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<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR><TD class=wintiny noWrap align=right>28687.1 </TD></TR><TR><TD height=8></TD></TR><TR><TD class=msgtxt>PRs are willing to pay very high prices for HDB resales for a simple reason: PRs think in terms of recovery of their "rentals". If PRs don't buy HDB resale but, say, pay $1,800 rental every month for a HDB 3 room, that will mean $1,800 down the drain every month with no chance of recovery. If they stay for, say, 20 years, they would lose $432,000 in total!
By buying HDB resales, they would ensure at least some recoveries of their rental payouts. This simple calculation will illustrate why they are so aggressive in their buying of HDB resale flats:
Through getting a max 30-year, 90% financing loan and their willingness to make a monthly payment of $1,800, they can in fact borrow up to $400,000! This means, they can easily afford to bid up the price of a 3 room HDB resale flat up to $440,000 (the current market price of a 3 rm at a hot area in Holland or Tanjong Pagar is about $350,000 only). They will have to, of course, cough up an additional $40,000 cash to supplement the 90% loan (assuming $0 COV).
Assuming 20 years later, they decide to get out of Singapore and sell their 3 rm HDB even at a loss of 20% (most PRs actually expect to sell their resale units back to the market at the same prices they bought, in the worst case), that would mean selling at about $350,000.
After 20 years, they will have about $180,000 balance of the mortgage loan to pay (see www.freemortgagecalculator.net, using 3.5% as the mortgage loan rate). After using the sales proceed to pay the balance of the loan, they will have $170,000 left. And after minus the $40,000 initial upfront cash they paid when they bought the flat, it will give them $130,000 - the amount they consider "recovered" from their "rental". This means, instead of losing $432,000 in the "pure" rental case, they only lose $302,000 in this case which works out to be $1,260 per month rental.
Now, what if they sell their 3 rm HDB at the same price of $440,000 they bought originally? Then, after minusing the $180,000 loan balance, they will get back cash of $260,000 and after minusing the $40,000 initial cash outlay, they will retain $220,000, the "recovered" amount from their "rental". Which means, instead of losing $432,000 in the "pure" rental case, they only lose $212,000. This works out to be $880 per month rental.
And don't forget, now that they own the HDB resale unit, they can also rent out their rooms to get further income, effectively making their stay here in Singapore free!
Hence, as you can see, the PRs have done their calculations and they have no qualms in bidding up the prices of HDB resales. No matter how, this is better than them renting the units. It's no wonder that nowadays, property agents love foreigners. And of course, our PAP also loves them. As long as PAP continues to give out PRs to foreigners like toilet papers, you will continue to see more aggressive bidding up of HDB resale prices!
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By buying HDB resales, they would ensure at least some recoveries of their rental payouts. This simple calculation will illustrate why they are so aggressive in their buying of HDB resale flats:
Through getting a max 30-year, 90% financing loan and their willingness to make a monthly payment of $1,800, they can in fact borrow up to $400,000! This means, they can easily afford to bid up the price of a 3 room HDB resale flat up to $440,000 (the current market price of a 3 rm at a hot area in Holland or Tanjong Pagar is about $350,000 only). They will have to, of course, cough up an additional $40,000 cash to supplement the 90% loan (assuming $0 COV).
Assuming 20 years later, they decide to get out of Singapore and sell their 3 rm HDB even at a loss of 20% (most PRs actually expect to sell their resale units back to the market at the same prices they bought, in the worst case), that would mean selling at about $350,000.
After 20 years, they will have about $180,000 balance of the mortgage loan to pay (see www.freemortgagecalculator.net, using 3.5% as the mortgage loan rate). After using the sales proceed to pay the balance of the loan, they will have $170,000 left. And after minus the $40,000 initial upfront cash they paid when they bought the flat, it will give them $130,000 - the amount they consider "recovered" from their "rental". This means, instead of losing $432,000 in the "pure" rental case, they only lose $302,000 in this case which works out to be $1,260 per month rental.
Now, what if they sell their 3 rm HDB at the same price of $440,000 they bought originally? Then, after minusing the $180,000 loan balance, they will get back cash of $260,000 and after minusing the $40,000 initial cash outlay, they will retain $220,000, the "recovered" amount from their "rental". Which means, instead of losing $432,000 in the "pure" rental case, they only lose $212,000. This works out to be $880 per month rental.
And don't forget, now that they own the HDB resale unit, they can also rent out their rooms to get further income, effectively making their stay here in Singapore free!
Hence, as you can see, the PRs have done their calculations and they have no qualms in bidding up the prices of HDB resales. No matter how, this is better than them renting the units. It's no wonder that nowadays, property agents love foreigners. And of course, our PAP also loves them. As long as PAP continues to give out PRs to foreigners like toilet papers, you will continue to see more aggressive bidding up of HDB resale prices!
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only for the citizens.
