Singapore Property Buying: BUYING A PROPERTY WITHOUT EMOTIONS

Singapore Property Buying: BUYING A PROPERTY WITHOUT EMOTIONS

www.PropertyBUYER.com.sg
16 Sep 2008 (re-edited on 25th Dec 2010)

—————————————————————————————————————————————-
WE RESEARCH, YOU SAVE!

Call us:             6100-0608

SMS us (text): 9782-8606

Email us:          loans@propertyBUYER.com.sg

—————————————————————————————————————————————-

TAKE THE EMOTION OUT OF BUYING A PROPERTY

What explains the price differential between 2 adjacent properties?

Sometimes, you will see 2 adjacent properties sometimes a big enough price gap to warrant a big WHY?

For example, Condo 1 is asking an average price of S$900 psf and Condo 2 is asking a S$1200 psf.

What could be the reason???

READ ON or DOWNLOAD THE Property Buyer Checklist here

–>        Property_Buyer_Checklist_version_168

OPEN AS READ ONLY — The PASSWORD to READ ONLY is PropertyBUYER

Here are some possible explanations: -

SIZE OF PROPERTY

1. Condo 1 offers bigger units and Condo 2 offers smaller units. Towards the pricier end of properties, affordability becomes more of an issue as lesser can afford the price quantum.

For example: -

Condo1 (S$900 psf) unit sizes may average around 1500 square feet (10.76 sq feet = 1 sq meter). That means that an average unit would cost around S$1.35m.

Condo2 (S$1200 psf) unit sizes may be around 700 to 800 square feet. That means an average unit would cost S$960k.

AGE OF PROPERTY DEVELOPMENT

2. If size is not dissimilar, Condo 1 may be older than Condo 2. Newer units generally command a premium as their design tends to be more up to date with current trends.

Over time, land value tends to become higher (With rising population), therefore newer properties tend to have better finishing, technologies (intercom systems), lighting, marble floors, feature walls, large lobbies, Bigger and faster lifts, air-con lobbies, nicely manicured gardens, etc. You name it, they have it. You are paying for the luxurious lifestyle. Good marbles and feature walls can cost upwards of 30 to 100 dollars (psf).

LOCATION OF PROPERTY DEVELOPMENT IN SINGAPORE

3. Even if a property is across the road, the feel and surrounding attributes may be totally different. In feng shui, the road cuts across the “chi”  of the area. That may also explain the price differences.

Example of that is Garden Vista a 99 years development (by Far East) in Dunearn Road, the going rates in 2006 were $850 to $900 psf and in 2007 and 2008, Far East was asking $1350 psf onwards.

But across the road/highway is Sherwood towers, it is going for $400-$700 psf tops (and it is either Free Hold or 999 years).

IDENTITY OF LOCATION?

Location effect, in this case, garden vista is “Bukit Timah” while Sherwood towers is “Beauty world”, that could play a part.

DEVELOPER FINANCES AND CASH FLOW – SINGAPORE

4. Some developers have large tracks of land (could be due to legacy). Or some have very good cash positions, they typically hold their prices until the market swings upwards before they release their units. Several tier-1 developers are quite strong financially and have holding power and will not reduce the prices. You may be better off finding bargains in the open market or with 2nd tier developers with lesser holding power.

Developers or owners selling below the price of (land + building costs) is not impossible.

LAND ATTRIBUTES

5. Two developments side by side may have similar finishing, however one may have a stream or is hilly and the other is flat. If developed and planned nicely, the rolling and hilly terrain may enhance the feeling of space and conveys a sense of well-being. As a result, people may like it more and are happy to part with more of their hard-earned money.

DESIGN AND ARCHITECTURAL ATTRIBUTES

6. Not all developments are the same. Different design appeal to different people. As Singapore is generally land scarce, properties are very expensive. Older designs in the 1970s and 1980s used to have balconies. As Singaporeans become more and more utilitarian, the balconies disappeared to become part of the living space. Hence those without Balconies are more highly valued.

Of late, as more and more developments are built without Balconies, developments with Balconies are making a come-back due to demand from certain segment of the home buyers who cherished the balconies, but they are priced at a premium.

7. Some designs are awkward, they deliberately squeeze out 4 rooms when it should only comfortably have only 3 rooms. There are several twists and turns, corridors are long and space is “wasted”. This is because you cannot really put anything along the corridor. Therefore the place feels smaller than it actually is. Though this kind of design may appeal to some, it is generally not well liked by the Space minded and bargain/value hunting Singaporean Property buyer.

FENG SHUI

8. Feng Shui, an age old art of harmonious living. More and more people are subscribing to this school of thought. And Feng Shui plays a big part in the value of a property. Even if you do not believe in Feng Shui, many others do. It will eventually affect the price of your property either positively or negatively.

CONNECTIVITY TO BUSES AND MRT

9. Properties near to major roads, bus stations and train stations are generally valued more. There are about 750,000 cars in a population of 4.6m. A very basic car sets you back by at least S$40,000 to S$ 60,000, only 1 in 6 people own a car and families with 2 or more cars are extremely rare.

Other family members still need to go to work, go to school, go to buy stuff and run errands, so connectivity is still very important.

Despite Singapore’s small size and somewhat efficient public transport system, some private residential areas are a bit off the beaten track. If they are near to public transportation nodes, they are generally of the 99 years lease hold properties.

VICINITY TO NATURAL ATTRIBUTES

10. Most good properties have good connectivity, but also great vicinity. The locality is near the Sea, near a nice lake, the hills, the forest or near heavily forested areas with lots of shade and foliage. Bukit Timah is one such place, East Coast park, Katong, Siglap, Yio Chu Kang are other such areas.

PRIMARY SCHOOLS, SECONDARY SCHOOLS, POLYTECHNICS, UNIVERSITIES, COLLEGES IN SINGAPORE

11. In Singapore, most children of school going age (6 to 7 years old) will have to go to Primary school. Being the usual KIASU Singaporean parents (a hokkien word to describe, “Afraid to lose out” ), most parents will try to get their children to the best Primary Schools.

In Singapore, priority is given to families living within a 1 km radius of the primary school (subject to the family having stayed there 2 years prior to the primary school registration exercise).

With good Primary schools within 1 km of radius, most properties within 1km of the school are highly sought after.

AMENITIES OF THE PROPERTY DEVELOPMENT

12. Singaporeans hate to walk. For an average foreigner, it would seem surprising that Singaporeans generally do not have the same sense of distance compared to a foreigner. So there is a premium to be near to the super markets, wet markets, shops and shopping centers.

LAND TITLE IN SINGAPORE

13. In Singapore, most people prefer Free Hold land followed by 999 years lease hold and the least liked is 99 years. For some people from Hong Kong or China for instance, they do not seem to understand what is the big deal about 99 years and Free Hold, because not many body live that long.

It does not have to be logical. In Singapore, most people prefer Free Hold or 999 years lease hold properties and that is a fact. All things being equal, Singaporeans would definitely go for a Free Hold or 999 years property.

DIFFERENCE BETWEEN FREE HOLD LAND AND FREE HOLD STRATA-TITLE LAND

14. There is also a difference between Free Hold Strata titled land and Free Hold land with individual title deeds. Though the difference is not always reflected in the price of a property. Free Hold Land has more intrinsic value generally as it cannot be over-written by a majority vote. Strata titled land with properties on it, means that each property owner owns a “share” of the land that their property sits on. And older properties over 20 years old have Strata title laws that governs it, as long as 80% or more vote to demolish or sell the property, even the dissenting 20% of property owner will have to agree. In other words, you have no control over your home, even if you do NOT want to sell it, you may be forced to sell it if the majority opts to sell or re-develop it.

However typical Free Hold tiles are Terraces, Semi-detaches houses, Bungalows, shop houses, etc. The plot ratio of these properties are low which means it is cheaper to acquire and can easily be subject to Urban Redevelopment Authority’s (URA) land acquisition act which can acquire your properties compulsorily. Whenever URA acquires, there also have a budget which they need to keep within. So there is some safety in numbers.

FACILITIES AND SIZE OF THE PROPERTY DEVELOPMENT IN SINGAPORE

15. A development needs to be of a certain size in land area in order to economically provide all the facilities. A full facility condominium (Condo) will have facilities such as: -

• Swimming pool
• Jacuzzi pool
• Gymnasium
• Sauna room
• Tennis court
• Exercise bay
• Children playground
• Function room
• Barbeque pits
• Squash court (most condos do not provide this now)
• CAR PARK (underground or ground, with or without porches)
  • Insufficient car parks do not immediately affect the price of a property until and unless it becomes public knowledge. Most buyers tend to over-look this.

LAND VALUE VERSUS PROPERTY VALUE IN SINGAPORE

16. Property and buildings depreciate. Fittings age and paints peel. The once sought after property is no longer deemed HOT. However, in land scarce Singapore with an expansive immigration policy, more population and lesser and lesser land is a recipe for higher land prices. Land appreciate, buildings depreciate.

17. Singapore is a country where the government likes to micro manage. Some call it good governance, others say, “they plug every loop hole”. So developers cannot buy large tracks of land and keep it till it appreciates. This is because the Government levies development charges and penalties on delay of construction.

You must look at a property for what it can be, not what it currently is.

If it is already beautiful, the chances are, it is already fully valued.

Buying a property can be so emotionally charged that at the spur of the moment, you could sign your next 30 years away.

Some 1 or several attributes may SWING your emotions so much (during a show tour) so that you ignore other attributes, only to regret later.

So we have prepared a simple spreadsheet form which could help you to check off each item and then rank them in accordance of importance. All these attributes are then compiled into a composite score, we hope this will help you to become a little less emotional when buying a property and preserving your cash.

EMAIL US: info@propertyBUYER.com.sg

+65 – 6100 06 08

sms : +65-9782-8606

www.PropertyBUYER.com.sg/mortgage

No related posts.

---

About Property BuyerContact Property Buyer
www.PropertyBuyer.com.sg
We are a Research-focused Singapore Mortgage Consultant which helps you compare Singapore Home loans either for new home loans or Singapore Mortgage refinance home loans, we balance risks versus rewards for each home loan to match your risk profile and financing needs.
Not Simply Cheap, but what Fits. We Research, You Save!
TEL:   +65 - 6100-0608
SMS:  +65 - 9782-8606
Email: Loans@propertyBUYER.com.sg
Business Registration: 200618162C
All articles are the intellectual property of www.PropertyBuyer.com.sg. You are welcome to reproduce our articles provided that you include an active and working link back to http://www.PropertyBuyer.com.sg
Career at Property Buyer