needs to fork out $400k for the deposit and assume he has this $400k.
Does it make financial sense to use $100k to clear the 1st property mortgage so that he only need to pay $200k for the 2nd property deposit & use the remaining $100k for other investment?

yes.

[TanKS]

Hi Dennis, do you think this latest measure will affect Executive Condominium prices? I am thinking of buying one to stay in, but worry the price will drop into negative equity..

[Dennis Ng]

Hi Dennis, do you think this latest measure will affect Executive Condominium prices? I am thinking of buying one to stay in, but worry the price will drop into negative equity..

it will take some time for the effect to take effect.

It depends on the pricing. I think downside risks of EC is for prices to drop to about S$550 psf, since downside for mass market condos in my opinion is about S$7000 psf.

[TanKS]

Can you enlighten me this point pls.
If there are unsold ec units, would the developers lower the price to entice buyers? But, by doing so, it will affect those buyers who bought much earlier at higher prices. Is this what they will do? What other methods can the developers do?

[Dennis Ng]

Can you enlighten me this point pls.
If there are unsold ec units, would the developers lower the price to entice buyers? But, by doing so, it will affect those buyers who bought much earlier at higher prices. Is this what they will do? What other methods can the developers do?

depends on the developer, what they want to do. For instance, Far East Organisation has a practice of NOT reducing their prices.