5 Property Myths Singaporeans Wholeheartedly Believe in - 99.co

06/10/2018 5 property myths Singaporeans wholeheartedly believe in - 99.
co
GO TO 99.CO BUYING IN SINGAPORE RENTING IN SINGAPORE
P R O P E RT Y N E W S
W H AT ’ S N E W
5 property myths Singaporeans Sell vs rent out your
wholeheartedly believe in property: How to make the

right decision
O c tob er 2, 2018
S E P TE MBE R 23, 2018
4 new launch condo projects

Property myths are more dangerous than simply being misinformed. It’s easy to correct to watch in Q4 2018
O c tob er 1, 2018
misinformation (i.e. being told the wrong thing), but myths are self-confirming beliefs and mindsets
that are hard to change. For example, when you find out that “walking distance” to the MRT actually
5 Semi-D homes that
pushes the limits of what your legs are capable of, it’s misinformation. deserve more publicity than
Vivian Lai’s crib
S ep temb er 30, 2018
Myths however, are far more sneaky, as they are formed over time, most often with the drip-feed of
information from experts and people you trust (e.g. family members). As such, myths make you want to
3 reasons why foreign
believe them to be true. Once you believe in a property myth that has no basis of truth, you property investors still prefer
Singapore
might find yourself seriously burned financially, or trapped by the market and/or authorities S ep temb er 29, 2018
when reality hits.
EXPLORE OUR TOPICS:

And it’s hard to avoid falling into the trap of property myths. Why? The more you search information
to verify the myth, the more you seem to find (it’s called confirmation bias). Before it becomes too late, Property News
we’re going to do our best to correct these five most common property myths that Singaporeans For Agents
somehow seem to believe in with all their heart — and sometimes money: 99.co Stories
Commercial News
Property myth #1: Capital appreciation of property = pro ts Featured Posts
Financial News
First of all, if you’re talking about capital appreciation of property, remember that the monetary value of
Guides
almost anything will rise over time, if for no other reason than simple inflation. This is the same story as
Home & Living
stock prices, oil prices, gold prices, and a thousand other assets (but you probably wouldn’t get as excited
Rental News
over, say, a barrel of oil than you would over a condo unit).
W H AT P E O P L E A R E S AY I N G
Now we’re big fans of property, or obviously we wouldn’t be a property portal. We do think property
is profitable as an investment, but what we don’t like is when certain salespeople conflate
rising prices with profitability. John Tan on Why the private home sales
slump is not all doom and gloom
Oi, stop trying to hype up the market just
It’s very easy to pull out a 10- or 20-year chart of almost any district, and show how the prices have gone because this is a property portal. With rising
interest rates, 46,000
up. But just because you see the prices rising, that doesn’t mean the owners are making huge profits.
JN on How your HDB sale proceeds might
For example, a particular condo cost $900,000 in the year 1995. By the year 2018, the flat is valued at get “taken” by CPF
Hi , Useful and detailed analysis for HDB
$1,250,000. That’s a healthy 150% increase — impressive at first glance. owners. Well-done! Would be awesome to have
an article that provides more
But what about the interest on the home loan? Assuming an average interest rate of 3.0% (average
Kyle Leung on How your HDB sale
interest rates were relatively high back then) and a loan amount of around $700,000, and a 30-year loan proceeds might get “taken” by CPF
Join our newsletter today! Enter your email address Subscribe Now
×
https://www.99.co/blog/singapore/property-myths-singaporeans-believe/ 1/7
06/10/2018 5 property myths Singaporeans wholeheartedly believe in - 99.co
tenure, the owner would have paid around $362,o00 in interest. Dear TTKNITIS, Thank you for your comment.
Yes, the same rule requiring the refunding of
CPF accounts apply to private
Then there’s the maintenance costs, property taxes, utility bills, etc. Even at a generous estimate of $400
a month for all of it (averaged out over the years) that’s over $158,000 paid by the year 2018. Ttknitis on How your HDB sale proceeds
might get “taken” by CPF
To the writer, doesn't the same rule apply to
Even making these superficial deductions (it’s bound to be more if we go in-depth and include private property also? If so, isn't your already a
tad subjective?
inflation), we can see the actual profit isn’t simply ($1,250,000 – $900,000) = $450,000. Without rental
yield, you’d effectively be making a loss of ($450,000 – $362,000 – $158,000) $70,000 over the
course of 33 years if the unit is not an investment property (i.e. it’s for your own stay). This is
even though significant capital appreciation of the property has occured.
So, property prices will rise and your property will appreciate. But for property to be really profitable,
you’ll usually need to be ready to play landlord, and at least rent out a room if you can spare one. If
you’re not renting your property out and hope to maximise capital appreciation, you’ll have to — at the
very least — buy at the right value/price point and the right location (expert investors can tell you dozens
of other factors). This is where a buyer’s agent can prove vital for property seekers.
[Recommended article: Property agent commission in Singapore: How much should I pay?]
Property myth #2: You can jack up the value of your property with
renovations
Now here’s where homebuyers start to get weird ideas about capital appreciation of their property. It’s
true that, if you want your home to fetch a good price, your house shouldn’t look like the set of a media
student’s horror movie. Fixing up the peeled paint, cracked tiles, broken air-con and so forth can
contribute to property value and rentability.
Beyond a certain point, however, you’ll see diminishing returns. High cost, big-ticket renovations,
which are supposed to add value, are actually quite speculative. Not everyone will pay more for marble
flooring, a walk-in wardrobe or a kitchen island. It might happen, but you can never count on it.
A more accurate statement would be that you can maintain the value of your property through
renovations.
So, renovate your property for a beautiful home to live in, but don’t do it to second guess some
imaginary buyer years down the road, expecting your choice of flooring to bring any gain in value.
Renovating your home could make it easier to sell, but it might not raise its value appreciably.
×
Property Myth #3: HDB loans are xed rate loans

This one is for HDB buyers, and the answer to whether HDB Concessionary Loans are fixed rate loans
is a resounding “Definitely Not”. This misconception has come about because HDB loans have been at
2.6% interest rate for a very long time. But the fact is that the loan isn’t set at 2.6%, but 0.1% above the
prevailing CPF Ordinary Account interest rate.
The prevailing CPF rate right now happens to be 2.5%. However, the CPF rate is subject to review
every quarter.
If you go back to around 1999, you’ll see the HDB loan rate was almost 4%; that’s because the CPF
interest rate rose at the time.
So forget the idea that “HDB loans are fixed”. A more accurate statement would be that bank loans
are more volatile than HDB loans.
It is true that bank loans swing up and down more than HDB loans. But it’s definitely not true that HDB
loans cannot also change.
Property Myth #4: Freehold means you can keep the property for
your children, your grandchildren etc.
Contrary to popular belief, freehold does not mean your property is some sacred space that the
government must build around. If the government decides that your property has to make way for new
train tracks, or an expressway, then you are required by law to give it up.
There’s typically compensation, but you can’t negotiate or refuse the amount.
The only way to really protect against government acquisition this is to try and buy conserved buildings
such as historical shophouses (but these cost an arm and a leg, and maybe a kidney too).
Secondly, you should know that most freehold properties — practically speaking — tend to end up
lasting as long as their 99-year leasehold counterparts. This is because as the development gets older, the
likelihood of an en-bloc sale becomes higher.
And if you think the owners will all resist, think again: many didn’t pick a freehold because they want to
live there forever, especially as the facilities age. Also, many property buyers specifically buy
freehold hopeful of a successful en bloc attempt, seeing as how developments on freehold land
can fetch a much higher premium during collective sales compared to their leasehold
counterparts. So, know that you’ll need to fight these determined homeowners if they set up a
collective sales committee to get an en bloc under way, and that things could very well get ugly.
×
Paying a premium for a freehold condo such as The Cascadia doesn’t necessary mean you get to pass it down like a family heirloom.
Property Myth #5: It’s better to use HDB loans, as your at won’t be
repossessed if you can’t pay
HDB absolutely can take back your flat if you can’t pay them. To be exact, they’re far more lenient than
the banks, but that leniency usually comes in the form of restructuring your loan, or allowing you to
delay payments. For example, HDB may let you stretch out your loan tenure a little more so you can
afford monthly repayments. Or you may be asked to include your working children as co-borrowers to
help with the mortgage payment.
The key thing for HDB homeowners is never ever come under the impression that, if you
suddenly get retrenched or otherwise lose your income, HDB will give you an understanding
nod and write off your debt.
In fact, there is nothing on paper saying that HDB has the obligation to help you find alternative
solutions in the event you are unable to service your mortgage. You still need to be responsible for your
personal finances and create a savings buffer in case you lose your income. We suggest you always hold
six months of your expenses — inclusive of the mortgage payments — in an accessible emergency fund.
At the same time, you can also consider insurance products that covers income loss.
In any case, don’t have the misguided opinion of how much “safer” an HDB loan is when deciding who
to take your loan from for your flat. This is also why you should do your own research, and never write
off on taking a bank loan or refinancing to one.
To be a truly savvy property buyer, always bear these property myths

in mind.
Know any more property myths that Singaporeans believe in? Share them with us in the comments section or
on our Facebook community page.
If you found this article helpful, 99.co recommends Can your HDB flat really appreciate after it’s 50 years
old? and Calculate rental yield in Singapore: a quick and simple guide
Find the home of your dreams today at Singapore’s largest property portal 99.co!
×
Share this on WhatsApp
HDB LOAN CONDO FREEHOLD HDB PROPERT Y MY TH PROPERT Y VALUE
R YA N O N G
YOU MIGHT ALSO LIKE
J O H O R ’ S I N VA S I O N O F HOW MUCH DOES IT COST 9 M U S T- A S K Q U E S T I O N S AT

CHINESE BUYERS (AND T O R E N O V AT E A N O L D A CONDO NEW LAUNCH IN
W H AT I T M E A N S F O R LANDED HOME? SINGAPORE
SINGAPORE) JUNE 15, 2018 JUNE 8, 2018
DECEMBER 2, 2016
NO COMMENTS
L E A V E A R E P LY
Name *
Email *
Website
×
Notify me of followup comments via e-mail.
You can also subscribe without commenting.
POST COMMENT
Previous Post Next Post

5 C O N D O S N E A R M R T FA S H I O N A B LY 5 M O S T C O M M O N R E NTA L P R O P E RT Y
C A R - F R E E Y O U N G A D U LT S C A N DISASTERS (AND HOW TO FIX THEM)
AFFORD
LIKE & FOLLOW ABOUT US OUR MOBILE APPS FOR HOME SEARCH
99.co
Liked 44K likes
Follow @99dotco 684 followers
THE LIVING COMPANY- 99.co- Singapore's

Fastest Growing Property Portal. Check it out!
GET IN TOUCH
Searching for a home to rent or buy in

Singapore? Give us a call (10am-6pm,
Mon-Fri) or send us an email and we
would love to help you.
I N S TA G R A M @ 9 9 . C O
Made with in Singapore
×
© 2018 99 Pte Ltd. All Rights Reserved. BACK TO TOP
×

5 Property Myths Singaporeans Wholeheartedly Believe in - 99.co

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

5 Property Myths Singaporeans Wholeheartedly Believe in - 99.co

Uploaded by

Copyright:

Available Formats

06/10/2018 5 property myths Singaporeans wholeheartedly believe in - 99.

GO TO 99.CO BUYING IN SINGAPORE RENTING IN SINGAPORE

5 property myths Singaporeans Sell vs rent out your

wholeheartedly believe in property: How to make the

4 new launch condo projects

when reality hits.

EXPLORE OUR TOPICS:

[Recommended article: Property agent commission in Singapore: How much should I pay?]

Property Myth #3: HDB loans are xed rate loans

To be a truly savvy property buyer, always bear these property myths

HDB LOAN CONDO FREEHOLD HDB PROPERT Y MY TH PROPERT Y VALUE

YOU MIGHT ALSO LIKE

J O H O R ’ S I N VA S I O N O F HOW MUCH DOES IT COST 9 M U S T- A S K Q U E S T I O N S AT

Notify me of followup comments via e-mail.

You can also subscribe without commenting.

Previous Post Next Post

Follow @99dotco 684 followers

THE LIVING COMPANY- 99.co- Singapore's

Searching for a home to rent or buy in

Made with in Singapore

© 2018 99 Pte Ltd. All Rights Reserved. BACK TO TOP

You might also like