3000+ BTO flats coming up!

[wemakebread]

HDB Launches 3,185 BTO Flats in Hougang, Sembawang, Sengkang and Punggol

http://www.hdb.gov.sg/fi10/fi10296p.nsf ... enDocument

[Dennis Ng]

HDB Launches 3,185 BTO Flats in Hougang, Sembawang, Sengkang and Punggol

http://www.hdb.gov.sg/fi10/fi10296p.nsf ... enDocument

Supply is coming...if year 2012 demands drops due to the coming of the Next Global Financial Crisis, guess what might happen to Property Prices?

[mlowky]

Hi Denis,

Need your personal opinion, i have a situation here.
Me and my family are staying at a resale flat. Because of work location, last year I've selected a BTO unit and the construction work started this year. Leased of agreement has been signed with HDB this year.
Estimate completion of project will be at 1st quarter of 2015, but i guess it will be completed and ready on year 2014.

At my situation now, do you think I should early sell away my resale flat unit instead of wait for the new BTO completed. Do you think this would be wise plan?
What will you do if you were me?

[Dennis Ng]

Hi Denis,

Need your personal opinion, i have a situation here.
Me and my family are staying at a resale flat. Because of work location, last year I've selected a BTO unit and the construction work started this year. Leased of agreement has been signed with HDB this year.
Estimate completion of project will be at 1st quarter of 2015, but i guess it will be completed and ready on year 2014.

At my situation now, do you think I should early sell away my resale flat unit instead of wait for the new BTO completed. Do you think this would be wise plan?
What will you do if you were me?

Hi mlowky,
You think of selling now becos you think that HDB Resale flats' prices might go down.

The No. 1 question I ask myself is "What if I'm wrong, will I be ok?" You may want to adopt this question as your No. 1 question as well.

If you sell your HDB resale flat now and prices go up instead of down, are you ok? Are you prepared for such a scenario?

Downside will be you have to pay for rental for the next 2 to 3 years while prices move up instead of down.

Only you yourself can make the assessment yourself and decide what to do.

[mlowky]

Denis, Appreciate for your swift response. Many thanks.
What make me worries is mrkt may become supply over demand for the next 3 yrs. Price may get effected.

[Jasper]

Hi mlowky,
you have to make the final decision.

I shared one live experience, my good friend sold his 4rm HDB during 2009, thinking property price will drop like 1996; he rented a 3rm to stay and wait for his discount pick.

So wait & wait but market show price even go up higher in 2010.
Now till today 2011, he still renting, he is not willing to pay more than what he had sold in 2009.
Land lord going to raise rental soon.
Everytime we have gathering with him, nobody dare to discuss about property.

So no crystal ball to tell you the direction; you have to weigh it carefully.

[Dennis Ng]

Denis, Appreciate for your swift response. Many thanks.
What make me worries is mrkt may become supply over demand for the next 3 yrs. Price may get effected.

I know, you think prices would fall. Question is, "What if you're wrong, will you be ok?"

Please read Jasper's comments I quoted below as well.

Hi mlowky,
you have to make the final decision.

I shared one live experience, my good friend sold his 4rm HDB during 2009, thinking property price will drop like 1996; he rented a 3rm to stay and wait for his discount pick.

So wait & wait but market show price even go up higher in 2010.
Now till today 2011, he still renting, he is not willing to pay more than what he had sold in 2009.
Land lord going to raise rental soon.
Everytime we have gathering with him, nobody dare to discuss about property.

So no crystal ball to tell you the direction; you have to weigh it carefully.

[mlowky]

Got it. Many thanks to Denis and Jasper I will think it over again.

[woonty]

Hi Denis,

Need your personal opinion, i have a situation here.
Me and my family are staying at a resale flat. Because of work location, last year I've selected a BTO unit and the construction work started this year. Leased of agreement has been signed with HDB this year.
Estimate completion of project will be at 1st quarter of 2015, but i guess it will be completed and ready on year 2014.

At my situation now, do you think I should early sell away my resale flat unit instead of wait for the new BTO completed. Do you think this would be wise plan?
What will you do if you were me?

Hi mlowky

So you're taking a bet or should I say concern that the resale value will drop by more than the rental you're going to pay for the next few years

eg. $2000/mth x 12mths x 4yrs = $96,000

OR

You have another place to stay?

[mlowky]

Hi woonty, at the moment I won't take any action.I understand that no one can tell what will happen to market when come to year 2013.
[/list]

[Dennis Ng]

Hi mlowky

So you're taking a bet or should I say concern that the resale value will drop by more than the rental you're going to pay for the next few years

eg. $2000/mth x 12mths x 4yrs = $96,000

OR

You have another place to stay?

yup, if you have to rent a place after you sell your flat, then the Rental costs is something you need to consider.

Thanks woonty for sharing the calculations.

I really like this forum and the spirit of selfless sharing in this forum.

[Dennis Ng]

Prepare for oversupply of Property in year 2013 and year 2014:

http://www.masteryourfinance.com/forum/ ... 81b6a1a417

[RTan]

Let me try to paint a scenario to illustrate "what if I'm wrong, whether I'd be alright".

Say you sold away your house for $500k and realised:-
$150k cash and $150k CPF. And currently servicing $1,200 monthly instalment through CPF.

Following the investment knowledge gained through Dennis's class, it is not uncommon to realise 10% return from the spare cash and cpf.

So, cash earned over 3 years = $150k X 10% X 3 years = $45k
CPF investment (35% of $150k) earned = $52k X 10% X 3 years = $16k
CPF interest gained on the balance CPF amount = 65% X $150k X 2.5% X 3 years = $7k
Savings of CPF monthly instalment = $1.2k X 12 mths X 3 yrs = $43k

So, at the end of 3 years
cash income = $45k (capital = $150k)
cpf income = $66k (capital = $150k)

Assuming you rent for 3 years at $2k per month = $72k. So, my net cash position is reduced by $25k. But my CPF position is increased by $66k.

As long as you don't rent perpertually, the net cash position would be pretty healthy to weather through the anticipated drop or rise in property prices.

[adriantal]

Hi RTan,

May I offer you a contrarian view on this. Once a person sold off his/her current home, in the long term, they will still need to hunt for another perm staying location. So after they sold off their current place, with the cash/cpf in hand, how many of us can really afford to lose this amount?

Remember Dennis's constant teaching of "What if I am wrong? Will I still be fianancially ok?" If the realised money from the proceeds of the sale is to put down the downpayment/renovations for the next house purchase, how many of us will still "dare" to invest? In the ideal scenario, a person could have made more profits from the money but what if it turns the other way, the money to be used for downpayment could be lost.

My 2 cents.

[RTan]

Hi adriantal

noted on your point. By not doing anything at all is itself a risk. It's all about managing time, risk and return.

The former example can be revised to reflect a lower risk taker, say we put cash $100k into saving acct and only invest $50k. The worst case scenario is to lose this $50k.

The rental will set a person back by another $72k cash.

As CPF investment is only 35% of $150k, the worse case scenario is to lose the $52.5k cpf.

So, at the end of 3 years of rental, the worse case scearnio is : cash = $150k - $50k - $72k = $28k and cpf = $147k.

I have to agree that this is pretty a bad state to be in. But remember what Dennis has taught, we can be wrong 6/10 and right 4/10 to make money. This scenario is to be wrong 10/10.