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A lot of the money in my CPF-SA is from the government. (AK reveals his CPF-SA numbers in detail for the first time.)

Saturday, January 3, 2015

Following my last blog post on a reader's predicament and an earlier blog post in which I said people are naturally attracted to large numbers, I decided to share my CPF-SA numbers publicly for the first time and hope that it will have some positive impact on anyone who might still be wondering if beefing up his or her CPF-SA is a good idea.







Facebook (31/12/16).

I have been pretty consistent in my message that beefing up our CPF-SA early would help us achieve retirement adequacy in our golden years.

Even if we were to stop mandatory contributions after some time, once there is a critical mass in our CPF-SA, the interest received annually would go a long way to meeting the (much feared) annual increases in the minimum sum over time.




In my case, I significantly beefed up my CPF-SA in the first 4 years of my life as a working adult. 


That would be from my mid to late 20s. 


I transferred all the funds in my CPF-OA to CPF-SA in those years. 


From time to time, I would make voluntary contributions too.




I am 44 this year and here is what I have to show for my efforts today after 19 years in the workforce:



AK's CPF SA.

I still do some voluntary contributions which I have marked with the letters V.C. above.




As I am still gainfully employed, I still have mandatory CPF contributions. 

What I want to draw attention to is the interest paid to my CPF-SA: 

$7,651.65.

As a sum of money, it might not look like much but if we were to think deeper, we would start to look at it differently. 

What do I mean?




Now, I know that many people complain about how the minimum sum keeps increasing and how they find it difficult to meet the minimum sum running on their own steam. 


Well, many years ago, my thought went like this:

"Why not let the government help me meet the minimum sum?"



Get a 4% to 5% coupon from a AAA rated sovereign?










If I were to push the balance in my CPF-SA significantly higher, the government would have to pay me more in interest. 

The much higher interest paid to me would then go towards meeting the minimum sum required. 

Sounds good but does it work?




Well, the interest I received in my CPF-SA has been higher than my mandatory contributions to it for many years by now. 

This means that the government have been working harder than me in those years to help me achieve retirement adequacy.

Don't you like it when others work harder than we do to help ourselves?



If we look at the schedule below, I think it is safe to say that the interest paid to my CPF-SA yearly is more or less able to keep pace with the yearly increases to the minimum sum. 

So, the strategy works!



Source: CPF Board.



At age 55, I could withdraw a nice sum of money in excess of the minimum sum (instead of only $5,000) with a smile on my face. 

I would probably have an even bigger smile on my face when I recall that a big chunk of the money is actually from the government and I am not just taking back my own money.









What? 

You want satisfaction? 

Well, then, why stop at taking back our own money? 

Isn't it more satisfying to take the government's money (legally)?





Related posts:
1. Don't be stupid to top up your CPF-SA.
2. Upsize $100K to $225K in 20 years.
3. Get a lifetime income of >$2K a month.

My parents say don't be stupid to top up my CPF-SA.

Update (31 Dec 16):

A reader told me:


"If I had done this, I would have hit the minimum sum too."

Actions today, results at 55:

A lot of money in my CPF-SA.
-----------------

I do not know how best to help the reader here. 

Reader says...

Read one of your post and it says that u often tell youngsters to voluntary contribute to their CPF-SA so that it will reach the minimum sum.

I mention this to my parents, and they said that I am stupid, as withdrawal of CPF $$ is controlled by the government and we will not know when will the government raise the age to withdraw or the minimum amount. 





They still sarcastically said that putting in the bank to earn the meagre interest rate is even better as we can withdraw as and when we like.

seek your advise

pardon my bad english :)











AK says...

It could be difficult to convince anyone who is suspicious of the system. :)

I will say that the CPF-SA is meant to help us with retirement adequacy. 


So, it is not money that is meant to be close at hand, available for withdrawal whenever we might need it. 

The money is locked up till we are 55. 







What is required for the MS will be put into the RA and the excess is available for withdrawal. 

Of course, there must be excess for this option to be available.

If we beef up our CPF-SA in our younger years, we are giving the funds a lot more time to compound and grow more quickly. 


I think the magic of compound interest is easy enough to understand. 






The magic needs time and if the base is bigger, the growth in absolute dollar terms will be more substantial.

Like I said, the problem your parents have is a lack of trust in the system. 


I don't know how to make your parents trust the system. 

Unfortunately, as with certain things in life, only time will tell.










I do know friends and also family members who are deeply suspicious of the system. 

Some are actually extremely negative about the CPF, to put it mildly.

This is a problem that has to be addressed but I suspect it will not be easily solved.


Similar post:
Investing in the stock market makes you a gambler.

Related posts:
1. "Return our CPF" protest in Hong Lim Park.
2. Balancing risks, returns, facts and fallacies.
3. An(other) open letter to the Prime Minister.

Tea with EY: Make CPF a part of your child's savings plan?

Friday, January 2, 2015

EY sent me an email and said:

"I called CPF this morning to enquire on the CPF contribution for my children. I have been mooting this idea for some months already and finally decided that I'll take action soon."






In relation to this, EY has decided to share another thought provoking guest blog here:


If you have children, what would you expect their New Year resolutions to be?


Being quite a laissez faire parent, I have never nudged my children to set any New Year resolutions. 

Two weeks ago, I decided it was about time to have them commit to some goals for 2015. Among them were a few financial goals/habits.







Below are the financial resolutions my teenage boys made, or more accurately, I made for them. Oh yes, of course they agreed!


1.      Save $10 per week from the weekly allowance of $25


2.      Save at least $500 for voluntary contribution into CPF OA/SA/MA


3.      Keep an expense journal to record daily expenses


4.      Maintain a cash flow statement at the end of each month







To sweeten the deal, I have agreed to match a dollar for a dollar savings into their CPF account. So if they save $500, I will top up another $500.





Some may ask why do I want my boys to contribute to CPF when they are only turning 15 and 16 in 2015? I have two reasons for this. 

Firstly, I want them to save up and partially fund their own university education. 

Secondly, I want them to actively manage their CPF money and be exposed to more complex financial decision making but within a relatively risk-free environment.







If my boys get into university, they will have 5 to 6 years to build up their CPF OA. CPF allows members to use up to 40% of the OA savings for polytechnic/university tuition fees. 


Along the way, I will encourage them to work during their school holidays and increase their voluntary contribution to CPF. 

Hopefully, they will accumulate enough to pay school fees for 1 semester. 

After they graduate, they will to pay back their own CPF OA. 

I want them to experience some form of financial obligation when they start work so that they won’t take on debt too readily.





Once they have settled their school fees for 1 semester, they shall decide what they want to do with their CPF OA. Let it accumulate slowly to more than $20,000 and use the excess to buy stocks subsequently?  


Or transfer the OA savings into SA to take advantage of the higher interest rate? I’ll leave it to them. 

For illustration sake, I’ll show them that at 4%, $5,000 in SA at 21 years old will grow 4.8 times to almost $24,000 when they reach 65 years old. 

Hopefully, this will inspire them to grow their SA more consciously and plan for retirement adequacy earlier. 







My children’s New Year resolutions will mark the beginning of my attempt to formally introduce financial literacy at home, which happens to be one of my own New Year resolutions. 


To keep all of us on track, I have downloaded the CPF voluntary contribution form from the CPF website and shall do the inaugural contribution using my boys’ current savings within the next week or so.


That shall be a good start to a prosperous 2015 and beyond!







Remember the POSB mascot, the squirrel? 

We might see a couple of squirrels on steroids here! Good one, EY!

EY's guest blog jolted my memory and I remember I started my CPF account before I had mandatory contributions too but it was for those discounted SingTel shares. 

I am sure some of you might remember the year that happened. I still have those shares today.





Thanks, EY, for providing munching material for consideration.

Read other guest blogs EY: here.

Related post:
Financial freedom is a family affair.

The head of a typical HDB flat household speaks (Part 3).

Thursday, January 1, 2015

In part 3 of our correspondence, we talked about investing in real estate for rental income:





Hi Ak


Another friend of mine (same age as me)is so concerned with unemployment before 50 yr old, that he keeps urging us to buy a condominium and then collect rental income on it. 

He already owns an apartment in KL, and claims that he is successfully collecting rent of it. But he always avoid my question when I ask about currency & political risk of owning foreign properties. 

Now he is aiming for his 2nd rental property in Singapore. He said that prices are coming down and good time to buy in 2015 or 16. But again he avoid my question when I ask him about maintenance costs affecting rental yield and the oversupply of condos/ foreign labour cut back in Singapore which makes it risky strategy.

When I suggest buying S REITS as an alternative, he said it's not worth doing it until he has a million dollar capital base.

He also say meeting minimum sum in CPF is no big deal for him..

I am highly suspicious of his recommendation.

Good if I can hear your objective view on owning a physical property vs buying REITS. 

Thank you

C



My reply:

Hi C,

Well, there will always be risks in investments. Risks cannot be avoided but they can be understood and even managed.

Your concerns with regards to buying a property overseas for rental income are valid. I hope that your friend is still doing OK with the RM's decline in value against the S$.

Anyway, is it better to buy properties than to invest in S-REITs? The topic is well discussed by many people before. Personally, I feel that both are good investments as long as the price is right. Quite simple, really.

I don't know what your friend has in mind but if it is something vague like buying properties in Singapore in 2015 or 2016 is a good idea because prices will come down, I think he needs to do a bit more research and analysis.

Personally, I feel that any property investment must be able to provide at least a gross yield of 5% to 6% to make it worthwhile. This is a primary consideration for me and I blogged about the Rule of 15 before. Then, there is a whole gamut of other considerations which I have blogged about in a piecemeal manner before too.



Ultimately, I would say to do what you feel comfortable with. There are so many paths to financial freedom. Choose a path you are not only comfortable with but one which you are sure will bring you to where you want to go. :)

Best wishes,
AK

Related posts:
1. Rule of 15.
2. Journey to financial freedom is not a race.
3. Buying a property in Iskandar, Johor.
4. Don't think and grow rich. 3 points to note.
5. The head of a typical HDB flat household speaks (2).

The head of a typical HDB flat household speaks (Part 2).


In part 2 of our correspondence, I see a millionaire next door in the making:
---------------------------------------------------------

Hi Ak,


Since you ask,
A few thoughts to add on my original email-

(1) My friend is single income & same age, he has to support his wife (a stay home mom) and one young kid. His annual income is less than me & wife combined annual income. 

(2) His estimated total condo & car loan (with interest & maintenance) is $X,XXX,XXX ... projected to finish his total loan when he is around 50.

(3) He spends about 8.5 yr of his annual salary to service his condo and car loan. For us, we are cheapskate, we spend only 2.5 yr of our combine income on our flat. 

(4) My wife and I are debt free, except ongoing costs of raising 2 kids. Again we stay simple , they attend close by neighborhood school, no tuition, no karate or ballet classes. We have no TV, read to our kids and only borrow books from library. Our outings are mostly to botanical garden and other public parks (no entrance fee). My wife calls me cheap. 

Oh no my flat ceiling is leaking again, got to go patch it up...

Talk to you soon, hope to hear from you. You are my financial hero. Your reply make my day ! 



--------------------------------------
My reply:

Hi C,

Your friend has to understand that his home is a consumption item. I do not know if he has given some thought to planning for his golden years but being in debt till age 50 due to consumption items is likely to set him back.

However, your friend could monetise his condo after staying in it for a minimum of 10 years. The chances of a nice capital gain is actually very good. ECs are usually priced 20% to 25% lower than surrounding private condominiums unlike new launches of private condominiums. So, they provide a margin of safety.

To be fair, your friend could have some plans up his sleeves and he could do very well in his career in future. We wish him the best, of course.

Your lifestyle is simple and it is good to keep it that way. We should remember that how much money we save is more important than how much money we make. I believe you are a millionaire next door in the making. ;)

Best wishes,
AK
-------------------------------------------
We can be a millionaire next door too if we choose to be a PAW. 

What is a PAW? 

See related post number 1 below.

Related posts:
1. The Millionaire Next Door.
2. The head of a typical HDB flat household speaks.

The head of a typical HDB flat household speaks.

Wednesday, December 31, 2014


I enjoyed the following email because it seems to be from a guy who is the head of a typical HDB flat household in Singapore. Married with 2 young children, he is trying his best to make sure he is financially secure in his golden years.

From what he has shared in his email and with certain assumptions I am willing to make, I feel that he will be quite comfortable in his retirement. I am sharing our correspondence here:
----------------------------------------------------------------------


Hello AK

Greetings. 

I have been reading your blog for about one year now. Truthfully I think you have been doing a good job in sharing your money saving and investing experience. 

I am 39, married with 2 young children. We just paid off our HDB flat and happily debt free, for now. We are not high income but live simple life. We take public transport to work and our friends (who stay in EC condo & drives a luxury car) make fun of us for staying in a dilapidated flat, but your blog keeps me motivated to achieve Financial Independence (FI) soonest I can. Nothing matters, except to achieve FI for us.

You inspired me to use cash and transfer from OA to max out my CPF - SA, which is on track to hit $161,000 by Dec of 2015 based on my monthly income contribution. 

Judging by our incomes, we'll be lucky to each have about $500,000 in cash savings (not counting the flat)  by the time we turn 55.

I know you a big believer in buying S-REITS and stocks and I agree with you too. The only small issue here is that I have to spend quite a bit of time studying and hanging out with my family, so with limited time to study and select stocks, would you recommend that I just dollar averaging into STI ETF from now until I am 55 years old? Do you know people who have successfully build up a retirement nest egg with this ETF strategy ? The other issue is that ETF does not give out much dividend as compared to REITS.. 

Grateful if I can hear from you, thank you very much

Sincerely,
C

When our home is fully paid, we have control AND ownership.
Before it is fully paid, we have control but NOT ownership.
We cannot say we own our apartment until it is fully paid for.
-------------------------------------------------------------
My reply to C:

Hi C,

Welcome to my blog and I am glad you have found it useful. :)

Next, congratulations on being debt free! It is a good feeling, isn't it? I don't think your friends staying in an EC and driving a luxury car are debt free. They could be, of course, but if they belong to the same cohort and have similar level of earned income as you, the probability is lower.

If your friends are still servicing a mortgage and car loan, you are being very nice not to laugh at them for being still in debt. OK, AK is being naughty here. Bad AK! Bad AK! ;p

Now, let me say that having $161,000 in your CPF-SA by end of 2015 is an accomplishment at age 40. By age 50, you would have $241,500 and by age 60, if you were to leave your funds in the CPF-SA and, of course, the mandatory CPF-RA, you would have $362,250. This is assuming that there is no more mandatory contribution from 2016 and this is also not taking into consideration the extra 1% paid on the first $40,000 in the CPF-SA. $500,000? I think you have nailed it with this strategy.

Oops, I forgot about your savings in the CPF-OA which will build up from age 40 to 55 (or 62 if you choose to retire later). ;)

As for investing in the STI, you want to read the guest blogs by Matthew Seah. Just go to my blog's left side bar and look for his name under the section that says "Guest Bloggers". Matthew wrote about options provided by POSB and OCBC.

For people who do not have the inclination nor the time to actively monitor their investments in the stock market, index investing is a pretty good choice. However, do take note that the stock market goes through bullish and bearish phases too. So, it is important that you are able to sit out bearish phases and not break into a sweat.

The trick is only to invest with money you can afford to lose and not to use money earmarked as emergency funds or for any other purposes. You do not want to have to liquidate at the depths of a bear market.

Investing will always have an element of risk. Look at the Japanese and the Americans and how their countries' economies went into a tailspin in the past. Investors saw years of gains wiped out. This is why I think that the CPF is an important cornerstone of retirement funding adequacy. It is not only risk free, it is free of volatility.

Continue with a financially prudent lifestyle. Make more money. Spend less. Keep a big enough emergency fund (and I think this should grow in size as we grow older). Invest the rest but always keep a war chest ready to buy more during bear markets. Quite simple. :)

Best wishes,
AK
----------------------------------------------


We should never laugh at people just because they are staying in homes less "prestigious" or if their mode of transportation is not as flashy. 

There are many HNW individuals in Singapore who stay in HDB flats and take the public transport.

Don't judge a book by its cover. Better still, don't judge. Just a reminder to myself, of course.

Related posts:
1. In my 40s, married with kids? What to do?
2. An essential habit to becoming richer.

One of the most noble things we can do.

In recent conversations, I revealed that one of the things I have been thinking of doing is to set up a foundation to help financially disadvantaged students in future.

 

In the meantime, I have been making regular donations for many years to help fund bursaries for deserving undergraduates in National University of Singapore where I spent 4 years of my life.


I believe that helping financially disadvantaged students so that they and their families will have a brighter future is one of the most noble things we can do. So, if you can afford to do so, you might want to find out more about NUS Annual Giving and how to make a donation: here.

Related posts:
1. Counting our blessings.
2. We can help to lessen the pain.
3. The world is full of nice people.

New year's resolutions to impact your financial security.

Tuesday, December 30, 2014

There are two points to note in this reply I made to a reader:

"Well, in your case, with $157K in the SA, at age 53, 10 years from now, even without another contribution, the money in the SA will grow to be at least $236K. I say "at least" because I have not taken into consideration the additional 1% interest for the first $40K.

"$236K in your SA at age 53 and without any risk. Sounds good? ;)

"... Yes, it is harder for older workers (to rejoin the workforce). This is also why I said during a discussion in FB that
a bigger emergency fund is necessary as we grow older."








The two points are:

1. Help the government to help us meet the CPF minimum sum. Beef up our CPF-SA as soon as possible and let time and the government do the rest for us.

2. The size of our emergency funds should not be static. Depending on our financial commitments and depending on our age, we should make adjustments to reflect new realities. The number of dependents we have and our age are important considerations.





Point 1 has worked out well for me but, of course, past results are not a guarantee of future performance, as some readers have pointed out. 

Point 2 is something I am always mindful of and I keep an emergency fund that is enough to cover 24 months of routine expenses.

With the new year just round the corner, giving some serious thought to these two points could be great new year's resolutions and greater still if some decisive action should be taken.

Related posts:
1. Get a lifetime income of >$2K a month (from age 65).
2. Emergency fund: How much is enough?

Helping more people discover a path to financial freedom.

Monday, December 29, 2014

A couple of years ago, ASSI squeezed into the ranks of the top 1,000 websites and blogs in Singapore. Today, we managed to squeeze into the top 1,000 again after dropping out for 2 years.

Yeah!

With many more websites and blogs in Singapore as time goes by, I have no doubt that being in the top 1,000 again is only possible because my blog's readers are quietly spreading the word and helping to increase readership numbers. ASSI is also very fortunate to have very good guest bloggers who contribute high quality articles which help to enrich the space.

All of you are the other half of ASSI. So, thanks very much for making ASSI the vibrant blog it is today and for spreading the word that financial freedom is not just a dream.




Traffic ranking by Alexa.

Related posts:
1. Top 1,000 websites in Singapore. (2012)
2. Be ambassadors of financial freedom.
"Even if the horse would not drink, at least try our best to bring the horse to water. We could be saving more than one life if the horse eventually drinks."

Disastrous investments in the property market: Lessons (Updated 5 July 2018).

Sunday, December 28, 2014

UPDATE: 5 JULY 2018

History doesn't repeat itself but it rhymes or so they say.

Apparently, people are flocking to showflats to buy condos now and they are likely to be at it until midnight.

Many property agents are definitely enjoying a feeding frenzy as buyers panic buy.

Why the panic buying?

ABSD is going up 5% and LTV is being tightened as well.

New rules kick in at midnight.





Yes, the government has come up with another round of cooling measures.

In recent years, I have said that private real estate prices in Singapore are too high and that it does not make good financial sense to think of them as good investments for income.

Vacancy rate is still very high and in some places like Geylang, rental rates have fallen by as much as 25% due to a glut in supply.





Buying and thinking that prices can only go up is speculation and with the enormous price tags of private real estate here, it is big time speculation.

I have also blogged that unless we have deep pockets, it is best to avoid.

Still, many people are throwing caution to the winds but beware how it could get blown back as a nightmare to hit us in the face.

People rarely make money buying real estate in a market euphoria but they usually make money buying when Mr. Market is depressed.

This certainly has been my experience.






The Government has raised Additional Buyer’s Stamp Duty (ABSD) rates as well as tightened the Loan-to-Value (LTV) limits for Singapore citizens and permanent residents, in order to “cool the property market and keep prices in line with economic fundamentals”.

With immediate effect, the ABSD rates will be raised by 5 percentage points for all individuals, and 10 percentage points for entities, said a joint statement issued on Thursday (July 5) from the Ministry of Finance, the Ministry of National Development and the Monetary Authority of Singapore.

There will be no change in ABSD rates for Singapore citizens or permanent residents buying their first property.






Previously, the LTV limit for a buyer’s first housing loan is 80 per cent, or 60 per cent if the loan tenure is more than 30 years or extends past age 65. This will be cut to 75 per cent, or 55 per cent respectively. 

Similarly, the limit for a second housing loan will be reduced from 50 per cent to 45 per cent, or 30 per cent to 25 per cent if the loan tenure is more than 30 years or extends past age 65.

Read full article here:
https://www.todayonline.com/singapore/government-introduces-new-round-cooling-measures






------------------------------------
I read in The EDGE that there will most likely be "a new level of pain" for landlords of residential properties in Singapore next year because rents and prices of properties are sinking while vacancy rate continues to rise.

Regular readers would remember that I said that the writing was on the wall in 2011 and that there was too much euphoria in the air as people just kept flocking to condominium showflats and buying into every new launch there was until a year and a half ago when the 8th round of cooling measures with stringent TDSR was introduced.






Some of us might remember this report in The Straits Times:

Some home buyers rushed to submit mortgage applications to banks last Friday night before tougher rules on home loan financing kicked in at midnight.

But a day after the Government's move to tighten home loan financing, the overall effect was muted as only a small segment of buyers are likely to be affected, agents and mortgage consultants told The Sunday Times yesterday.

Developers said it was business as usual at show-flats and they still managed to sell a few units yesterday.

The Monetary Authority of Singapore (MAS) said on Friday that banks have to use a standardised set of guidelines to assess property buyers' ability to borrow. It also plugged a loophole that let buyers dodge tighter loan-to-valuation limits on their second and subsequent properties.

The restrictions apply to loans with an application date on or after June 29.

As a result, some buyers hurried to submit loan applications before the Friday midnight deadline. A significant number of these were buyers at J Gateway, which reportedly sold all 738 units at its Friday launch.
The Sunday Times understands that OCBC received a surge in loan applications on Friday night after the MAS announcement. 


(Source: The Straits Times, 30 Jun 13)



These buyers probably would not have been able to obtain bank loans with the new measures which are there to encourage financial prudence. 

I won't be surprised that some of these buyers had bought multiple properties too. 

This "kiasu" mentality that is born from greed is likely to be the downfall of more than a handful of such "investors".






In the last few years, I continually warned that we must be cautious about buying residential properties in Singapore in order to avoid wealth destruction unless it is a BTO flat or an EC or we have spotted a great value buy.

New launches usually have priced in future price appreciation. 

Have you wondered why a new project is almost always much more expensive than the surrounding condominiums? 

Is it only because the land cost is higher? 

So, it is difficult for buyers to make money from these purchases in a short time of a few years unless the euphoria continues. 

It is a game of musical chairs and the music (i.e. euphoria) will stop.






J Gateway

484 sq ft shoebox units in J Gateway sold for as high as $1,774 psf in July 2013. That is a price tag of $858,616! 

Freehold? 

Nope. 99 years leasehold. 

Yes, we know that Jurong is a promising location as our government has plans to develop it into a more robust regional centre but it just doesn't make much sense to me to pay so much for the place now. 

If that is not pricing in future price appreciation (the price would probably only make sense many years down the road), I don't know what is.






So, in the next few years, these buyers would have to service their housing loans (in an environment of increasing interest rates) and hope for the best, bearing in mind that there will be no rental income as the condominium is being built.

Now, with mortgagee sales (i.e. properties foreclosed by banks) rising and some expecting them to rise to 2008-09 levels as distress spreads from luxury condominiums to outlying areas, people who have been waiting for a meaningful correction in prices before making a purchase are going to be amply rewarded for their patience. 

Things are likely to get worse.






"Newly completed condos, including shoebox apartments in the suburbs and on the city fringe, have also popped up at auctions as mortgagee sales in recent months.... some investors holding on to multiple units may have difficulty servicing their mortgage or unable to secure tenants in their newly completed units. Collier's Ng believes, however, that mortgagee sales of upscale apartments in the prime districts will continue to dominate the auction scene. " Source: The EDGE, 29 Dec, page CC9.


Evidently, there are areas which are going to be worse off than others and if you are thinking of buying an investment property for rental income, I have said before that properties in the RCR would be more resilient and the data has supported this but, remember, if you overpay, you won't do much better at all. 

"... the leasing market is going to be more challenging in OCR and CCR, notes JLL's Ong. He sees condo units in the city fringe or RCR faring better. The city fringe is close to the city and yet more affordable. Rental decline in RCR so far has been the mildest." Source: The EDGE, 29 Dec, page CC2.







When I said that the government is determined to bring down the prices of residential properties in Singapore and warned that we should not underestimate the political will of the country's leadership, there were still many optimists out there saying that demand would stay strong enough to prop up prices. 

Recent speeches by Minister Khaw Boon Wan and DPM Tharman Shanmugaratnam indicated that prices are still too high. 

The cooling measures are staying in place.

Some might remember this from October 2013:


Alan Cheong, head of research and consultancy at Savills Singapore, made his case last Friday at Carlton Hotel marking Singapore Management University's (SMU) homecoming celebrations for its Master of Science in Applied Finance programme.

"I think barring external shocks, property prices, residential prices will stay elevated," he said.


Mr Cheong argued that a fundamental concern that there will be an oversupply of homes come 2015 is not the case at all.


"The reason is in Singapore; it is a situation of undersupply."


Source: ST Property






There are many lessons in this blog post and not to ask barbers if we need a haircut is only one of them. 

It is good to refresh my memory from time to time.

Related posts:

1. Selling a private property just got harder. (2011)
"This development is likely to hasten the weakening of private residential real estate prices which is something I expect to become really evident in 2014 or 2015.  "

2. Leverage up and buy investment properties? (2012)
"... it is obvious to me that the government is sending a clear message that they want property prices in Singapore to lower in the next couple of years.."

3. To rent or to buy: Rule of 15. (2013)
"For a while now, we see people buying real estate in Singapore and being quite happy with rental yields of 2+% to 3+%. This is acceptable really only because of the abnormally low interest rate environment. It won't last."

4. Ask these questions when buying properties. (2014)
"... for the more adventurous ones in our midst, please think again and again before handing over that cheque when temptations find their way into our mailbox."

5. Affordability and value for money.
"... we should remember that it is not about "affordability", it should always be about "value for money".


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