Thursday, January 13, 2011

Will the cooling measures introduced on 14 Jan 11 affect us?

Hi all,

First of all, I would like to thank those who have bought my book, "Route to Successful Property Investment in Singapore". Hope you have enjoyed reading it. Kindly post your feeling and comment to my email, as stated in the book.

Today, MAS introduced a new set of property cooling measures as follows:

1.   Those who has outstanding loan with the financial institutions can only take a loan of up to 60% of the purchase price. So, we have to come up with 40% for downpayment? Yes, we can use cash to pay 10% and 30% from CPF. So, those who are CPF rich, will not be affected.

2.   The seller's stamp duty (SSD) will increase from 3 years to 4 years. So, if you intend to sell your property, bought on 14 Jan 2011 onwards, you will have to pay:
      a.    16% of the selling price in the 1st year.
      b.    12% of the selling price in the 2nd year.
      c.     8% of the selling price in the 3rd year.
      d.     4% of the selling price in the 4th year.

So, how will these two measures affect value investors like us?

Well, I will say that it may even be good news to us.

1.   We can wait for the property market to really cool down first, then buy. Meanwhile, build our war-chest with lots of cash and CPF.

2.   We can buy an incomplete property from developer and sell after TOP. The best is to buy those properties that has completed their foundation work or earlier. The monthly loan repayment will be less than $1000 per month for the first 2 to 2.5 years.

3.    Gather a group of friends to buy the same project. A bigger group of people will have bigger bargaining power. Can ask for a huge discount from the developer.

As value investors in properties, I would say this piece of news is great news to us. Don't you agree?
Just like what I wrote in my book, our strategy is timeless. We can always buy a good property at reasonable price at any time. We do not rush into buying, we strike only when the price is right.


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