TIPS FOR FIRST-TIME BUYERS

HDB UPGRADERS

Ref: 902071
Subject: HDB upgraders in the net of HDB rules & regulations.
Comments: Be careful about using relative's name to buy private property.
Any condos/bungalows for rent? Contact Asia USA Rental Realtors or email drsing@asiahomes.com, call (65) 9668 6468.

February 10, 1999.

To: First-time Buyers
From: Anne Brocklebank.

8 months ago, the Singapore residential real estate market was dead and many realtors were zombies or had gone into hibernation. Now, there is a great interest in property purchase continued into January and February 1999, with most queries on landed properties less than $1 million, purchase of HDB apartments especially the Bishan area and private condos. However, HDB owners who are not allowed to buy private properties within 5 years of purchase of the HDB apartment feel that they may be missing the bottoming of the Singapore real estate (residential).

As property experts and consultants had had been proven wrong when they predicted that the property market would not peak in around 1995/1996, advising caution, it is even more difficult for the ordinary person to know when it has bottomed.

Although there is said to be a 7-year cycle in the theory of the property market, it is not a perfect 7-year bust and boom cycle, otherwise 2003 should be the peak of the property market. 1985, 1992 and maybe 1999 should be the bottom of the cycle.

The best advice to HDB upgraders who want to buy private property is that you buy within your financial means, taking into account that one spouse may not be contributing to the mortgage payments in later years. HDB properties are usually within affordable means; not pretty but dependable.

There is a formula of using 1/3 of your gross income to service the housing mortgage. It may not be a good formula for Singapore in view of the fact that car ownership costs are much higher and many Singaporean wives, no matter how highly educated, do drop off from earning an income to sustain the high cost of private property ownership for employee-type husbands who may be retrenched. Therefore, do be careful.

Note to foreign investors: HDB (Housing Development Board) apartments are for sale only to Singapore citizens and Permanent Residents. Buyers of new HDBs are NOT permitted to buy private properties for the first 5 years and if they do miss out the bargains sometimes since the property cycle may be at the bottom but they can't sell their HDB in the private sector till after 5 years otherwise they lose money selling back to the HDB.

Below is a typical FAQ from HDB owners after the advertisement.

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XXX wrote:

 Dear Sir, We are in our early thirties and are having a combined income of $90,000 yearly.  Currently we are leaving in a 5-room HDB flat in Woodlands and it will mature in 2 year's time. We have $80k cash and are thinking of getting a private property using our mother's name.  Our saving per month is $1.5k per month. Wondering with our current financial status, would appreciate it very much if you could give us your professional advice on whether we should take the plunge in the light of the current property landscape in Singapore?  Will be available for more questions if necessary.  Best regards,  XXX   

Reply to XXX:

Sun, 07 Feb 1999 12:12:16 +0800 From: "Asia USA Realty, Affordable homes for expats, Dr Sing Kong Yuen, www.asiahomes.com (65) 9668 6468, (65) 254 2728"

Organization: Asia USA Realty affordable rentals for expats (65) 9668 6468

To: XXX

Subject: Re: PLEASE ADVISE

Thank you for email. If both husband and wife (I presume you are a married couple) work for the next 10-20 years, it will be OK to buy a more expensive private property.  Otherwise, you may get into financial difficulties with mortgage payments (your savings being $1,500pm) if one spouse resigns to stay at home.

Never use mother's or other relatives' name because your siblings (if any) will want to claim the estate and your mother may not want to sell it or influenced not to sell it when you need to sell it.  Legally you have no case.

Since you have 2 years more to wait, please be patient, unless you want to forfeit some monies in returning the HDB flat early.

Timing is important but you are caught in the web of HDB rules and regulations and cannot own private property for the next 2 years. Work hard, save up and when you have cash, you can buy anything you want 2 years later.  Property prices unlikely to shoot up the roof. You may still encounter mortgagee sales and good buys.

Best wishes.