May 1, 2015

Cory Diary: Property

Visited a show room recently so thought i pen something to share from my learning. Elsewhere maybe different as i am no property expert. Read this as my personal thought talking to myself and not advise.

Room Size
The show room units are truly well designed. Is a promise of future living. However rooms are really small if you are "HDB type". And if you plan to wait longer so that it can grow bigger in future, we may need to accept it that is not going to happen even if price gets significantly lower.

Kitchen, Flooring, Air Con, Toilet, Doors are all done up. The lights are excluded. Conceit piping/wirings.
Fridge and Washing/Dryer machine provided. There is a glass section through the kitchen.
If i am to value it, maybe 100k effort max.

Is quite huge. In fact, 2/3 of the land mass. The "public area" looks beautiful. So only 1/3 is unit space. So unlike HDB, the common area in private condo is really private. So you have to pay for it which will works into the unit price.

Unit Price
Unless you go for investment, 2 Bed Room (BR) is rather small for a family. For the 3BR, easily hit S$1.1 M price tag for well located unit and good project location like this one i have visited. That's kind of high i thought but not after i do the maths.

From the forum information, the land was bided $1077 psf ppr. The unit on average were sold $1300 which doesn't add up as per analyst this will put the developer selling the unit sightly below cost. Well businessman do this for reason i think.

1. Integrated Strategy/Strategic reasons - Meaning they can earn from malls and to protect their market share and margins.

TDSR and 80% 1st Home loan
2. Is the demand affordability due to TDSR and 80% max loan limits. The person who thought of this is ingenious.

Here's why. If we target household who are employed, Median household income S$8300. Max loan allowed is about 5K monthly payment using rough estimation.This mean S$1.1M unit is already brink due to 80% loan max with 220K ( CPF+Cash ) for this example. All the figures can varies but the point is the concept that restrain the bull.

Thus the developer will have problem moving units if priced higher psf. Buyers are constrained by the 80% ratio, TDSR, CPF and available cash. In addition we have the ABSD that cap on PR and Foreign investors. For people look on 2nd property ... the hurdle is even higher ...

The unit area has to shrink some. This trend will be hard to change. Probably integrated development is the way to go for the future.

1st May 2015


  1. private housing is approx 15-20% of overall housing units. If we estimate that "mass market" condos target the 81st-90th percentile of the population, then thats $5524/pm per household member (as of 2014 report), so if both husband and wife work, then thats $11,000 in income, then max total debt service per month comes to $6600. Even so, I think its a stretch for middle-income earners to afford private housing. Hence why developers are fighting for ABSD to be removed so that they can attract high-net worth foreign buyers.

  2. i believe TDSR and ABSD have to work as a pair. Will it makes sense to allow foreigner to speculate but locals no since is not practical to use TDSR on foreigners ? Others question in my minds will be will this encourage developers to produce more luxury units on our limited land resources, in suburban or lifts overall prices instead for locals ?