Opinions sort - no right or wrong answer

[PrimroseHill]

So, one of the bone of contention between OH and I is this: we have a house here (freehold and foreigner eligible) and we have a small flat (approx 600sq feet) in Zone 2 London (Prime area). So this is the crux of the argument - OH is convinced that in 10years time when we are ready to take our foot of the job pedal, the housing market in London would have gone up and ramped up so much that we are in a worse position. We would be essentially left behind.
Although our house here would have gone up in price it would never have touch the same levels as London prime areas.

I disagee with OH's argument mainly for different reasons - We still have a foot in the door in terms of London property ladder. We had to sell our house in London (yes, in London) due to some stupid govt plan for HS2. Londoners blighted by this isn't due compensation compared to rural areas. I believe that it doesn't matter where we are in the world, location trumps it all. We are in the D9-11 areas.

So, its all speculation, of course as who knows what will happen in 10 years time, but is OH correct and I will have to eat humble pie or will I be correct?

[PNGMK]

So, one of the bone of contention between OH and I is this: we have a house here (freehold and foreigner eligible) and we have a small flat (approx 600sq feet) in Zone 2 London (Prime area). So this is the crux of the argument - OH is convinced that in 10years time when we are ready to take our foot of the job pedal, the housing market in London would have gone up and ramped up so much that we are in a worse position. We would be essentially left behind.
Although our house here would have gone up in price it would never have touch the same levels as London prime areas.

I disagee with OH's argument mainly for different reasons - We still have a foot in the door in terms of London property ladder. We had to sell our house in London (yes, in London) due to some stupid govt plan for HS2. Londoners blighted by this isn't due compensation compared to rural areas. I believe that it doesn't matter where we are in the world, location trumps it all. We are in the D9-11 areas.

So, its all speculation, of course as who knows what will happen in 10 years time, but is OH correct and I will have to eat humble pie or will I be correct?

Neither of you are correct. Stock market investments (into companies that grow their dividend returns) on a regular basis with dividends reinvested have trumped real estate since records began.

HOWEVER - Property in Singapore has crashed 3 times in my time here.... and the next time it craters it may not come back as quickly as it did after the 04/05 crash. I don't think London will crash as badly as Singapore.

[Steve1960]

HOWEVER - property in Singapore has crashed 3 times in my time here.... and the next time it craters it may not come back as quickly as it did after the 04/05 crash. I don't think London will crash as badly as Singapore.

I tend to agree, even when property does fall in the UK London tends to be more insulated from the effects. Singapore is due a correction and I think it's coming soon.

[PrimroseHill]

You think London is more insulated?
And you think that stock market investment provides better return?

Maybe right. My minisucle portfolio was nearly wiped out a few years back. At the moment stock market return are at all time high, I agree. Look at RBS shares pre- govt and post. I bought RBS shares for pennies.

Bought our first home together, mid90s for under GBP200k sold it 5 years later for double. 10 years later we sold our house for triple. House prices in prime areas London didnt crash after 9/11, nor did it crash after banking crisis.

So, you reckon in 10years time, FTSE will be more than 10,000? Don't you think in SG like prime london, the buyers of properties are international buyers?

[sundaymorningstaple]

I've not paid too much attention to the property market but recently decided to take a look at valuations in my area. My flat has appreciated valuation wise about 35% over the past 14 years since I bought it, or around 2.5% pa. That was not counting the COV which is not showing in the valuations from HDB. So, in reality the valuation gain on my property is only around half of the inflation rate of around +/-5% pa. On the flip side, it's all profit considering that I would have been paying a rent of maybe 150~200% of my mortgage payments for the past 14 years. Additionally, due to the drop on interest rates of the banks, even my down payment, which was sizeable, didn't really lose all that much interest (probably offset that several times by having an HDB Mortgage with a fixed interest rate that managed to stay the same throughout the mortgage term.

I am curious, though, if it tanks, wonder how far it would fall? Would it go back as far as the '07 financial meltdown in Asia?

[PrimroseHill]

correction & tanking - everyone has been talking about it for years in London, yet it didn't tank.
Rising prices in property I suppose is all relative. Because whatever paper profit, I made, the next property that I buy would have gone up as well.

After all for most of us, our property/properties are our largest purchases of all and largest asset.

[sundaymorningstaple]

Not looking in the parking lots of a lot of HDB estates. The number of High End cars there make me wonder where the money it. Unless it is the adult children of the original buyers of the flats who purchased the flat new 25 years ago.

[Girl_Next_Door]

My husband and I are looking to buy a place in London currently, so I am doing a bit of research in London.

My two cents...
- During my property research, I have noticed some discrepancy in prime areas(Zone 1 & 2). On the same stretch of street, I have seen more than a few units that are previously transacted (within a 2 years period) at half the price of the asking price of another seemingly similar unit. Given the worse case scenario whereby the previously sold unit is in an unlivable condition, I have doubts that a similar property on the same street is worth more than double.
- Rental in London is pricey, especially for units in tip-top conditions. I am not sure if most of them are vacant in reality (like in Singapore) or they get snapped out quickly.
- There are quite a fair bit of "government related" developmental plans in London. The agents I spoke to, predicted 20% increase in home values after the developmental plans are completed. To me, if the agents think it will go up by 20%, I will adjust it to 10% as agents tend to inflate numbers.

On London property, I do think that the value will increase, but unlikely in a rate faster than Singapore. Transport infrastructure are improving in London and people can get to work within an hour, despite living far out. There are still ample of space to spread. The culture is also completely different whereby more people prefer a bigger houses far away from office, against tiny apartments closer to office.

- We currently own a 3 bedroom apartment around Novena. I am aware that there are many plots of lands being released by the SG government recently, but I noticed that most of these lands are often at more sub-urban area. The developers are also pricing these properties at a very high price, from $1300-$1500psf.

Personally, I think that Singapore is a bubble and the property price is very inflated. However, I think that the price will continue to raise, especially over a 10 year period. No doubt that there is likely going to be at least 1 property crash within this 10 year period, but if you have the holding power, you should be able to survive this and see even greater value after the crash.

My reason? Singapore government will not allow the country to collapse. It has a huge amount of reserve, even in the worse possible scenario, they will find a way to keep this small island afloat.

I like to take a look at property prices whenever we travel, and property prices in developing cities (KL, Phuket, Jakarta, Yangon, BKK, etc) are not cheap. In fact, you can probably get a nice house in southern france or sunshine coast which cost much lesser than a sea-facing apartment in Phuket. There are too many foreigners snapping up properties in persue of their "retirement dream" without realizing that they are often over-paying.

Of course, these property markets are more bubbles waiting to be blast, but the difference is, very few of them have governments with deep pockets. I won't be surprised if they all blast and everyone start flowing to Singapore to invest, in exchange for that "perceived" stability.

[PrimroseHill]

JA, investment strategy? Everyone has one, don't they. I have no real estate experience of SG property compared to central London.
GND, from my experience, rental is really high in central london. Well, I lived there for over 25years, been home owner and now landlord. From experience, location and postcode trumps anything else. The same street can have different postcodes. I used to live near Avenue Road- one side of the road is Westminster Council, cheaper council tax and its NW8. Opposite side is Camden Council, expensive council tax and its NW3. Both are equally expensive and disportionate to the rest of the country and the South East.
Yes, the travel mentality in UK is different from here. However, people do be grudge paying over GBP3000 pa for commuting to work and takes them over an hour each day in travel, yes, upside is bigger house, plenty of land, downside is that, well, if you want a night in town or theatre, it can be a eyes wateringly expensive evening.
However, I do not have any SG property experince, just dont want to lose money after 10years, thats all.

[JR8]

So, one of the bone of contention between OH and I is this: we have a house here (freehold and foreigner eligible) and we have a small flat (approx 600sq feet) in Zone 2 London (Prime area). So this is the crux of the argument - OH is convinced that in 10years time when we are ready to take our foot of the job pedal, the housing market in London would have gone up and ramped up so much that we are in a worse position. We would be essentially left behind. Although our house here would have gone up in price it would never have touch the same levels as London prime areas.

So you’re saying you have a flat in London, but when you return you’ll want a house. And your think your house here, will not grow in price as fast as the flat back home?

I disagee with OH's argument mainly for different reasons - We still have a foot in the door in terms of London property ladder. We had to sell our house in London (yes, in London) due to some stupid govt plan for HS2. Londoners blighted by this isn't due compensation compared to rural areas. I believe that it doesn't matter where we are in the world, location trumps it all. We are in the D9-11 areas.

Did HS2 entail Compulsory Purchase of property? Didn’t know that, I thought it ran on existing track routes.

So, its all speculation, of course as who knows what will happen in 10 years time, but is OH correct and I will have to eat humble pie or will I be correct?

No one can predict, whether property inflation will turn out higher here or there. Why not remortgage your property, and use that equity to buy further property in which ever market you think will do best?


I'd also recommend reading the research from http://www.savills.com/research/ . They analyse global markets, including UK, and SG. Plus their papers are not 'media puff', they are proper considered research. [Two thumbs up].

[PrimroseHill]

JR8, thank you for the research links. HS2 complusory purchase, aren't applicable to Londoners. And it is on new lines not existing lines, in London it will be tunnelling, then afterwards they plan to sink the houses. We sold our London house and sunk the London house into a SG house.
We have no plans to buy another house in central london. There's isn't a need, given in a few years time the little one will be in uni somewhere.
Rental yield in London (zones 1&2) is pretty much on par with SG, 4-5%pa. Days are gone whereby if you bought a flat for GBP800k, you get to rent it out for GBP800 pw.
With all the govt schemes here to contain the bubble and the govt there fuelling the bubble, I am wondering if we will be worse off since the bigger asset is here

[JR8]

We have no plans to buy another house in central london. There's isn't a need, given in a few years time the little one will be in uni somewhere.
Rental yield in London (zones 1&2) is pretty much on par with SG, 4-5%pa. Days are gone whereby if you bought a flat for GBP800k, you get to rent it out for GBP800 pw.
With all the govt schemes here to contain the bubble and the govt there fuelling the bubble, I am wondering if we will be worse off since the bigger asset is here

800/800 = 5.2%. Yes, when i started out you didn't even sniff anything offering under 10, even 12%. And that's Zone 1/2. Of course, interest rates were c8% back then.

I was considering off-loading some of my portfolio, but my trusted London agent suggested I'd be nuts to right now. The 'Help to buy' (or what ever it's called) scheme just coming onto tap, is expected to have a major trickle-up effect. They say.

[PrimroseHill]

The Help to Buy is going to create another bubble and this is one that the govt creates. Easy to set up is it going to be that easy to dismantle?

Yeah, hang on to the property, the gains on capital appreciation far exceeds the rental income

[JR8]

The Help to Buy is going to create another bubble and this is one that the govt creates.

Excellent news. I'll just have to try and finesse the exit plan

Easy to set up is it going to be that easy to dismantle?

'Easy to set up' [in 1996?]? hahaha, you have no idea how hard it was. The spoils rarely fall into the lap of the idol, or those pursuing a worn and hackneyed path.

To dismantle, I just need to sell (they're very saleable). The major issue for me is tax, and naturally, maximum legitimate avoidance.

Yeah, hang on to the property, the gains on capital appreciation far exceeds the rental income

And herein lies the conundrum. As a landlord you run a business, you have households dependent on you 7 days a week (EVEN if you go 'full management' via an agent). Example just today I've some inbox 3 pages long about a tenant wanting to install a water-meter (for their benefit, at my expense). There is a point I don't want to have such a random travelling circus of individuals dependent on me.

At first it's quite 'interesting' learning who your tenants are, providing them with good homes, but you get some certifiable loonies which really isn't fun at all ... I guarantee it though, first time some pi$$ed up tenant calls you (3am his time), just as you're stepping off the ferry in Tioman or Bali or Malapascua, and asks if you can pop over with a spare key, as he's drunk and locked out.... ... such are the things that wear you down...

[PrimroseHill]

Easy to set up difficult to dismantle - I meant that about Help to Buy that the govt set up. Its so easy to set up, how is the govt going to dismantle it later? And what are the effects on the economy when flatline again?
The trickle up effect on this Help to Buy is scary.

I understand your dilemma and your angst about the tenants. I just gotten rid of a pair of nasties from ITV. Unlike you, I really do not want to get to know my tenants. They have their own lives, I have a good builder that will take care of things for me. I have some storage in central London so I can be flexible on the furniture situation. I also provide the British Gas Homecare. So, the ones that aren't touchy touchy feely tenants are ok, corporates and it works out ok. The local tenants, like the ITV couple, they just try to take the piss.

When it is running smoothly, it is good. When there are problems, yeah, combine that with a 7/8hours time zone it isn't ideal.
In terms of tax, check out the HMRC site, there are some new NRL rules earlier on this year, April. CGT should be ok, once you have done, 5years out of the country. Its the IHT at a later date and the domicility issues to consider too.

I am not trying to be greedy but in 12years, our house in London tripled. I wonder if our house in SG can ever do that.