Buy or Rent dillemma

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kc_phil
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Buy or Rent dillemma

Post by kc_phil » Tue, 23 Jan 2007 10:33 pm

Hi Gang.

So i have been making the rounds and looking at rentals near the center of Singapore. I have seen some good and some bad.

When weighing the cost of a mortgage against rent though, it seems like if you have the capital to put down, buying condo seems to make a lot more sense than renting...at leaast on the surface.

I understand there are severe penalties for selling early and that the market might be over inflated right now. I am not really looking to invest in Singapore real estate, i just hate pi$$ing my money away on rent.

I don't know how long i plan to stay in SG but i could easily envision 2-3 years and i figure put the place up for rental after that if i want to move on. I just got an employment pass and I plan to apply for PR shortly.

Anyone have any insight/experience with a similar dillemma?

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Post by keinicke » Wed, 24 Jan 2007 2:26 am

The experience I share with you is hating pissing up rent while I feel buying would be wiser.
Still I never have made the move still to buy as it seems I keep relocating around the world & thus renting keeps being the most sensible choice...

Singapore could be the more permanent place for me, but only time can tell - first I need to move in, but its coming close :)
Life's a bonus isn't it?

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Post by ksl » Wed, 24 Jan 2007 3:43 am

With rents on the up & up, we have decided to buy!

There is information out there on the net, that forecasts commerical properties rising 60% in the next 18 months, Residential condo's you had better be careful, you don't end up with negative equity, many of them drop in price, I am informed, by some Singaporeans, that got hooked. and are more than a 100,000 out of pocket!

New condo's seem to get snapped up and sold on in areas of demand, even before anyone moves in.

HDB doesn't move much, although your rental maybe saved, providing you do your home work, the prediction is positive on HDB, as more PR decide to stay on in Singapore, and also the recruitment drive for more talent, is pushing up prices.

With the new resort being built and the casino's, it may only have a direct effect on prices in specific areas. The choice is yours i guess!

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Post by kc_phil » Wed, 24 Jan 2007 9:17 am

ksl wrote:Residential condo's you had better be careful, you don't end up with negative equity, many of them drop in price, I am informed, by some Singaporeans, that got hooked. and are more than a 100,000 out of pocket!
Where can i find more information on this? You have put your finger precisely on my primary concern.

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Post by Grim Reaper » Wed, 24 Jan 2007 11:26 am

The property market in Singapore is complex and for most foreigners completely irrational.

Buying to me therefore seems to be a big mistake. The thought that you waste money on rent, cause you don't get anything in return is quite simplistic.

You get a place to live in return.

Unless you are looking for a longterm investment, I would say that when only living here for 2-3 years, rent a place and be merry.

Also take into consideration that by far not all property here is eligible for foreigners, so with an employment pass you can forget about buying those that are not eligible.

Live here for a number of years, egt a better isight in the culture and its ethics and then when knwoing how it works in the property market, make a more thoughtful decision.

You're not exactly buying chocolates after all, you're talking about hundreds of thousands of dollars.

Also, you may want to get more knowledge on all regulations, quality and so forth and so forth.

If not, you're in for a nightmare scenario.
Time will come....

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Post by sundaymorningstaple » Wed, 24 Jan 2007 12:35 pm

Grim Reaper wrote:You're not exactly buying chocolates after all, you're talking about hundreds of thousands of dollars.
Have you bought any Royce Chocolates lately! :wink: Gettin' close! Pound for pound even more!
SOME PEOPLE TRY TO TURN BACK THEIR ODOMETERS. NOT ME. I WANT PEOPLE TO KNOW WHY I LOOK THIS WAY. I'VE TRAVELED A LONG WAY, AND SOME OF THE ROADS WEREN'T PAVED. ~ Will Rogers

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Post by Asian_Geekette » Wed, 24 Jan 2007 1:20 pm

sundaymorningstaple wrote:
Grim Reaper wrote:You're not exactly buying chocolates after all, you're talking about hundreds of thousands of dollars.
Have you bought any Royce Chocolates lately! :wink: Gettin' close! Pound for pound even more!
But the money's worth it when you're enjoying Bitter Nama Royce chocolates. ;-)
My business is not to remake myself, but make the absolute best out of what God made. -Robert Browning

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ksl
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Post by ksl » Wed, 24 Jan 2007 3:32 pm

kc_phil wrote:
ksl wrote:Residential condo's you had better be careful, you don't end up with negative equity, many of them drop in price, I am informed, by some Singaporeans, that got hooked. and are more than a 100,000 out of pocket!
Where can i find more information on this? You have put your finger precisely on my primary concern.
Read the full articals on this website, may point you in the right direction

http://www.amberlamb.com/

Although Grim Reaper is right, short term is not really worth it, we have also family and business in Singapore, and that's the only reason, why i decided to buy, I expect the next 6 to 8 years rental will go through the roof.
We are not looking to make money on the property, just save the rental, so chose carefully.

We managed to get 148sq mtr, ground floor maisonette in a block of 4, for 305,000 after asking friends in the area, the prices of identical units. Some have paid 320.000 3 years ago for the same units, an are worth 375.000 today.

Although the concern is the 99 year lease, one would imagine prices to start dropping with less years on the lease. still 75 years, left on ours, So i'm not worried at my age, the property will be a present for my 6 year old daughter.

Although there are many resrictions on improvements, we are just not wishing to throw rent money away.

Some of the agents are very dodgy here, and untrustworthy, we signed for a furnished apartment, and over the two year period, they have taken furniture away, because they have used other peoples furniture from other properties, to furnish ours, they left us, with no furniture, increased the rent by 25% and to be honest the property is not worth it, when the neighbour is offering more for less money!

I had to build the kitchen myself, although it is very big at 160 sq mtr, its old and needs work, no aircon.

When the rent went to the same price as the cheapest condo here, we decided to make the choice to buy.

One property agent to keep away from will be advertised on here, when we are out!

The two years have been a nightmare!
Last edited by ksl on Wed, 24 Jan 2007 3:37 pm, edited 1 time in total.

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Post by ScoobyDoes » Wed, 24 Jan 2007 3:35 pm

My secretary bought an apartment when prices were high. She ended up in a lot of negative equity.

Her words to me were "you are lucky you rent."

Luck has nothing to do with it. I have the freedom to move easily if my neighbours turn out to be bums or worse. I have the the freedom to move if my work moves. I have the freedom to move if prices drop and i can get a better place for the same price...... or visa versa.

When i move to Singapore next month, it will be my third country in less than five years so i may be a little bias in my opinions but in the end i am free to make choices without getting bogged down in thoughts of selling, renting out, how to maintain etc.

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Post by ksl » Wed, 24 Jan 2007 9:44 pm

ScoobyDoes wrote:My secretary bought an apartment when prices were high. She ended up in a lot of negative equity.

Her words to me were "you are lucky you rent."

Luck has nothing to do with it. I have the freedom to move easily if my neighbours turn out to be bums or worse. I have the the freedom to move if my work moves. I have the freedom to move if prices drop and i can get a better place for the same price...... or visa versa.

When i move to Singapore next month, it will be my third country in less than five years so i may be a little bias in my opinions but in the end i am free to make choices without getting bogged down in thoughts of selling, renting out, how to maintain etc.


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Post by Rich D » Wed, 24 Jan 2007 11:23 pm

I wholeheartedly agree with the sentiment that paying rent is money down the drain. However I also agree that when buying you must know what you are about although I don't find the Singapore property market inherently different than anywhere else in the world although of course the mix of factors affecting it are unique.

It seems to me that there are 2 different reasons people choose to buy property, namely as somewhere to live and secondly as an investment. I know that is simplistic and most will be a mixture of the 2 but perhaps they lean more towards one than the other. In both of the extreme cases you need to make sure that the building is sound because you can't live in rubble or sell it for a profit but your attitude to its value will vary. If you bought it because it is exactly what you want until you shuffle off this mortal coil then although its a bummer if its value drops, within reason you shouldn't be overly worried. There will always be the smart arse who boasts about the great deal he got but relax in your homestead and make a note to visit him when he has his heart attack - if you can be bothered to step out of "Mon Repos". If it is as an investment though then its value and potential worth are of the essence and you should therefore place an similarly higher importance on doing your homework on the factors affecting the value such as development potential in the area, proposed new MRTs' etc. etc.

I bought my property here after 7 years, having decided to put down some roots and having become PR. Note, if you are PR you can use your CPF contributions, which remember you deducted from your taxable income, to pay your mortgage. Others might be able to confirm but I believe the deposit for PRs which is 10% remained at 20% for those still on EP.

I too bought an older 99 year lease property for a number of reasons. First and foremost it had everything I wanted in terms of layout and facilities. Next but allied to the aforementioned, older is bigger. No one has yet convinced the architects that Singaporeans are getting bigger (well perhaps they have but the developers are still paying them to cram in as many units into the footprint!) so apartments are getting smaller.

After about 10-15 years most (note I said most) latent faults have manifested themselves and my observation is that build quality is not improving. I am proud to say that I have been chucked out of more than 1 showflat and refused entry to review building practice on site just for querying the finishes/standards. I'm always surprised how many management committees' first task is to sue the developers who sold them their homes for the costs of repairing the defects.

I have no misconception that my place will be worth a great deal to my kids but I have another freehold UK property (for which some sucker is paying off the mortgage with his rent!) to settle that. In particular the value will plummet when there is 70-75 years only left on the lease as this is the limit below which the banks refuse to lend or put premium clauses on to the mortgage terms.

I would say go for buying once you have got your PR and are sure (or think you are sure) that you have got to grips with the market but only if you are sure you will be here for at least 3 years - since you are prepared to hang on to it you could rent it out to the suitcase brigade.

I must end though with a note of caution - my wife bought a unit in City Lights over a year ago and is now pestered on a daily basis by agents trying to get her to sell it. It sounds and feels great at the moment but in the back of my mind I can't help thinking that this is very reminiscent of the situation in 1997 when no one could believe the bubble would burst.
Everyone is entitled to my opinion

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