Hi Navin, most people fail to realise, that the measures taken by the government is mainly to make RESALE HDB FLATS MORE AFFORDABLE.
Measures such as forbidding private property owners to own HDB will cause the COV prices to decrease, since most HDB buyers will be first timers/ upgraders, and usually they do not have the cash means to pay outrageous COV, which private property owners usually can.
The supply of new HDB flats will increase supply and lower prices of resale HDB flat.
For private property sellers, the main measures by the government is the 70% loan ruling for those will existing home loan, and the 3% seller stamp duty.
Firstly, seller stamp duty will only affect those prothe 3% perties bought after 30 Aug. Thus, it does not affect current private property sellers. They do not have to pay the stamp duty. Even if those who bought after 30 Aug wants to sell, they will price their properties even higher to recoup the 3% stamp duty.
Secondly, it is the 70% loan amount for those with existing home loans, which is down from 80%. The cash upfront is also doubled, from 5% to 10%. Frankly, this plus the seller stamp duty, will only deter speculators from entering the market. The presence of speculators cause prices to go up. The absence of speculators DOES NOT cause price to come down. It merely stablises the price at the current level.
From the most basic of economic law: For private property prices to come down drastically, which is what most buyers are dreaming of, there needs to be either supply to increase and/or demand to fall.
Supply is constantly increasing, with new projects coming up constantly. But so is the population of Singapore, and the relative wealth of people (some own one property in the past, two currently, and soon three in the future). For prices to come down drastically, there needs to be a drastic increase in supply, so much that there is oversupply in the market.
If the supply does not increase drastically, buyers can hope demand fall drastically. This is the case for the HDB. With the new measure forbidding private property owners to buy HDB, the demand is cut by a large percentage. But for the private property market, we do not see a large number of buyer being crowded out of the market, mainly a small bunch of speculators and upgraders who find it hard to cough up the cash.
For a major decrease in demand for private property, so that prices will fall, it will require a crisis as large as the 2008/9 credit crisis. That will cause many buyers to find coughing up the downpayment hard, and reduce demand by a large margin.
The main majority of genuine buyers are still in the market, hoping for a fall in prices that may never come. That's why you will notice most questions in this forum are buyers asking when prices will fall, so that they can come in. You do not see any sellers asking if they should sell now. In the private property market, there are still many genuine buyers with enough financial means.
The seller stamp duty does not cause supply to increase or demand to fall. It merely increases prices(and government coffers).
This logical analysis shows that HDB prices will come down, but private property prices will stablise at the current level. Most buyers say wait-and-see, or my-friend-say-price-will-drop, but they mostly have no idea what they are waiting for, or if the friend really has a good reason to back what he/she says.
I would recommend that in buying private property, especially for own stay, is that you and your family like the place a lot, and the price is within your financial means. Short-term fluctuations in price is negligible if you are looking long term. Over time, property ALWAYS go up, especially true in Singapore.
Property investing should not be so stressful like day trading.
Thanks!
Regards,
Richard Wan
Black Diamond Real Estate Group
richardwan@live.com
94363793
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