Speaker 1: this is a C. N. A.
Speaker 2: Podcast.
Speaker 1: We'll go for some quick fire questions in a few words.
Speaker 1: Can you give us your thoughts on the following first
Speaker 1: would be your dream home, my
Speaker 2: dream home, just a simple bungalow,
Speaker 2: which actually I already
Speaker 1: stayed
Speaker 1: buying or renting,
Speaker 2: buying for sure
Speaker 1: BTO or resale flat
Speaker 2: resale flat
Speaker 1: private property or HD be
Speaker 2: private property,
Speaker 1: bank loan or hDB loan.
Speaker 2: Mm hmm. Maybe now. HtV
Speaker 1: low.
Speaker 1: Mhm.
Speaker 1: All of us reach a stage in our lives when
Speaker 1: we want to buy a home but this is not
Speaker 1: just any purchase, it's the biggest of the big ticket
Speaker 1: items will buy in our lives. A typical property mortgage
Speaker 1: in Singapore can set us back by half a million dollars.
Speaker 1: So how does this impact a young couple's financial journey
Speaker 1: and his property a sure bet for the long run
Speaker 1: to answer these questions is a man known to many,
Speaker 1: he is the ceo of Singapore real estate agency prop
Speaker 1: Nick's Ismael Gaffer has witnessed the twists and turns of
Speaker 1: the Singapore property market and together with it, he has
Speaker 1: made his own fortune. So thanks so much for joining
Speaker 1: us today is mild
Speaker 1: now no one can deny that home prices in Singapore
Speaker 1: are not cheap. So could you explain to us why
Speaker 1: it is so and do property prices only go up
Speaker 1: from here.
Speaker 2: Generally speaking, property prices tend to go up, but it
Speaker 2: would be a myth to say it will only go up.
Speaker 2: But if you take it from a very long time
Speaker 2: horizon property prices have to keep going up. The logic
Speaker 2: is very simple, say 20 years ago or 10 years
Speaker 2: ago or for that matter 50 years ago, the salary
Speaker 2: of an architect and engineer is not the same. So
Speaker 2: there's this element known as inflation. So does the cost
Speaker 2: of materials
Speaker 2: goes up
Speaker 2: and in the land scarce Singapore, everything become tight and
Speaker 2: therefore in general to say over a longer period of time,
Speaker 2: property prices will go up is the right way to
Speaker 2: look at it. However, within that longer time horizon
Speaker 2: there will be cycles due to uncertainties. Either it could
Speaker 2: be SARS or it could be some kind of financial
Speaker 2: crisis or for that matter even the very recent covid.
Speaker 2: But I must say even during the covid period our
Speaker 2: real estate market was relatively resilient.
Speaker 1: Some younger people start with a less expensive home first
Speaker 1: and maybe
Speaker 1: pick a non mature estate for example with a few
Speaker 1: rooms and then upgrade as needs change.
Speaker 1: Maybe when you have a child until you start upgrading
Speaker 1: your property. But buying and selling your home is not
Speaker 1: very straightforward. So some younger people start buying a four
Speaker 1: or five room flat, maybe consider a convenient location. So
Speaker 1: for those who are trying to get in this property market,
Speaker 1: get a home that they're going to live in. What
Speaker 1: factors do you think they should consider?
Speaker 2: I think it's very important when we are young sometimes
Speaker 2: because I was young once too we
Speaker 1: can to be
Speaker 2: short term in our considerations.
Speaker 2: Why do I say that for example if a young
Speaker 2: couple who wants to buy a B. T. O. Flat
Speaker 2: built to order flat and you know by today's norm
Speaker 2: it could take anything between 4 to 5 years for
Speaker 2: the constructions to complete
Speaker 2: before you can get the keys and thereafter you have
Speaker 2: another five years minimum occupation period
Speaker 2: and only then after that you're able to sell. Therefore
Speaker 2: there is almost a 9 to 10 years time like
Speaker 2: before you can either downgrade upgrade or move forward. And
Speaker 2: can you imagine you may be young now but in
Speaker 2: 10 years time a lot of things can change. Maybe
Speaker 2: two Children you may have made
Speaker 2: and maybe in 567 years down the road, maybe one
Speaker 2: of your parents may be wanting to occupy together with you?
Speaker 2: I'm not so sure. So if you did not put
Speaker 2: any of such consideration and you just say okay I
Speaker 2: just wanted the smallest place in the very right location.
Speaker 2: Doesn't matter even if it costs me because I wanted
Speaker 2: to be in so central and therefore you take a
Speaker 2: three bedroom
Speaker 2: And then you must be mindful the next 10 years
Speaker 2: you are going to be there. So that's what I
Speaker 2: would say here is it's okay to have a smaller
Speaker 2: house but each an individual must have their own planning
Speaker 2: in terms of the time horizon, what is the likely
Speaker 2: family needs a personal needs before your deciding whether you
Speaker 2: want a bigger flat or a small flat.
Speaker 1: So a lot of things to consider not just the
Speaker 1: price it seems,
Speaker 1: but what about those who are not married because their
Speaker 1: options are even more limited. What advice would you give?
Speaker 2: Oh get married.
Speaker 1: Yeah.
Speaker 2: So I think in Singapore's system here is this procreation
Speaker 2: of family something that is very much favored with a
Speaker 2: lot more incentives. But we do respect singles. I think
Speaker 2: with all due rights for their own lifestyle is perfectly okay.
Speaker 2: But until they attain the age of 35 they don't
Speaker 2: have much options because once you're in a single above
Speaker 2: 35 you may have got some options
Speaker 2: in terms of buying resale flats or so I generally
Speaker 2: think for the younger and as well as a single,
Speaker 2: the ideal option will be still too
Speaker 2: Take advantage of your parents home. So you don't need
Speaker 2: to pay anything live as long as you're happy. But
Speaker 2: the disadvantage is that sometimes the generation gap you want
Speaker 2: wants privacy and you want to be bold, you want
Speaker 2: to come back home at two am
Speaker 2: and therefore yeah, then you don't have an alternative. The
Speaker 2: other options are obviously
Speaker 2: something becoming more popular. Now here is this co living
Speaker 2: space where the younger generations can live together with a
Speaker 2: communal kind of thing where you don't have a completely
Speaker 2: huge house but there are common toilets, common kitchen and
Speaker 2: you pay an affection of another usual rental of a
Speaker 2: house and
Speaker 2: that would be something nice if they are comfortable. It
Speaker 2: all depends on the individual are the one who is
Speaker 2: very comfortable with strangers to co leave. Obviously the other
Speaker 2: thing here will be for you to just rent a
Speaker 2: room and that gives you all your 100% privacy or
Speaker 2: a smaller apartment like in a one bedroom.
Speaker 2: But all this is going to cost money. So one
Speaker 2: has to be really thoughtful about the fact that as
Speaker 2: long as you are renting
Speaker 2: there's an outflow of your savings or your cash and
Speaker 2: you're basically making the landlord reacher and not yourself. The
Speaker 2: ideal scenario will be for one to get your own house,
Speaker 2: which means your monthly mortgage installment that you're paying is
Speaker 2: something equivalent to your rent is paying towards your own
Speaker 2: property Over time the property is fully paid up with
Speaker 2: their capital appreciation. This would be the best option for
Speaker 2: you to accumulate in terms of your retirement
Speaker 1: Because rent definitely not cheap, especially nowadays. And another factor
Speaker 1: that we need to keep in mind now is rising
Speaker 1: interest rates because mortgage rates have roughly doubled in the
Speaker 1: first six months of this year and that could mean
Speaker 1: a lot more in interest payments. Over time. For example,
Speaker 1: the median two year fixed rate mortgage rose from 1.15%
Speaker 1: in December last year to 2.25% in May. So that's
Speaker 1: a big jump only in six months. How should home
Speaker 1: owners tackle this?
Speaker 2: Just be happy about it. Not to worry because you
Speaker 2: can't tackle something, it is market norms. But to start
Speaker 2: with
Speaker 2: singaporeans we all need to be very happy about it.
Speaker 2: The fact that
Speaker 2: the 1.2 below 1.5 are not a norm. There MS
Speaker 2: enormous mainly because of the federal interest rates has been
Speaker 2: really near zero due to crisis Covid. And they wanted
Speaker 2: to just encourage more of the spending and so on.
Speaker 2: But that also gives rise to other challenges in America
Speaker 2: where inflation went up to 7 to 8% and that's
Speaker 2: why they have decided to increase the interest rate and
Speaker 2: therefore in my personal view, interest rates or mortgage anything
Speaker 2: up to 3 to 3.5% is a norm. So when
Speaker 2: we take a miss normal
Speaker 2: percentages and then we feel, wow this is 2.5. So
Speaker 2: I'm honestly not worried about that at all for the
Speaker 2: fact that you see any one of us who wants
Speaker 2: to take a loan
Speaker 2: based on the MES guideline,
Speaker 2: you will be assessed as if the mortgage amount given
Speaker 2: to you at the current interest rate of 3.5%
Speaker 2: even though the bank only charges 1.5 or two. Therefore
Speaker 2: this is kind of safety measures
Speaker 2: That you will not be given a loan at a
Speaker 2: very low rate but it is assessed at 3.5. So
Speaker 2: there's an a buffer been in built for prudence and
Speaker 2: why 3.5? I think that is more like a normal rates.
Speaker 2: Therefore the interest rate having gone from 1.25 to 2.25
Speaker 2: and it's not going to stop here. In my view,
Speaker 2: It may hit about three
Speaker 2: and that normalized and I will not pay too much
Speaker 2: attention to this. Honestly,
Speaker 2: We're not talking about five, Then there would be a concern.
Speaker 2: So with such rates, this should not deter any young
Speaker 2: couple to look into it because sometimes we study a
Speaker 2: lot of things and then we look at the headlines,
Speaker 2: it has gone double and by not entering the market,
Speaker 2: the prices that we will eventually end up paying will
Speaker 2: be huge.
Speaker 1: Yeah.
Speaker 1: And it's not going to stop here. As you mentioned.
Speaker 1: So you mentioned dismal that anything under 3% is considered okay.
Speaker 1: We shouldn't be too worried about that. But in the
Speaker 1: past decade and some as you mentioned, rates have been
Speaker 1: so low that
Speaker 1: so many people have turned to bank loans over HDB
Speaker 1: loans because of the difference in in the rates now
Speaker 1: that mortgage rates from the banks are creeping up. Do
Speaker 1: you think it's time to consider HDB loans, especially for
Speaker 1: those who are just about to buy their first property.
Speaker 2: I definitely think yes, because HDB loans are more sheltered
Speaker 2: because I think over the last umpteen, not 10, not 20,
Speaker 2: not 30. Have not put my finger to really go back.
Speaker 2: It has always been fixed at 2.6%. The formula works
Speaker 2: is 0.1 above the ordinary account payment of 2.5. So
Speaker 2: what HDB loan interest rate gives a person here is
Speaker 2: the stability while a bank loan will be quite cyclical
Speaker 2: demand and supply. You would be able to secure the
Speaker 2: entry at below 2%.
Speaker 2: When the rates start to go up, you may end
Speaker 2: up paying more than 3%. Therefore, I think it's perfectly
Speaker 2: okay right now where the interest rates are expected to
Speaker 2: go back to the norms. HDB loan will be more
Speaker 2: attractive for young couples.
Speaker 1: Do you have a preference for floating or fixed rates
Speaker 1: when it comes to bank loans? Because I'm sure a
Speaker 1: lot of mortgage holders in the next few months will
Speaker 1: look at their payments and go, well that's a lot more.
Speaker 2: I think it's very individual. It all depends on the
Speaker 2: risk appetite and how you read the market.
Speaker 2: I've always been more favored towards floating because I think
Speaker 2: I understand the market because I'm always looking at the
Speaker 2: market but myself too. I've also taken fixed rates in
Speaker 2: the past when I know the market is changing towards
Speaker 2: the tide
Speaker 2: where the interest rates are expected to go up then
Speaker 2: by fixing your interest rate. You also
Speaker 2: basically safeguard your commitments.
Speaker 2: So what would one do here? Is it fixed or floating?
Speaker 2: Especially right now. The difference between a floating and fix
Speaker 2: could be almost close to 0.75 because most of the
Speaker 2: banks are already pricing in the future cost. So that
Speaker 2: being the case, I think to an extent floating is attractive,
Speaker 2: but if you are going to be someone who just
Speaker 2: want a peace of mind for next three years then
Speaker 2: you can opt for fixed as well.
Speaker 1: So amid this rising interest rates, if we take a
Speaker 1: look at a broader picture here while some are trying
Speaker 1: to gather enough for their first home, there's a growing
Speaker 1: number of public housing millionaires,
Speaker 1: how should we balance the need for a place to
Speaker 1: live in and the investment opportunity from a home purchase.
Speaker 2: One of the real good things about being Singaporean. And
Speaker 2: I must say it is a commitment of the government
Speaker 2: that every Singaporean will get the first home at a
Speaker 2: very affordable price.
Speaker 2: And I must say that that's a commitment, not just
Speaker 2: by words, but it has been illustrated over the years
Speaker 2: when the government keep increasing the grant, that one can
Speaker 2: qualify
Speaker 2: A couple, even buying a resale flat if the household
Speaker 2: income is below $1,500, which is quite unusual unless they
Speaker 2: are really not working and maybe cleaners. I'm really not
Speaker 2: sure sure at the very lower income bracket,
Speaker 2: The government is prepared to give $160,000 of grant
Speaker 2: to assist them to buy the first property. And that's
Speaker 2: why what I think is is buying a first property
Speaker 2: in Singapore is never a major concern
Speaker 2: Because you know, first and foremost the bto subsidized and
Speaker 2: you also do qualify for some kind of underground depending
Speaker 2: on your income bracket, not everybody gets 160 as your
Speaker 2: household income goes on the upper scale, then the grant reduces.
Speaker 2: So then what is the major concern?
Speaker 2: The major concern here is not about at the entry
Speaker 2: level is the aspiration of some of us, we want
Speaker 2: bigger home, we want lifestyle, we want central location
Speaker 1: closer to parents who are mature estates. That's
Speaker 2: closer to parents, you still got additional ground because you're
Speaker 2: staying closer towards the parents.
Speaker 2: I mean obviously if my parents are staying in downtown
Speaker 2: or for that matter in Queenstown, I would prefer to
Speaker 2: buy a property because not only I can visit them,
Speaker 2: but even when I have a child there's someone to
Speaker 2: look after. But
Speaker 2: then the question here will be, what about
Speaker 2: affordability? For example, a four bedroom in the central location,
Speaker 2: A B. T. O.
Speaker 2: Can be anything between 600 over $1000 in a central location.
Speaker 2: I'm talking about Queenstown blanca and so on versus a
Speaker 2: four room at let's say yee shun
Speaker 2: or the outlying area is 400 plus for 50 plus
Speaker 2: minus on average. So one has to pay a premium
Speaker 2: to buy a very central location.
Speaker 2: But then if they cannot afford that premium to buy
Speaker 2: a forum, some of them compromise to buy a smaller flat,
Speaker 2: maybe a tree room in Queenstown, which will cost 400 over,
Speaker 2: but you could have
Speaker 2: Bought a four room elsewhere. So this is a compromise.
Speaker 2: But as I said at the start, when we talked
Speaker 2: about it, young couples have to really think about what
Speaker 2: is it, they truly one and not only for now,
Speaker 2: but for the next 10 years. Is it space more
Speaker 2: important or is it locality more important?
Speaker 2: Or is it lifestyle
Speaker 2: like an executive condominium?
Speaker 1: But what do you think about
Speaker 1: people who are eyeing properties in certain locations with the
Speaker 1: potential investment return in
Speaker 2: mind. I totally can understand that and that's why, you know,
Speaker 2: for all the video flats in the very central locations,
Speaker 2: the subscription rates are much higher because it is human,
Speaker 2: it's nothing wrong about people desiring to have a place
Speaker 2: there because they achieve two things. One, the convenience of
Speaker 2: the location
Speaker 2: And in time to come. Such properties tend to sell,
Speaker 2: as you said, $1 million dollar ticket. Why don't I
Speaker 2: stay enjoy the convenience and yet
Speaker 2: enjoy the better capital appreciation in comparison to the outlying areas.
Speaker 2: So I think it's a good idea that a lot
Speaker 2: of people
Speaker 2: tend to go for this,
Speaker 2: but they must also understand when the subscription rates are
Speaker 2: so high, your chances of you getting one is very slim.
Speaker 2: The government realized this after so long that there seems
Speaker 2: to be like a lottery effect. People who bought pinnacle
Speaker 2: some time back
Speaker 2: and today
Speaker 2: almost most units that goes well above a million dollars
Speaker 2: and people do make an a sizable appreciation. That's why
Speaker 2: now the government has come up with more restrictions in
Speaker 2: the M. O. P. Is beyond five years to extend
Speaker 2: to 10 years and restrictions and things like that so
Speaker 2: that people who are buying don't come from investment angle hugely,
Speaker 2: but more of a livable space at
Speaker 1: Least for the first property at least. Do you think
Speaker 1: it's fair though that public housing is going for at
Speaker 1: least $1 million dollars in some places?
Speaker 2: I think it's fair. I think in life we can't
Speaker 2: say it's fair or not fair for many instances,
Speaker 2: but when you look at for example, a spin nickel
Speaker 2: or Queenstown or downtown or rocco or boogies,
Speaker 2: If you want to live there and have the convenience
Speaker 2: of everything that comes with it and if you want
Speaker 2: to buy a private property per square foot can cost
Speaker 2: you $3,000 just a square foot of a space while
Speaker 2: even $1 million dollar property,
Speaker 2: But square foot is not even $1,000.
Speaker 2: So it's less than one third of a surprise. But
Speaker 2: on the other hand if he said no, no, we
Speaker 2: have to be fair because it's public housing every place
Speaker 2: also then
Speaker 2: whether you are staying at inn or boogies, it must
Speaker 2: be the same price. But it doesn't work that way
Speaker 2: because the demand and supply in the resale, people will
Speaker 2: be willing to pay a higher price for central locations.
Speaker 1: We're going for a short break, we'll be right back. Hi,
Speaker 1: I'm Adrian Tan and I'm Christina robert. We are the
Speaker 1: host of a new podcast called working, We're here to
Speaker 1: get into the essential things that no one tells you
Speaker 1: about working and company culture from office politics to dealing
Speaker 1: with burnout. If you've ever wanted to eavesdrop on an
Speaker 1: interesting conversation by the water cooler. This podcast is for
Speaker 1: you look out for our episodes wherever you get your podcast,
Speaker 1: you have a very inspiring story. You lived in a
Speaker 1: rental flat, you're running Singapore's largest real estate agency and
Speaker 1: you've also invested in property yourself and you've grown your
Speaker 1: real estate portfolio. Do you think your property investment roadmap
Speaker 1: is still feasible today?
Speaker 2: I wish it is feasible but unfortunately you will have
Speaker 2: to overcome hurdles that are much more harder than during
Speaker 2: my time because the government have
Speaker 2: putting a lot more cooling measures loopholes that people do
Speaker 2: take advantage in the past. Maybe it is not even
Speaker 2: seen as a loopholes the government has made it, that
Speaker 2: property is something that a lot more people should benefit
Speaker 2: and that's why people who are buying a second property
Speaker 2: of third property, even if you're a singaporean,
Speaker 2: You're subjected to additional stamp duties. And then you have got.
Speaker 2: Now total debt servicing ratio. If you want to buy
Speaker 2: a second property, the amount of loan that you get,
Speaker 2: for example the first property the bank is prepared to
Speaker 2: give you 75% loan. But if it is the second property,
Speaker 2: the bank can only give you a 60% loan. But
Speaker 2: during my era our parents era for those young people
Speaker 2: who are listening,
Speaker 2: we had to benefit
Speaker 2: because whether I buy the first or the second or
Speaker 2: the third property, I don't need to pay additional stamp duties.
Speaker 2: Neither the loans discriminate or there's a differentiation in terms
Speaker 2: of a lower quantum but put all those things aside,
Speaker 2: we have to only look at squarely what is available
Speaker 2: right now.
Speaker 2: Very briefly if I talk about my journey, I started
Speaker 2: my first property was a hdB three room resale flat,
Speaker 2: stayed there for a couple of years,
Speaker 2: accumulated some money, sold a flat
Speaker 2: and bought a private apartment
Speaker 2: and stayed in that apartment for some time to
Speaker 2: enjoyed it with the lifestyle and facilities with a swimming
Speaker 2: pool and so on
Speaker 2: and we sold that and we had some little tidy
Speaker 2: profit and capital appreciation and the fact that myself and
Speaker 2: my wife, we worked and our income have also gone
Speaker 2: up and we decided to upgrade to a small landed
Speaker 2: inter terrorists property. So I'm just trying to tell each
Speaker 2: and everyone
Speaker 2: dreaming is one thing is good to have the castle
Speaker 2: that we want.
Speaker 2: But we have to take the first step
Speaker 2: and the first step has to be within our means. Yeah,
Speaker 2: that's perfectly okay, you see. But one of the things
Speaker 2: that I normally used to share to the first time
Speaker 2: buyers or the younger couples will be,
Speaker 2: it is not a good idea to save money for
Speaker 2: your dream home which may not materialize.
Speaker 2: Why do I say that you said that? No, no, no,
Speaker 2: I do not want an H. T. B. I want
Speaker 2: to straightaway go into a private property. That's the lifestyle
Speaker 2: I won and therefore I will save and accumulate enough
Speaker 2: money to pay the down payment
Speaker 2: While you are saving the property prices keep going up.
Speaker 2: Let's say in the next 5 to 8 years what
Speaker 2: you could have bought right now, you plan at a
Speaker 2: million dollars in 8, 10 years down the road, it
Speaker 2: could be 1.4 million. So what you have saved 2,
Speaker 2: 300,000 inflation would have creeped up and entry into the
Speaker 2: macro be tough.
Speaker 2: So my suggestion here is
Speaker 2: as long as you are ready
Speaker 2: enter the market regardless of the size of the uni
Speaker 2: and that become your foothold
Speaker 2: and that property keep pace with inflation doesn't matter if
Speaker 2: you bought it for 400 in eight years down the road,
Speaker 2: in the 400,000 property goes up to 55 50 you'd
Speaker 2: have attained a capital appreciation of 100 over 1000 plus
Speaker 2: your savings. Then you use all the accumulated
Speaker 2: CPF and your capital appreciation to upgrade to the next property.
Speaker 2: Because over the next 56 years your income should have
Speaker 2: probably gone up as well.
Speaker 1: Some people think that investing in a property is out
Speaker 1: of their reach and their focus is simply just
Speaker 1: getting your first home and staying there. Do you think
Speaker 1: that property should always be part of someone's investment mix?
Speaker 2: I would always encourage everyone to look at your property
Speaker 2: from an investment angle,
Speaker 2: even though it's a public housing,
Speaker 2: I know it's a very clear direction from the authorities.
Speaker 2: Public housing is not meant to be an investment and
Speaker 2: I agree to that as well.
Speaker 2: But why do I say that for all young couple
Speaker 2: when you buy a property, please do have some element
Speaker 2: of investment in your mind simply because even if you're
Speaker 2: buying in an outlying area,
Speaker 2: If the lease of the property is going to be
Speaker 2: only 70 years or 65 years
Speaker 2: You must understand if you buy a property that has
Speaker 2: got balance 65 year lease and you're going to stay
Speaker 2: there for 15, 20 years and the balance least only
Speaker 2: goes to 40 over years. That property capital appreciation is
Speaker 2: so much muted or it may go into the negative
Speaker 2: slide
Speaker 2: and the fact that you live in that place for
Speaker 2: the last 15, 20 years, paying your hard earned CPF money,
Speaker 2: why don't you buy a property that has got while
Speaker 2: you stay there for the next 10, 15 years. And
Speaker 2: yet the property can have some form of capital appreciation
Speaker 2: which is from an investment angle. So that's why I
Speaker 2: always encourage young couple to say that don't be too
Speaker 2: emotional about properties,
Speaker 2: look at the property for what it is right now
Speaker 2: and whether it caters to your needs, the space, the
Speaker 2: location
Speaker 2: and at the same time pause a moment
Speaker 2: to think about say come 10 to 15 years and
Speaker 2: why do I say 10 to 15 years by and
Speaker 2: large for most singaporeans. I think 10 to 15 years
Speaker 2: your family composition may change your income may change your job,
Speaker 2: place may change
Speaker 2: and therefore it may be good for you to reorganize
Speaker 2: your property portfolio or even shift
Speaker 2: And that's why you must always take into consideration whatever
Speaker 2: I buy now when I want to exceed in 10 years,
Speaker 2: what would be the value of my property for all
Speaker 2: the money that I'm committing in the next 10 years.
Speaker 2: So that's a very worthwhile in depth thinking to do
Speaker 1: so it means we should mentally be prepared to
Speaker 1: move houses throughout our life.
Speaker 2: Yeah, I think I've spoken to many young couple,
Speaker 2: it goes with the same thing when we get married,
Speaker 2: we say for life or grave we are together
Speaker 2: but you and I know how many marriages last.
Speaker 2: That's the truth of the matter and same thing. Most
Speaker 2: people when they buy a property, they say this is
Speaker 2: our home for our life. But it will not be
Speaker 2: the case. But it's not as bad as marriage not working.
Speaker 2: But I think in a home when you ever change
Speaker 2: is a positive thing in my view. Either you write
Speaker 2: size it or you up size it or downsize it.
Speaker 2: It really doesn't matter based on your needs at that time,
Speaker 2: based on what you've invested. Right now, if you take
Speaker 2: a 600,000 mortgage, it will always be a very daunting
Speaker 2: thought for a young couple to take a $600,000 loan.
Speaker 2: I mean you're so young you say that what should
Speaker 2: I even take a $600,000 loan.
Speaker 2: It all depends on the income
Speaker 2: Who qualifies to take a $600,000 loan for public housing.
Speaker 2: There is AM. S. R. of 30% of your income,
Speaker 2: A 600,000 loan over a period of 30 years
Speaker 2: at average let's say 2% interest rate. Currently
Speaker 2: The monthly installment is going to be about 2200, which
Speaker 2: means the household income between the couple has to be
Speaker 2: about 7005. If someone earns $7,500,
Speaker 2: They do qualify to get a $600,000 loan comfortably to
Speaker 2: buy a property
Speaker 2: and monthly they have to fork out
Speaker 2: Only $500 cash because the rest come from their CPF
Speaker 2: ordinary account.
Speaker 2: If the couple says no, I don't want this commitment
Speaker 2: of a $500 monthly. Then
Speaker 2: The household income of the couple has to be $10,000
Speaker 2: If they earn 5000 each and they got $10,000 and
Speaker 2: they take a $600,000 loan over 30 years. The full
Speaker 2: amount can be paid through your ordinary account CPF
Speaker 2: and you don't come out cash a dollar. Therefore don't
Speaker 2: be so worried about taking loan. As long as you know,
Speaker 2: you have a stable career in whatever trade you are.
Speaker 2: You know, there's a demand and you can be employed.
Speaker 2: It's okay to take a loan and buy the right property.
Speaker 1: Yes, don't be afraid of loan but not too much
Speaker 1: to
Speaker 2: write.
Speaker 2: I always never worried about
Speaker 1: loan.
Speaker 2: What
Speaker 1: happens if you have people in properties
Speaker 1: that they are not appreciating for different reasons or they're
Speaker 1: not appreciating as much as they would like it to
Speaker 1: be or needed to be.
Speaker 2: Very good question. Sarah, I really like that. And that's
Speaker 2: why I always advocate all listeners not to take
Speaker 2: your current property
Speaker 2: as a property. That's forever
Speaker 2: Because a property when we purchased five or 10 years ago,
Speaker 2: it could have been an asset, but over time it
Speaker 2: could have muted capital appreciation
Speaker 2: or it may even end up as a liability.
Speaker 2: So what should one do?
Speaker 2: I think one should take an active approach to evaluate
Speaker 2: your existing property portfolio to understand how it has performed
Speaker 2: over the last 5, 10 years. What is the expectations
Speaker 2: in the next 10 years? Has there been a break
Speaker 2: in terms of capital appreciation? And if that is the
Speaker 2: case this is the right time to offload
Speaker 2: and get something else that's still in its life cycle
Speaker 2: has got further growth. So this is something is very actively.
Speaker 2: Some savvy investors does
Speaker 1: what makes a home an asset and a liability. When
Speaker 1: should alarm bells start ringing in our
Speaker 2: head? It is an ally ability in my view,
Speaker 2: if you buy something and for all what you have
Speaker 2: paid
Speaker 2: and for whatever reason when you decide to downsize or
Speaker 2: when you want to cash out the property is not
Speaker 2: at that moment worth what you have paid for. That
Speaker 2: means the property has not worked as hard as it should.
Speaker 2: In my view is in fact a liability because if
Speaker 2: you continue to stay there for another 10 years instead
Speaker 2: of getting let's say 400,000, another 10 years stated is
Speaker 2: only going to give you 300,000. Yeah,
Speaker 2: so it may not be seen directly as a liability.
Speaker 2: Probably you may have paid up the full mortgage loan.
Speaker 2: But the mere fact that at any time when you
Speaker 2: want to visit it is not going to give you
Speaker 2: a better return from what it is today. The longer
Speaker 2: you stay there,
Speaker 2: then I think it is a liability obviously from the
Speaker 2: other aspect, it could be a liability is for those
Speaker 2: people who own more than one properties and you're dependent
Speaker 2: on the rental yield from your tenant to pay the
Speaker 2: monthly installment. But somehow with the interest rates going up
Speaker 2: and your monthly mortgage installment,
Speaker 2: the rent don't seem to be going up
Speaker 2: and what do you collect from the tenant is not
Speaker 2: even sufficient
Speaker 2: to pay your monthly installment in overtime. The gap widens
Speaker 2: then I think it is a liability to
Speaker 2: in all fairness a lot of young couple can read
Speaker 2: from internet and many of those digital platforms,
Speaker 2: but it would be good if you have someone who
Speaker 2: has been in the market for a good 5 to
Speaker 2: 10 years, who understand who have got data and statistics
Speaker 2: to show you for example,
Speaker 2: we would be able to track if you say that
Speaker 2: I'm staying in condo A versus condo B and Condo C.
Speaker 2: And we can just plot
Speaker 2: The last 10 years, capital appreciation or price movement or
Speaker 2: the demand. So what would be able to visually see
Speaker 2: is the property has got potential or not. So, but
Speaker 2: you need some experts to come in to help you
Speaker 2: and guide you.
Speaker 1: A lot of people right now look to the older
Speaker 1: generation and look at the gains that they've got from
Speaker 1: property as Singapore's property market boomed during the early years
Speaker 1: for example. But now those gains might be less likely
Speaker 1: because Singapore now is a mature economy and we won't
Speaker 1: see
Speaker 1: that big of a jump in the economy and in
Speaker 1: the property prices.
Speaker 1: So what does that mean then for the younger generation,
Speaker 2: you're absolutely right,
Speaker 2: that's life. But having said that property still makes sense
Speaker 2: if someone invests a second property million dollars
Speaker 2: And you come out even of 40% down which is
Speaker 2: 400,000 and you take a loan of 600,000 over a
Speaker 2: 20 year period
Speaker 2: And the next 20 years
Speaker 2: You have been renting it out and the 10ant pays
Speaker 2: the monthly mortgage.
Speaker 2: The man at the end of 20 years, the Tenant
Speaker 2: has paid the entire 600,000.
Speaker 2: So the property you bought 20 years ago was a million.
Speaker 2: Your equity was 400,000, you took a loan of 600
Speaker 2: over 20 years and the tenant pays off after 20
Speaker 2: years and after 20 years
Speaker 2: Assuming the property price, what do you reckon it be
Speaker 2: assuming it is even 1.6 million or two million
Speaker 2: 5% inflation. And if it's not even compounded.
Speaker 2: So if it is
Speaker 2: two million,
Speaker 2: Your 400,000 equity has gone 500% or even if it
Speaker 2: has just gone to 1.6 million, it has gone your
Speaker 2: 400 because when you sell at the end of 20 years,
Speaker 2: the $1.5 million dollar check is all to you.
Speaker 2: So it still makes sense. It still makes sense even
Speaker 2: compared to our earlier parents time and now because property
Speaker 2: generally keep pace with inflation but as long as you
Speaker 2: enter the right property, what I can agree with you
Speaker 2: here is people who bought a landed property in the 1960s,
Speaker 2: $30,000. I
Speaker 1: can't imagine that now.
Speaker 2: Um 4500 in the eastern part of Singapore today. The
Speaker 2: same condition of the house, the same condition
Speaker 1: no enough has
Speaker 2: been done.
Speaker 2: That piece of land today is no less than six million.
Speaker 2: A 30,000 has gone to six million. No less. It's
Speaker 2: likely to be better to be higher.
Speaker 2: So um 10fold. Are we talking about
Speaker 2: Many, many 400 awful
Speaker 2: such things are not likely to happen as you rightly
Speaker 2: qualified by saying that Singapore was a growing economy. If
Speaker 2: you want to wish to have such kind of growth
Speaker 2: potential then go and buy Myanmar
Speaker 2: But to be there and I would advise no better
Speaker 2: not because the risk is too high. Same thing when
Speaker 2: those people who bought it in the 50s and 60s
Speaker 2: in Singapore, they also took a risk.
Speaker 2: We are today stable that was all the formative stages
Speaker 2: but all said, I still think property does make sense.
Speaker 1: Are there any other myths that you think people have
Speaker 1: that you'd like to debunk or maybe areas that they
Speaker 1: are not completely informed about.
Speaker 2: Ah I mean one of the things that we already
Speaker 2: talked about, you want to save enough to buy a
Speaker 2: dream home that will never
Speaker 2: materialize in my view. I always think that it's good
Speaker 2: to have a foothold in the market to keep pace
Speaker 2: with inflation. May be another example if I may give
Speaker 2: here is some of them always like to buy the
Speaker 2: biggest home because they like space, they're like lifestyle.
Speaker 2: But I would say if you have a very big house,
Speaker 2: one house
Speaker 2: and you're so busy working so hard. The only person
Speaker 2: who enjoyed the houses your mate and the dog.
Speaker 1: That's a good point.
Speaker 2: Yeah. So by necessarily buy two houses by one that
Speaker 2: you don't need to be stressed and buy another one
Speaker 2: like the earlier example I give that somebody pays the
Speaker 2: monthly installment
Speaker 2: and at retirement
Speaker 2: you can travel the world. Yeah. So one will have
Speaker 2: to understand what are your needs. As I said
Speaker 2: when we are young we don't tend to think long
Speaker 2: term but people who think of long term they do
Speaker 2: benefit hugely.
Speaker 1: Yeah. So we can talk about buying your first home
Speaker 1: without touching on this is male. What do you think
Speaker 1: should come first? Video application or a marriage proposal.
Speaker 1: Mhm.
Speaker 2: I think um
Speaker 2: wow. I said that if you want to talk about
Speaker 2: a video application,
Speaker 2: how is your marriage don't even take place. But I
Speaker 2: think it's the right thing to do if you're really
Speaker 2: definitely quite agreed upon that you are the life partner
Speaker 2: going to be for each other. My strong suggestion is
Speaker 2: go ahead and apply the BTU because it is going
Speaker 2: to take a good four or five years. But I
Speaker 2: really want to encourage people to look at the other
Speaker 2: option
Speaker 2: and believe me
Speaker 2: I think this is a superior option for most people
Speaker 2: but not everyone to look at resale flat. Why do
Speaker 2: I say that? I think about it
Speaker 2: when you buy a resale flat you get the case
Speaker 2: within three months and you do qualify for higher grant
Speaker 2: compared to Bto Bto. The ground is not so much.
Speaker 2: The government deliberately give higher amount of ground because of
Speaker 2: the price difference. What is your first advantage
Speaker 2: Your marriage and your privacy and to leave your home
Speaker 2: start immediately not five years later. # two your minimum
Speaker 2: occupation period starts the day you collect the keys.
Speaker 2: I mean five years down the road
Speaker 2: you can
Speaker 2: reorganize your portfolio. Either sell the resale flat and by
Speaker 2: an executive condominium or something else. As opposed to a
Speaker 2: Bto flat. You're stuck for 10 years, five years of
Speaker 2: construction plus another five years of M. O. P. So
Speaker 2: you can't manure. Not forgetting the fact if you're going
Speaker 2: to be 28 30 10 years is 40.
Speaker 2: So that five years lead time can mean a lot
Speaker 2: of things.
Speaker 2: So as I said I'm not suggesting everybody should look
Speaker 2: at resale flat. If you can afford
Speaker 2: if you think your aspiration is now, just for the
Speaker 2: next five years or six years to have a decent
Speaker 2: flat without waiting too long for your marriage, go for
Speaker 2: a resale.
Speaker 2: But on the other hand, you said, hey, resale is
Speaker 2: going to be a bit more hefty because the resale
Speaker 2: prices are definitely higher than B. T. O. And video
Speaker 2: much cheaper and it's brand new. Fine. Then you must
Speaker 2: be mindful of the fact that if you apply for
Speaker 2: the video, apply early, if you intend to get married
Speaker 2: in 23 years better apply now
Speaker 2: so that at least halfway through after you got married,
Speaker 2: you don't need to wait too long,
Speaker 1: smell one question before we let you go. So we
Speaker 1: all know you've made quite a hefty sum in the
Speaker 1: property market. Can you give our listeners your view of
Speaker 1: money and what you learned when you had little? And
Speaker 1: when you had a lot
Speaker 2: lot of people may not
Speaker 2: really
Speaker 2: maybe agree with me
Speaker 2: to me. Money has only got that much value,
Speaker 2: honest truth. Probably a lot of people will say when
Speaker 2: you have a lot of people tend to talk like that,
Speaker 2: maybe I'm not so sure
Speaker 2: you have all the money. But if you don't have
Speaker 2: the heart to give it to
Speaker 2: your own loved ones, including your parents, including whoever who
Speaker 2: is in need because you start to halt money because
Speaker 2: money is so important to you
Speaker 2: somehow money won't come to you much because you have
Speaker 2: an affiliation with the money. That money is all paramount
Speaker 2: to you. I'm not saying that just be free and
Speaker 2: just be spent with no
Speaker 2: when you work hard and
Speaker 2: you give money where it is due to make a
Speaker 2: difference in the life of other people as well. But
Speaker 2: it all starts with your own family first.
Speaker 2: I think somehow money has got more meaning
Speaker 2: because it is not about you have multiple millions and
Speaker 2: you still feel that it is not enough versus you
Speaker 2: have enough and you feel so happy that you're rich,
Speaker 2: the state of happiness is in the mind,
Speaker 2: but all said is it's equally important. You must have money,
Speaker 2: work hard,
Speaker 2: earn the money,
Speaker 2: but pure money doesn't give you happiness using the money
Speaker 2: with the right cost, bring greater joy and that's how
Speaker 2: I feel.
Speaker 1: Yeah, that's a great advice. Think long term when it
Speaker 1: comes to your property, don't wait until you've saved all
Speaker 1: the money you need for your dream home. And remember
Speaker 1: that over a long period of time, home prices do
Speaker 1: go up though, there are cycles in between. Thanks so
Speaker 1: much for joining us
Speaker 2: appreciate it. Thank you.
Speaker 1: Okay,
Speaker 1: we hope you enjoyed this episode of money talks the
Speaker 1: team behind this podcast is hope a name, Danieli, Christina
Speaker 1: robert and you've got a refreshed slate of audio material
Speaker 1: you can listen to on your commute or your workout,
Speaker 1: go to the C. N. A. Website or app. Look
Speaker 1: for the listen button and subscribe to the podcast. See
Speaker 1: like if you have thoughts, ideas or even stories you'd
Speaker 1: like to share, please write to us. The details are
Speaker 1: in our episode notes. Until next time. This is Sarah apology.
Speaker 1: Mhm.