Decision on Purchasing House

[midlet2013]

Hi

How can I decide what kind of house to buy in case I want to?

My wife and I are PR (8 yrs and almost 3 yrs). So we can buy HDB if we want. But we can probably afford more also.

In short, we both have Phds and have decent careers with potential growth in future (I am a data scientist which is in demand and she is a chemist in pharma). Our household income might be around 250k total ritenow (everything included ) but I can see that rising in the future. So we still have potential to earn more.

Should I play safe with a cheap HDB or should we think about condo ?

I am a bit scared spending too much.

[Max Headroom]

If I were you, I'd relax and sit on the fence a little longer. There's every indication that property will continue its slide in both the foreseeable and unforeseeable future.

If you haven't already done your fair share of research, start now and keep at it. By the time it's time to swoop in, you'll be a property pro and, in all likelihood, you won't be spending one cent too much.

[PNGMK]

Keep in mind the ridiculous banking rules imposed by MAS and CPF. MAS have severely reduced the maximum term of a loan and CPF locks up at 55.

The essential effect is to slow down the ability to shift or upgrade properties and as you get older the loan terms get shorter. I would recommend buying as much as you can when you think the price is right and accepting you may only be able to do one upgrade or maybe none at all if you're using CPF.

[Girl_Next_Door]

Have you considered your longer term plans? Do you plan to stay in Singapore for the next 5 - 10 years or longer or there is a possibility that you might moved to another country?

For me, we bought a 3 bedroom apartment which is based on our affordability. We plan to start a family, and figured that we would need more spare when the baby comes. It doesn't make sense to stay in a 2 bedroom and buy/rent a bigger unit at a later date. Our longer plan is also to stay in Singapore, or come back to Singapore, if we plan to leave at some stage. In the longer term, property price will increase. There are some pressure points whereby certain areas property prices has dipped, but it is often difficult to catch those price drops without doing it almost full time.

Financially, it is also a lot easier for us because we contribute maximum into our CPF. After taking into consideration our bonus, we are able to utilize about $3K from our CPF, and pay about $1K cash for our mortgage (we bought a $1.6mil property with a 80% loan).

You can speak to a bank to understand how much would your monthly commitment be, before deciding what kind of property to purchase.

[PNGMK]

Have you considered your longer term plans? Do you plan to stay in Singapore for the next 5 - 10 years or longer or there is a possibility that you might moved to another country?

For me, we bought a 3 bedroom apartment which is based on our affordability. We plan to start a family, and figured that we would need more spare when the baby comes. It doesn't make sense to stay in a 2 bedroom and buy/rent a bigger unit at a later date. Our longer plan is also to stay in
SNIP1
Financially, it is also a lot easier for us because we contribute maximum into our CPF. After taking into consideration our bonus, we are able to utilize about $3K from our CPF, and pay about $1K cash for our mortgage (we bought a $1.6mil property with a 80% loan).
SNIP2
deciding what kind of property to purchase.

Decision one is wise because buying a house here is not frictionless - there are significant transaction costs.

Decision 2 is not wise. You'd be better off paying cash for your M/G payments and conserving OA in your CPF account for a rainy day (i.e. unemployment or time off) when you can use it to fully service the loan as well as of course saving for retirement. IF Singapore gahmen really wanted to crash the property market they should drastically reduce the ability to use CPF for property. I have used it for that and now at 52 I regret.

[sundaymorningstaple]

You and me both, PNGMK!

[Girl_Next_Door]

Decision one is wise because buying a house here is not frictionless - there are significant transaction costs.

Decision 2 is not wise. You'd be better off paying cash for your M/G payments and conserving OA in your CPF account for a rainy day (i.e. unemployment or time off) when you can use it to fully service the loan as well as of course saving for retirement. IF Singapore gahmen really wanted to crash the property market they should drastically reduce the ability to use CPF for property. I have used it for that and now at 52 I regret.

We have made other plans for retirements, hence, we do not really need the CPF for such purposes. We also have a place in London for investment purpose, so by the time we retire, we will probably sell that place, and keep the cash for retirement, among other investments.

[PNGMK]

Uh huh. PLans of mice and men.

[Wd40]

OP is a rare specimen of an endangered species called "Indian PRs, yet to buy a house in Singapore"
Seriously, I think everyone who had to buy a house in Singapore has already bought one. With record inventory of houses coming onstream and Govt, wanting to replace foreign workers with robots(who dont need a house to live), I dont think it is wise to buy a house. Heck, it is not wise to buy anything in this gig economy. Just rent everything. I read this really cool article, yesterday. Must read until the end:

http://qz.com/821221/indian-startup-fur ... furniture/

[midlet2013]

@Wd40 : What would you do if you were a PR.


The reason why I have not bought a house is bcus I cannot settle in a place just to save rent. I should be convinced that my career is good and I am doing well and am happy. Unfortunately, Singapore is not 100% convincing when it comes to my field of work when the real opportunities are in the west.

I do not believe owning a house will make me happy. If I am happy, I will buy a house.

OP is a rare specimen of an endangered species called "Indian PRs, yet to buy a house in Singapore"
Seriously, I think everyone who had to buy a house in Singapore has already bought one. With record inventory of houses coming onstream and Govt, wanting to replace foreign workers with robots(who dont need a house to live), I dont think it is wise to buy a house. Heck, it is not wise to buy anything in this gig economy. Just rent everything. I read this really cool article, yesterday. Must read until the end:

http://qz.com/821221/indian-startup-fur ... furniture/

[Wd40]

You have to pay 5% absd and 3% sd. I think total transaction costs would be around 10% of the house cost. So 2 years of potential rental savings will be gone in the transaction costs. So from a financial point of view you need to have a visibility of 5 years atleast for it to make sense. If you are currently renting hdb and paying like 2k in rent then you save about 75k in 5 years. Assuming prices don't change and you can sell your hdb after 5 years.

So depending on how much does 75k mean to you, you can decide on whether to buy or continue renting.

Condos are higher risk higher return.

I have already completed 7.5 years in Singapore. I don't have the visibility to stay here for another 5 years. So I would continue renting. I like the flexibility of being able to pack my bags anytime, if I want to move back.
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[midlet2013]

Honestly, instead of whining about costs and doing unnecessary cost analysis which is beyond my control, I would focus on growing my earning potential by career advancement .

I am not worried about 2k rents and have never considered buying an apartment just to save a bit more, which is the de facto reason why people want PR in the first place.

Again, you would have told a completely different story had you been a PR and owned a HDB or condo.

Sometimes, I feel happy that I do not have too many Indian friends and I prefer logic and personal preferences over the herd mentality.

You have to pay 5% absd and 3% sd. I think total transaction costs would be around 10% of the house cost. So 2 years of potential rental savings will be gone in the transaction costs. So from a financial point of view you need to have a visibility of 5 years atleast for it to make sense. If you are currently renting hdb and paying like 2k in rent then you save about 75k in 5 years. Assuming prices don't change and you can sell your hdb after 5 years.

So depending on how much does 75k mean to you, you can decide on whether to buy or continue renting.

Condos are higher risk higher return.

I have already completed 7.5 years in Singapore. I don't have the visibility to stay here for another 5 years. So I would continue renting. I like the flexibility of being able to pack my bags anytime, if I want to move back.
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[Wd40]

Focusing on earning potential is mutually exclusive with doing cost analysis, no? I didn't whine about cost. I just told you from a financial point of view. If money is not your concern, then you need to evaluate based on whether you like permanence of having your own house vs flexibility of leaving the country anytime, without any attachments.

Why did you even ask this question in that case? PhD holder couldn't even figure that out

To me PR doesn't mean much when it comes to career opportunities. I have friends who gave up their house and PR because they got opportunities in better countries.

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[valleyman]

@OP: If you are looking for your own stay, you should buy where you can see yourself living for atleast the next 5-10 years. I was on the sidelines of buy/no-buy for the longest time, but then things were never all in place at the same time. So I took the plunge and I am quite happy for it. A house to live in, is still an emotional decision for most of us from the sub continent anyways and no amount of analysis could make the decision for you. There are many new websites now on property which can give you more data on condos to help you choose the right one. Lastly, data analytics is a hot area to be in and your skillset is not going out of demand soon.

Focusing on earning potential is mutually exclusive with doing cost analysis, no? I didn't whine about cost. I just told you from a financial point of view. If money is not your concern, then you need to evaluate based on whether you like permanence of having your own house vs flexibility of leaving the country anytime, without any attachments.

Why did you even ask this question in that case? PhD holder couldn't even figure that out

To me PR doesn't mean much when it comes to career opportunities. I have friends who gave up their house and PR because they got opportunities in better countries.

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@WD40: A casual observation, all your posts on almost every thread are dripping with negativity and general disdain for the red dot. I fail to understand why ? A case in point - the line above should be "better" career opportunities in other countries and not "better" countries.
Seriously man, life is too short you should really make better choices than stick on in a place you dislike so much.

[Wd40]

Well nothing is black or white. So there are things I like Singapore for and there are a lot of things I hate about it. I also believe a bird in hand is better than 2 in bush. So I will stick on as long as it makes sense. But I still maintain there are a lot of better countries to work in than Singapore and I know this from people who have left Singapore on their own inspite of having a house and a PR.

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