Sorry, your House is NOT an investment, actually.

This discussion thread is for forum members to discuss and learn and share with one another on anything related to the Property Market.

Moderators: alvin, learner, Dennis Ng

Post Reply
Dennis Ng
Site Admin
Posts: 9781
Joined: Tue Nov 29, 2005 7:16 am
Location: Singapore

Sorry, your House is NOT an investment, actually.

Post by Dennis Ng »

18 Jul 2010

Most people have this misconception that the House you stay in (Home) is called an investment. Sorry to dissappoint you, it is NOT. No doubt it is an Asset (has Value). (Even the article below published in newspapers hold this same misconception.

On the other hand, Robert Kiyosaki got it wrong when he says your House is NOT even an Asset, since he classify as Assets "put money in your pocket". Since you don't receive income from your House, Robert Kiyosaki thinks it is NOT your Asset.

Sorry to disappoint Robert Kiyosaki as well. He got it wrong too.

So what is the Correct Way of Classifying your House?

Your house is an Asset, since it has value, but it should be classified as Personal Use Asset.

An investment means you can Make Money on it, eg. through Income (Rental Income) or Capital Gains.

Some would say you can make Capital Gains on your House. Is it true? If the price goes up, you sell high, guess what, you need to buy high as well.

Eg. you sell your HDB flat bought 30 years ago for S$100,000 for S$500,000 today. Did you make money? Well, I need to highlight to you that if you want to buy back a Similar Property, you most probably also have to pay S$500,000 as well. Please don't talk about Downgrading (moving from Big House to Small House) or talk about Selling a property at eg. Toa Payoh and buying a replacement at Jurong or Sengkang. Come on, you're NOT comparing Apple to Apple.

Jurong or Sengkang is very different from Toa Payoh in terms of Property Prices.

So there is an Illusion of Capital Gains when you sell your House.

However, if you have a 2nd property, then you can REALLY make Capital Gains. Becos after you sell, you NEED not buy back, do you, since you don't stay in the House.

You can Buy Low, Sell High and wait for prices to dip, to buy again, thereby really making Real Capital Gains.

But if you only own 1 Property, if you sell and don't buy, you need to pay Rental Income and also risk that you might not be able to buy back a similar property if the price goes up after you sell.

So I hope once and for all, I can clear all these misconceptions about whether a House is an Asset, or whether a House is an Investment.

Property investment starts at home
HDB flats also can be a tool for making money as owners move into the private market
By Adam Tan

You don't have to own a condo near Orchard Road to be on the path to property riches; your HDB flat can serve as a fine investment springboard.

After all, even if you have a mortgage on your home, the fact that you are an owner and not renter means you are already a property investor.

So view your HDB home as a tool for making you more money as you move into the private market.

Assume you bought a three-room HDB flat in Tampines for about $180,000 five years ago. You could rent out the flat today for about $1,600 a month - an investment yield of about 10.7 per cent.

This is a very good yield and is unique to smaller units. By contrast, a five-room HDB flat in Marine Parade bought five years ago cost about $485,000 and would fetch a monthly rental now of $2,500 - a yield of about 6.2 per cent.

However, HDB flats are primarily meant for public housing and should not really be retained by owners for investment purposes.

That is why there are many restrictions put in place by the HDB, such as a Minimum Occupation Period (MOP).

Flat owners can rent out their home only after occupying it for three years if it is a resale flat bought without any Central Provident Fund grants. The term is five years if it was bought directly from the HDB, or a resale flat purchased with a CPF grant.

Timing is paramount when upgrading from HDB to private property. The idea is to make the jump from public to private housing when the price gap between the two narrows.

HDB flat prices are almost guaranteed to slowly but steadily increase, while private home prices tend to fluctuate depending on factors such as the global economy and the supply of new homes.

That three-room Tampines flat used as an example earlier could be sold today for around $300,000.

As a seller, you would then have realised a profit of about $120,000. Naturally you would have to plough some of that back into your CPF account with accrued interest, but essentially you would now have cash to buy a new property.

You could buy a slightly larger unit in the nearby freehold Ferraria Park Condominium in Tampines. That would cost about $630,000.

After paying $126,000 or 20 per cent of the sale price in cash and CPF, a loan for the remaining 80 per cent, or $504,000, would involve a monthly instalment of less than $2,200 for the next 25 years, based on prevailing interest rates of 2 per cent.

In February, the Government introduced tougher rules on bank loans that allow lending institutions to lend only up to 80 per cent of the purchase price in a bid to cool the market by weeding out overzealous investors.

If you empty your CPF account to reduce the loan, you could reduce the amount for a shorter mortgage term or lower monthly instalments.

Alternatively, if you had bought a four-room build-to-order flat in Treelodge@Punggol at $231,000 in March 2007, the same flat would be worth around $369,000 on the resale market today.

Imagine the value of the flat when you collect your keys next year, and when you are eligible to sell your flat in 2016, especially given the blossoming Punggol neighbourhood.

However, note that all property investments require a mid- to long-term view. Whether you are a first-time buyer having to fulfil an MOP or not, expect to stay in your property for at least five to 10 years.

Then do your research on the flats in your targeted area. Are they old and due for an en bloc sale? Will there be an MRT station or a mall close by in a couple of years? These are just some of the many factors which will enhance the value of your property over time.

It also helps to always buy within your means. It is not advisable to wipe out your CPF account and savings, and then take a massive loan and hefty mortgage repayments just to acquire a more expensive apartment.

You might also need interim accommodation and furniture storage when upgrading from HDB to private property, as well as funds for renovations.

HDB resale prices are still growing slowly but steadily, both in terms of cash-over-valuation as well as the Resale Price Index.

Prices should go up by another 5 per cent over the next six months for an overall growth of 10 per cent this year.

The writer is corporate communications manager of PropNex Realty.

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
Dennis Ng
Site Admin
Posts: 9781
Joined: Tue Nov 29, 2005 7:16 am
Location: Singapore

Post by Dennis Ng »

19 Jul 2010 - I think with the 2 recent floods within 1 month, in future, when you choose property, other than near MRT station, make sure it is NOT in one of the Flood Zones in Singapore as well.


Dennis Ng,

Floods again: Residents in Jalan Ma'mor off Balestier Road woke up this morning to find water pouring into their living rooms from the common drains that run in and alongside their houses

A day after the latest flooding incident, Acting Minister of Information, Communication and the Arts Lui Tuck Yew is asking the Public Utilities Board (PUB) to explain itself to affected residents.

Mr Lui, who is the Member of Parliament for the Tanjong Pagar GRC, said that he would speak privately with the Environment Ministry about conducting on-the-ground dialogues.

'I think the most important thing is for people to have an explanation and better understanding of what the situation is, as well as to know what plans PUB has in place to alleviate the situation,'
said Mr Lui, speaking at the sidelines of a community event on Sunday.

He added: 'I know the PUB must be also very concerned about the situation. They are doing the best that they can. Some of the plans they have to improve the drainage will, of course, take time.
But nonetheless I think being able to touch base with people on the ground is important at this point of time.'

He said that a few parts of his constituency, such as Cambridge Road and Dorset Road, were affected, 'worse than the two previous occasions in June'. Some who had parked in basement carparks
had water up to their car doors. Mr Lui himself had difficulty leaving his Telok Kurau home with his wife on Saturday morning.

'I've got two ways out, one way to the left when we got out of the house, within 30m we could see a car stalled, so we quickly reversed and went the other way. We went along Lorong L, & halfway
through we said the water is too high, we reversed and got out as well.'

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
Investing Mentor
Posts: 1731
Joined: Sun Jul 17, 2011 11:36 am

Re: Sorry, your House is NOT an investment, actually.

Post by candy_chia »

Let us not kid ourselves
By Romesh NavaratnarajahOct 25, 2012

Is Singapore really experiencing its golden age, or are we missing a part of the plot?

In a recent commentary, Straits Times Editor Sumiko Tan described what she called ‘Singapore’s Golden Age’, with references to Singapore’s impressive skyline, boasting an array of new developments like Marina Bay Sands, Gardens by the Bay and the Singapore Flyer, just to name a few.

Citing statistics and surveys, Tan implied that the city-state must be doing something right and is attracting many foreigners to come and work here.

She further stated: “Property is a national preoccupation, but it’s not whether you can afford a roof over your head that Singaporeans fret about. It’s whether or not to get a second property to invest in.”

Sorry Sumiko, but I beg to differ as there are undoubtedly a growing number of Singaporeans who are Struggling to Buy a Decent Home for themselves or for their families, let alone purchase a second property.
affordable property.png
affordable property.png (96.9 KiB) Viewed 8968 times
There was even a recent article which first appeared in The New Paper highlighting how cash-over-valuations (COVs) for resale HDB flats are high, making it more difficult for buyers to acquire units. The report quoted B. Wong, an operations manager, who said that he and his wife would not have been able to pay the S$60,000 COV for their 11th-storey four-room flat in Punggol had they not sold their previous unit.

Moreover, property prices rose to record levels last quarter amid low interest rates, prompting the Monetary Authority of Singapore (MAS) to implement new home loan regulations to prevent a property price bubble.
property bubble.png
property bubble.png (38.09 KiB) Viewed 8968 times
Private home prices rose 0.5 percent to a new high in Q3 this year. As for the PUBLIC HOUSING market, Singapore recently saw its First S$1 million HDB resale flat transaction.

So it is unlikely that the majority of Singaporeans are indeed preoccupied with acquiring more investment properties, especially with the many netizens regularly grumbling about sky-high housing prices.
high property price.png
high property price.png (67.59 KiB) Viewed 8968 times
I don’t argue with the fact that Singapore has seen astounding progress over the last few decades, but it might be time to also accept that NOT all that glitters is gold. ... -ourselves
Investing Mentor
Posts: 1731
Joined: Sun Jul 17, 2011 11:36 am

Re: Sorry, your House is NOT an investment, actually.

Post by candy_chia »

Mrs Foo bought her 49th floor (highest floor since sky garden is on the 50th floor) at The Pinnacle @Duxton for $450,000 in 2004, ... llionaire/

This reminded me of my next door neighbour who mentioned she won't even consider parted with her beloved house (acquired around $250k) even with offer of $900,000 when I told her one 5-rm unit at blk 8, Ghim Moh Rd, 1250 sqft (35 years old flat, storey 21-25) was transacted at $820,000 in Nov 2011.

Lots of people think they are living in 'private property' & didn't realised the stringent restrictions of public housing which subject one to the risk of repossession by HDB for violating the rules & fulfilling the lengthy minimum occupation period of 5 years.

* The Housing and Development Act says that the HDB can compulsorily acquire a flat once it ascertains that the owner is illegally subletting it. ... 99s-flats/ ... 07541.html

Exercising the Heart – selling my beloved property at an irresistible price
by JON on OCTOBER 27, 2012

The Pinnacle at Duxton is a PUBIC HOUSING project like no others.

Conceived after a competition involving over 200 architecture firms from around the world was held to select the best design, the seven 50-storey interconnected blocks consist of 1848 units and 2 sky gardens on the 26th and 50th floor. It was the site where the first two original HDB blocks were build in 1963, and with its Wiki page and its official website now, the Pinnacle is a juxtaposition of historical and modern day Singapore. With it’s slew of local and international awards, there is no doubt that this is HDB’s flagship project.

In recent weeks, it has made the news more than once. HDB conducts ‘Sale of Balance Flats’ exercises periodically to make available to the public units that have been REPOSSESSED. In the most recent exercise, a unit at the Pinnacle was put on sale for $736000 (1,140 sq ft).

Separately, Minister for National Development Khaw Boon Wan commented that there will be many millionaires when the minimum occupancy period for the development is over and the flats come on the open market.
property value.png
property value.png (117.64 KiB) Viewed 8919 times
Not that it mattered to everyone, because a resident, C.M. Foo, when interviewed, declared that she would never sell her unit on the 49th floor. Not for one million ‘or even 3 million, because of the view’.[/b]


We bought our house many years ago thinking we could translate our CPF monies into better rental yields. We must have seen at least a hundred units before coming across this one.

There was nothing not to love about the apartment. It was bright and airy, quaint and cosy rolled into one. It had a small kitchen that we could live with, and a huge walk in wardrobe that the wife could not live without. The neighborhood was shrouded in greenery and extremely well maintained for its age. But the clincher was this – The View.
view.png (148.48 KiB) Viewed 8919 times
The View

We stayed over the night we got the keys. We thought we might as well wake up to the view ourselves first before renting it out. A week, or perhaps a month or two. It became six months, and then a year and in the blink of an eye, we have lived here for five.

Storm Clouds brewing

We could spend hours staring out of the window. We could tell when a storm is brewing from afar and water cyclones forming. We could see National Day Flypasts, the Marina Bay Sands taking shape, and Sentosa Cove on a clear day.We never had curtains until recently because no one could look in. The ships and the planes and sea and the sky form the ultimate tapestry. We would always spend the 31st of December at home, toasting in the new year with champagne together with ships out at anchor and their flares and horns.


We had happy memories. We got married and held our Solemnization Ceremony held right here in this house. We had our friends come over to decorate the night before, and we spent the whole morning cleaning up and tidying the whole place. It was our matrimonial house in every sense of the word.

Earlier this month, we awarded an Option to Purchase to a couple who wanted to buy our house. We were made an offer we could not refuse and it was a decision we lost a lot of sleep over. The house has been a part of us for a long time. It has seen us through many stages of life. It was the perfect apartment, one in which we could see ourselves growing old in.

I have always been an advocate of rationality, telling everyone who cares to listen, not to fall in love with their stocks, or trades, or houses, but it is only when the buck stops at me do I realize the difficulty in making that decision. It was heart wrenching.

Rainbow after the storm

In his book ‘How Rich People Think’, Steve Siebold suggests that

=> ‘Average people see money through the eyes of Emotion,

==> Rich people think about money LOGICALLY’.

- Thinking about money logically sounds easy enough.
- One uses the mind and the mind alone.

money or house.png
money or house.png (192.14 KiB) Viewed 8919 times
- Unfortunately in some situations the Heart decides to gets involved. And when the mind says one thing and the Heart feels the other, to come to a logical decision, one would have to compartmentalize emotions, rationalize them and then mask and dismiss them. It is an extremely arduous task indeed.

Whether or not the decision to sell out is a good one will only become apparent many years down the road; we have no idea. But in signing that option, we knew deep inside that the decision was symbolic.

We knew that by Forcing ourselves to Do the RATIONAL thing, what we are doing is really Exercising the Heart.

In doing so, our capacity for Making the Right Decisions Free of Emotional Encumbrances will only increase. And in doing so, we will only grow stronger.


The last I checked, a 100 sqm unit on the 51st floor of the Marina Bay Residences could be had for 2.8mil. For her own sake, I hope Mrs Foo was only fooling around when she said what she said. ... ble-price/
Post Reply