Jan 25, 2010

The House of Wang And Other Little Stories

Hi there, miss me? I haven't posted for a week, because we've been busy moving house. Right now, we still have boxes lying around the place, but order has largely been restored and we are settling in nicely.

As regular followers of my blog would know, I bought a cluster house in March 2009 (when the private property market was at a bottom). I also sold my HDB flat in November 2009 (when the HDB market was at a high - I think).

And right now, while the cluster house is still under construction, we've rented a condo apartment (when the rental market is still weak).

So far, so good - it would appear that I am reading the stars correctly. Here's a little more validation, for my astrological interpretations:
ST Jan 23, 2010
Cash premiums for HDB flats hit a high
Q4 median COVs at $24,000, but have since dropped this month
By Jessica Cheam

BUYERS desperate to get into the public housing market are shelling out twice as much in cash top-ups for HDB resale flats as they did just a few months back.

These cash premiums are known as the Cash-over-Valuation (COV), and refer to the amount a buyer has to pay above a flat's valuation set by a bank.

High demand and tight supply drove the median COV paid to $24,000 in the fourth quarter of last year, according to fresh data from the Housing Board (HDB) yesterday.

That is double the $12,000 median in the previous three months and breaks the COV record of $22,000 achieved in the fourth quarter of 2007.

The buying frenzy seems to have abated a little since the new year. The HDB said yesterday that median COV has come down to $22,000 for the first half of this month.

So the COV was at a high in Q4 2009 (when I sold my HDB flat) and seems to be falling now (in January 2010).

Anyway, after moving into our current place, we realise that we like it a lot. It is quiet and peaceful, and the apartment has a nice view and is quite breezy.

The condo also has the kind of swimming pool that I really like. Not just big, but deep (and those of you who like swimming will know that a deep pool is much more fun than a shallow one).

Also the MRT is a short walk away. As the station is on the Circle Line, we think that the the apartment has the potential to appreciate in value, over the next one, two or three years.

That's because currently, only five stations on the Circle Line are operating. When the Circle Line is completely up and running, it will be the longest MRT line in Singapore, covering 31 stations. Home buyers would then be more willing to pay a higher premium, for the convenience of living near a Circle Line station.

So the beginnings of a new game plan has started to arise in my mind. It's all tentative. But who knows, we might end up BUYING the condo from the landlord, and staying here; and selling our cluster house for a good profit (high-end properties are expected to appreciate in 2010).

It seems possible that the landlord will agree to eventually sell, if we really discussed the matter with him. In fact, Mrs Wang has already tentatively sounded out the landlord and his wife and they are open to the idea.

Their main motivation for selling would be to make a clean break with Singapore and just get out for good. They already own a home in Australia and that's where the landlord's wife is staying, most of the year.

The landlord himself is still working in Singapore (and flies frequently between Australia and Singapore) but he is nearing retirement. When he retires, the plan is for the entire family to leave Singapore and live in Australia.

At my end, I'm starting to suspect that the corner cluster house might not be the most appropriate home for my family. The house is very big, with four floors, one basement and a large PES. It's the kind of place where I might have to shout "Where are you?!" a lot, before I can find my own kids, or wife, or maid.

Staying in a condo apartment might be a better idea for us.


Onlooker said...

Maybe You should organise a house warming party with your close friends. Cheers :)

MM SZ said...

Linked. Thanks:)

Anonymous said...

more space always better than less space, no regret one.

Charles said...

If your condo is cheap you could buy it, but otherwise...
Condo supply is on the rise so they are noy luxury items any more and so should not reach luxury price either.
Just the same, the multiplication of MRT stations reduces value: "close to mrt" is less exclusive...

Now, if only HDBs could be built with normal ceiling height instead of rabbit hole height...

KAM said...

Cheap cheap cheap? It is all about money?

Personally I would prefer to live in the cluster house and shout "where are you" instead of "get out of my face I am watching TV" all the time.

You can afford space, and you should utilise it. I think your children and also you may appreciate this "distance" in the house.
You could always sell the cluster house a little while later, if you really don't like it.

Not everything is about saving money or getting the best deal. If this is the case, then I have only sympathy for you.

Anonymous said...

If the condo is offered at a good price, i think you should get it. Location is always a major plus, since it makes getting anywhere easier. Whether to buy groceries, get the kids home from school, going to CBD etc etc.

I used to think cluster house was the bomb, with affordable prices and a lot of space. But after a while, getting anywhere was a pain when the car is not around [taken out by wife lol] and you really need to maintain a lot around the house. Hate the algae growing on the top deck...

keithyip said...

Ha, good to know that you are happy with all the things happening:) Just to check if you think that you just happen to have all the good luck, or you have been planning all these all the while?

Anonymous said...

Our neighbour's single house was turned into 8 cluster bungalows (near 2/3 foreign schools, prime rental area). These cluster houses are generally 4 different levels built very close to each other. It may be hard to locate family members on different levels but neighbours could in one glance (not intentionally of course) see bedrooms, dining room, living room-except basement-ie almost the entire house if shades are not drawn.
I believe approval for new cluster housing has stopped though those already approved will continued to be built.

Mr Wang Says So said...

Yes, you are right.

That is why I bought a corner cluster house (and it's the most "inside" corner of the development).

No one will actually walk all the way there, unless they intend to come to my house. Being at the furthest corner also means that it's difficult for neighbours to look into my house. So that's why my place will be quite private.

Also, I intend to utilise the open area just outside my house, around the back and side. Technically it's not my land, but because I'm right at the corner, I don't think anyone will care. I suspect no one will even walk that way.

The space would be big enough for me to plant a few trees; hang the clothes; grow some vegetables. My maid (who used to be a vegetable farmer in the Philippines) is very enthusiastic about the idea.

LuckySingaporean said...


Hmm...reminding your readers about your uncanny ability to time everything almost perfectly?

I have new neighbors. They bought right about the time you sold your HDB. My ex-neighbors were a property agent+insurance agent couple. Never buy a house from a property agent!

I woke up middle of the night yesterday - my mind sort of piece together all the ecnomic news/articles I read while I was at Borders during the day. I think this whole thing is going to fall apart soon. Its all an economic mirage - quatitative easing + stimulus. When it is all gone, this will be the recovery that never was...and on hindsight we will look back at the $100K COV for HDB as one heck of a property bubble.

A few months ago, I took a look at the property index chart vs the STI. Unlike the stock index which gyrates wildly, once the property index turns down, it goes down for many quarters....and it takes the stock market down with it.

I get this feeling its all going to happen soon...this great unravelling.

Anonymous said...

Lucky, I think you are a little over pessimistic!
I think the PAP Govt still have a lot of cards to play, they might give you a pleasant surprise, afterall, they are the highest paid in the whole Universe!

Anonymous said...

I initially carried the same view as Lucky because I too felt that property boom cannot continue forever.

But having doing some more research, this is the conclusion that I came up with.

1) Government WILL allow more foreigners in.

2) New immigrants WILL have to stay somewhere.

3) Many HDB dwellers may try to sell their properties to the new immigrants so as to have the cash to purchase private properties.

4) Private prop owners who own more than 1 prop might start selling their other props to retain high liquidity.(Some might even sell their only pvt prop at a huge profit and downgrade to a HDB)

These scenarios are already happening in Singapore and they are no doubt part of the factors that created the astronomical prices of the properties that we see today.

Therefore, I believe that the property prices will continue to rocket upwards just as long as our population continues to increase exponentially.

Sigh. Truly a sad situation for wannabe-homeowners.

Chong Han

Anonymous said...

wouldn't it be better to rent out the HDB flat instead of selling it away?

with the IRs opening, the foreign workers coming into singapore will be staying in rented HDBs. it is a good source of passive income.

though the government is rapidly releasing BTO these few months, but the effects on the supply are limited due to a long backlog demand for HDB.

i have a friend who sold his condo the last quarter at $750k (netting $300k profit) but he regreted it now. cos it is worth $800k currently and the rental yield is $3k a month. he realised he can actually use the rental yield to pay for two of his property mortgages.

Mr Wang Says So said...

Keeping the HDB flat was also a possible approach.

I dunno, I guess I like to stay nimble. As LuckySingaporean indicated, there are various "black swan" uncertainties lurking on the horizon, and one must stay nimble in order to deal with them, in case they occur.

Staying nimble, in this case, means selling the HDB and having a lot of cash in hand.

Otherwise I might have to deal with a situation like this. I keep the HDB, rent it out, and move into the cluster. Then:

1. Interest rates go up

2. HDB flat goes down in market value

3. Private property market goes dead

4. HDB tenant leaves after one year

5. Economy goes bust, no new tenant can be found

6. Mr Wang gets retrenched (who knows, it can happen)

But if I sell the HDB now, and have a lot of cash in hand (plus my other savings), then:

Risks 2, 4 and 5 would not exist,

and the cash in hand is a big buffer against Risk 1 and 6

and since I am using the cluster as my residence, Risk 3 is also of no immediate concern.

Mr Wang Says So said...

"I have new neighbors. They bought right about the time you sold your HDB. My ex-neighbors were a property agent+insurance agent couple. Never buy a house from a property agent!"

It's indeed a good rule of thumb. When a couple like a property agent + insurance agent decide to sell a property, there's a good probability that it's a good time to sell that kind of property.

Insurance agents, not just property agents, can also have their noses on the ground, for this kind of stuff.

That's because insurance agents sell home protection schemes. mortgage insurance etc - so they are therefore constantly talking to home buyers. That's how they get a feel for the market.

Anonymous said...

After u have settled ur housing in Singapore, u should look at buying a property overseas. U never know when u will need it. It is an investment with a bonus - security.

Anonymous said...

Congrats Mr Wang!

But I thought the initial plan of getting that cluster house is that it is near schools that your kids can study in?

Anyway, you are right! In this current situation (in fact, in any situations), it is best to be nimble and have loads of spare cash.

pat lee said...

Mr Wang, I seriously HATE my town council.
Can you help me to post my blof
http://zerotc.blogspot.com/ on this website so that all can read and comment


pikachu said...

Err Mr Wang, can you explain how selling you HDB will give you "lots of cash in hand"?

Doesn't most of the money go back into CPF? Unless you didnt use your CPF to pay for the loan instalments?

For me it made no sense to sell a positive cash flow HDB flat in a very good area. All the money would go back into my CPF account.

I continue to use my CPF to pay the HDB flat instalments. I collect rent. The rent is used to pay for the loan instalments on my 2nd property and I still have a couple of dollars left in hand. And I now have TWO properties.

In the case of worrying about not having tenants, you will always be able to find tenants. It is just a matter of how low your rent goes. HDB loans are also fixed rate pegged to CPF rates. I doubt CPF interest rates will ever be attractive.

Mr Wang Says So said...

Money that goes back into the CPF can be used to pay the monthly mortgage on the cluster house, of course.

And it can also be used to aggressively prepay the cluster house loan downloads, if interest rates on that loan go up.

Mr Wang Says So said...

"Downwards", I mean, not "downloads" ...

Brain not working today, haha.

poirv said...
This comment has been removed by the author.
poirv said...

Mr Wang,

Although you just made a million dollar commitment, I am impulsed to ask if you have any plans to leave the country in the future?

With your qualifications, I'm sure your can command a job easily in any western country.


Anonymous said...

It is a lot harder for married professionals with children who are successful in Singapore to move abroad for the following reasons :

1) Comfort level in Singapore is high. Why leave for another struggle?

2) Professional qualifications are sometimes not recognized in the same way overseas. You might have to rebuild your career from a lower start point

3) Maids are a lot more costly overseas and years of not doing your own household chores makes one very unwilling to do them abroad.

4) Children are settled in Singapore, doing well in school. It seems too much to risk these high achievers in Singapore schools destined for bright futures by placing them in overseas "inferior" school systems.

5) Singapore has one of the lowest tax rates for high income earners. You get to keep a lot more of the a lot you earn than if you were to move abroad.

It's a different story for middle class white collar workers though and rich business people.

Anonymous said...

Fully agree with the last comment.

When I first graduated, all I wanted to do was work in the US or Europe due to much higher starting salaries and better lifestyle for working adults.

Now that I'm married, in my 30s and making a comfortable amount of money, why would I want to uproot myself and move from a 20% tax bracket to 40-50%? That's absolutely insane.

Having said that, I worry all the time that Singapore is making me too soft. So much so that if the dream were to be shattered one day, there'd be nowhere else to run to.

Anonymous said...

That's called complacency.

A lot of us know deep down inside that this Singapore cannot continue like this forever. It will end one day. But we choose not to think about it. It is a problem for the children to work out.

Anonymous said...

so mr wang, u are god lah?

Anonymous said...

Mr Wang,
Was that you who wrote that article to the Forum today with regards to the foreign talents?

I suppose in the comfort of your cluster house, you might have forgotten that the vast majority of Singaporeans hold jobs that are threatened by foreign talents - not because they are smarter or more capable, but because they are much cheaper.

Would you be singing the same tune, if the foreign talents threatened your high-paying job? I am quite certain that there are foreigners who can do your job for 1/5 of your salary. If one of them can't do it, how about two of them? It's still at most 2/5 of your pay.

Very few of us are able to afford a nice cluster house like you do. Try putting yourself in our shoes when you wonder why so many of us are hostile to foreigners.

We bear arms for the country, and one day, if that day comes, we may have to die for the country. But of course, since you won't help protect your fellow Singaporeans, then maybe when war comes, your fellow singaporeans won't stand up for Singapore too. We will just do everything by looking at the bottomline. And the bottomline says we are stupid to lay down our lives so that foreigners can take our jobs and enjoy our country. Why not get the foreigners to bear arms for us?

Enjoy your nice cluster house while it last - before you get replaced by a cheaper, better and faster foreign "talent".

Mr Wang Says So said...

"Was that you who wrote that article to the Forum today with regards to the foreign talents?"

LOL, no.