SG PROPERTY A BAD INVESTMENT IN 2024? Latest Rents Dropped Again...
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- เผยแพร่เมื่อ 9 ก.ค. 2024
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Singapore residential property rent dropped yet again and with prices still climbing, the yield that a new project unit is getting seems to be less than guaranteed fixed deposit rates even. Is property investment in Singapore still making sense?
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0:00 Introduction
0:28 Rent in HDB and condo drop in May24
1:45 Analysis Normanton park 1 bedroom
5:00 Analysis Normanton park 3 bedroom
6:50 Cashflow from property investment
7:45 Refinancing deals
9:37 Demand for residential property
11:30 Conclusions
#property #sgpropertyinvestment #sgproperties #sgproperty #propertysg
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Perhaps using downpayment to calculate return on investment is more accurate instead of rental yield/buying price.
For example a 1.3m property downpayment is 325k. And the rental is around 4k. Assuming 11month rental its around 44k.
Holding period of the property 10 yrs assuming 11month for 10 years - same rental = 440k
I would says with consideration of others like MCST, tax and others. Its not really a cash flow generating investment and not liquid.
Assuming gradual condo price appreciation of 1% per annum the return of investment is definitely higher than 1.9% in this video.
6:50 Cashflow from property investment - for 3bdrm is negative cashflow if rent is $5,000 and loan is $8,161 as shown.
Even if we purely go with interest cost alone and treat tenant rent as paying down capital, at 2.9% interest cost is $4,205/m of the $8,161.
Net rent of $4500 should be less this $4,205 over the capital invested. To find leveraged yield. As gross yield is less than leverage cost, leverage brings down ROI actually. Hope it explains
SG Prop maybe bad, but the SG REITs mentioned on this channel are definitely worst 😥
Thats the last 1y. Maybe if we look out into 3years ahead with a start now it could be very different? =)
and, if it drops further, we will look out into 10 years?
Don’t buy REITS la
As long as the mortgage is fully paid nothing much to worry much about 🎉. Those praise for Long and maximum leverage are the ones must worry more about
I understand until the REIT index turns (which has been a bear since 2021) the concerns will be there
3years of decline can be seen as a permanent decline or a decline to a point where its cheap
The high mortgage %, rental up 30-50% CBD units. It is to expect the peak will correct to prior Covid. Without the peak, there wont be drop. Typically rental yield is about 2%, fully costed with cost of funds.
1:22 Interesting perspective there on the upcoming private residential supply. Property investment gurus like Pete have painted it the direct opposite for the same data by saying the supply is going down for the next 3 years.
We had already diverted investments to industrial & commercial properties.Rental for coliving units from landlords is still high .
Awesome sharing. Buy low sell high. So simple logic but majority can't do it. Greed and FOMO always get in the way.
mkt hav slowed down, vol hav dropped, and dd is dampened esp by the high ABSD, it appears to be playing out the greater fool theory, we will only know when the music stop.
U need to also take into account the leveraging impact, unless someone just throw 1.12m in cold hard cash
Cash outlay comes up to roughly at 300k and that translates to ~10%. Not factoring in the appreciation and pay down of the mortage interest via rental.
@@jiajingkia6166 need to minus maintenance fee, interest etc but yield still definitely higher than 2+%
Hmm of course I understand leverage.
6:50 Cashflow from property investment - for 3bdrm is negative cashflow if rent is $5,000 and loan is $8,161 as shown.
Even if we purely go with interest cost alone and treat tenant rent as paying down capital, at 2.9% interest cost is $4,205/m. There isnt much left in yield.
@joshconsultancy
No lah. If it's an investment property, you can only borrow 45%, not 75%. At 75% you won't rent. Hence, your instalment should match the rent. Plus, most of them probably bought at launch time at an average of $1.7k psf.
For those that just bought newly TOP projects or 5 yrs MOP hdbs, mostly are staying there and won't rent them out.
@@minracleandrew7903 i do undertstand actually.
On the loan of $8,161 for the 3bdrm as shown if we purely go with interest cost alone and treat tenant rent as paying down capital, at 2.9% interest cost is $4,205/m.
That leaves $4500 (net rent) -$4205 (interest) that leaves $295/m
You may use 295x11mths over capital. It aint good.
Even if I am wrong, say where its wrong objectively. Retract using the word mislead. Thank you
10:05 Investor demand can be found out via Ura Realis. 116 foreigners and 1335 PR bought a private non landed in 2024 till date. With China, Malaysia follow by India as the top buyers
You pay a commission of half a month of rent for 1 year of rental. One month commission is for 2 years rental. 😊
Pty tax 10%, Maintenance 10%, Agent comm 5%. Assuming 100% occupancy & no pty impairment. $3200x12x75%. ROI 2.5%
good framework
The private property runa on HDB machine. It has flown too high, it has to be reachable to HDB upgraders. HDB prices will catch up, then the next boom cycle starts
I hope it booms soon our generation is suffering, it’s either pray for BTO or go broke buying resale
Good analysis. You are talking about new development prices. For a rental, wouldn't it be better to buy a resale condo? The PPSF is at least 30% less and I dont believe rents are proportionally lower. I think that prices for new developments are detached from reality of the rental yields, interest rates and population demand trends.
The hype is on new launch and its big leap in prices.
I agree with points
From my personal observation, for the past 3mths 4rm HDB lease greater than 70years went up like 5 to 8%.
Prices will appreciate over long term as long as SG continues to grow
Some periods rise quickly and then small down cycles
FH landed are the magnificent 7 of Singapore in terms of residential property.
good FH 😅
Scarcity is a rare commodity like Ferraris, never on sale!!
Number of jobs by Rental (Condo Vs HDB)
Josh, if i am not wrong, those projected units are developments to be launched, and will not be completed earliest by mid 2027.
At present, there are about 20K unsold private homes.
Average demand for homes is about 10K annually.
The number of private homes in Singapore that are expected to receive Temporary Occupation Permit (TOP) in the following years:
- 2024: 0
- 2025: 4,433
- 2026: 9,875
Demand and supply is back to equilibrium
Hi Henry, quick search headline reads
"28 Condos That Will TOP in 2024 for Those Who Need to Move Urgently in Singapore"
One pearl bank being one of them.
Can anyone with insights verify?
it's liddat one, when many people pay stupid prices
Private rental commissions is one month for one year lease?
1/2 month. Buffer of 1/2 for any downtime or unexpected cost?
More viable to use total annual rent over total cash outlay, not the entire property cost.
On the loan of $8,161 as shown if we purely go with interest cost alone and treat tenant rent as paying down capital, at 2.9% interest cost is $4,205/m.
That leaves $4500 (net rent) -$4205 (interest) that leaves $295/m
You may use 11.5mth but here isnt much left in yield because the raw gross yield is low and its below the cost of borrowing.
You wont get an decreased ROI
Hope it clarifies k
Josh, maybe you can do a video on the pros and cons of sell 1 (hdb) buy 2 (condo) concept, e.g. whether the rent of one condo can cover the mortgage like some gurus are advocating...etc..
Done. One of my earlier videos - Can You Really Sell HDB Buy 2 Condo? 🤦♂️ ("Asset Progression" Explained)
th-cam.com/video/OH2pPiQeUac/w-d-xo.htmlsi=--A9Y0miQD00GwGr
Smash the SUBS k =)
Many Malaysians/Foreigners working here and even local celebrities like Hossan Leong and many are flocking to JB to rent condos there as many condos in JB have TOP and the rental there is only a fraction of rental here, eg: R&F phase 2. So not surprising rental here are dropping. Wait until MRT/RTS is up and running in the end of 2026.
R&F is crazy expensive
Ive this interview on R&F JB condo - I CONFRONTED him for saying R&F Princess Cove IS A GOOD BUY?! | JB Property | Retire in Malaysia - th-cam.com/video/VelaIDOSAI4/w-d-xo.htmlsi=fOLyhtBoGILeU7gY
@@seabreeze667 A 3 room condo at r&f is about $250k sgd compared to almost $2million here. :) So rental is about 2.5k ringgit now compared to $4k sgd. I think many Malaysians are flocking back to JB to rent, especially so when RTS is up and running. Not only talking about r&f, just giving an example. I talking about Malaysians and Foreigners moving to stay in JB so definitely rental here is dropping.
You believe foreigners like non-malaysians able to in and out Singapore for working? @@davidtan9101
@@davidtan9101 a few breakdowns here and there and people will change their mind again about JB rental. We know how reliable our own MRT is !
People mindset when they rent is more about capital appreciation rather than rental in 2-3 years. If things dont turn out well, fire sale will happen. i dont think interest rate will no longer fall below 3% . People need to keep in mind india and vietnam will snatch up jobs here in 3- 5 year as they become the new china site. With everything so expensive here, we might see less job coming here. People buy property is like stock when it is hot so when hot goes down, massive exit is rushing to the door but unlike stock no easy to sell house.
Dont forget alot of the condo purchasers, upgraders, are buying with leverage. These purchases with intention to sell before TOP with be faced with a hard reality when they realised they cant sell their property with a proposed profit and need to start financing their repayments. When market go south, it usually go down hard and fast. Just hope we dont become a smaller version of China property market saga. Note: recent Site bid: Marina Gardens Crescent bid rejected because there was only low-ball bid. Upper Thomson Site - 0 bidders. This hasnt happened in the last 20 years. If this is not a sign, then I dont know what is.
If you want to buy Condo for rental income, it is always good to buy resales units, and hopefully is FH.
FH yield is lower actually coz quantum size is bigger.
General finding is if property held 10y or less, the 99 lease route makes better % returns
cousin sold her 4 room bto for 900k at sengkang, hdb 4 room prices already hitting 1m so crazy!
Would you be able to share how much she bought her next flat? I always thought that selling for a good profit means buying for a high price too
@@briarshard2871 She didn't buy any. Move to mother's house instead
but fed may cut interest rates soon
When fed raised rates, property price didnt drop
Conversely, rate cut may not be a bullish signal
Hedge against inflation is one key reason to buy property as investment which is not mentioned
All Assets which can pay an inflation related cashflow like stocks can hedge also. But the key is the price of purchase that defines the ROI
I think both stock market and property market r too hot now. Should sell everything and keep cash
No no no. Dun sell home and rent, never know how things play out. Never exit the markets fully also
I think hospitality reits still safe, especially those with diverse exposure to many continentals as travel is bouncing back to pre-covid level.
But because market likely correct itself by 20% next year before rebounding in 2025-2026, it is not just prudent to sell matrimonial home, but also financially wise.
Should also exit all reits, long stock positions. Shorting is okie.
Just hold singdollar cash. No gold, no Bitcoin, no property, no stock. All in cash.
Different ppl different risk appetite. The all cash idealogy will suffer if market don't crash.
Why it decline? Over supply or less demand? Which is the key contributor?
I’d believe it’s oversupply
Rents increased over the demand increased due to Covid pressures. Foreign employees need to secure a living space in SG to continue working in SG, especially a majority of workers from Malaysia had to secure a living space in SG to remain in Singapore during covid. Also the media promoting Singapore as a safe haven attracted a lot investment and also ppl looking to employment and possible migration to SG.
The sudden increased demand
1. New Naturised citizen
2. Foreign workers looking for temp accommodation
3. Foreign investments -- employees and immigrants
Lack of new developments
1. HDB stop constructing new BTOs some time back
2. Covid delays
With the above factors, of course it may not be exhaustive but that if you look at the above during covid and now.
the factors that caused the inflation of rents are slowly but surely depleting.
Covid delays are over and developments are popping up everywhere, TOPs projects will soften the demand
HDB have accelerated multiple BTO releases over a year, 3 to 4 locations at a single BTO program. HDB propose to lower from 4 releases to 3. That shows that we have soften the demand.
Foreign Employees are feeling the pinch on the extremely inflated living expenses in SG and many are considering other options (rental itself has inflated 2x-3x)
Businesses are also considering options(countries) to reduce expenses and overheads
With WFH initiatives they are able to remote work, meaning they are able to perform their work out of SG too.
Malaysian workers who had sought a temp accommodation during covid has returned to Malaysia - SG causeway travel daily after their lease ended.
Market unrealistically inflated will be returned to realistic levels as all markets do.
finally a video with substance unlike other property youtubers
sg will cont be world class laundromat becos of our obessed our govt are towards $. for those who question whether will population ponzi scheme end in singapore. do a google map check and see why ICA building have an extension building in lavender? is 6.9m population the real target or infinete population is the end game?
Sg property never meant for speculation….
As with all markets all that goes up will come down. Currently the market prices are all jacked up with the property agents/gurus singing the same tune as though the prices will be in a 100% rocket up trajectory and giving unrealistic projections getting buyers to keep buying and jacking up prices of property. Famous tagline of agents " I sold this unit $30k abv valuations" the next price to follow this inflated $30k until the point where you have all the bagholders when the market starts crashing down. Euphoria dont hold the prices, demand does. Demand drops so will the prices. Lets hope these bagholders know what their buying into.
Hi Josh I absolutely loved this video, keep them coming
I have a question though. Do you have a Discord channel? And if you were to recommend fellow SG finance TH-camrs like yourself who'd you recommend?
Thank you for the high praise. I have friends on youtube so won’t name drop any haha. Let you choose k :)
@@joshconsultancy I don't know any lmao that's why I asked so I could probably get your recommendation 😅
@@joshconsultancy also do you have a discord channel?
Normanton park is known for not a good investment. using this property is not a good example
!!! It is a good project
@joshconsultancy there are many resale condos with better rental yields, can you check on those and see if the numbers make sense?
I think many investors do not care so much about the yield;1-2%. More are attracted to the capital appreciation which they saw for the past 2-3 years, thinking that this kind of upside might repeat itself moving forward (3-4 years). Lol
Yes I’ve tried to highlight it too. So far it’s still climbing so the confidence is there
Jai Hind. Unlike the Chinese, we Indian origins investors everywhere are now very worried about Overcapacity in many key markets.
@@joshconsultancy this kind of projection is too optimistic n too dangerous; not forgetting transacted vol has drop a lot. What we see is just top of the iceberg.
Shouldn't your approach to property investments be to assume real cash outlay on a per annum basis i.e. 25% of purchase price + principal + interest as your base, rather than the entire purchase quantum?
That said, whichever way we look at it, it seems completely plausible that the declining birthrate and depopulation trends globally can only lead to oversupply of housing over time. We may very well end up like some of the older cities in Europe and Japan that are simply emptying out due to these trends coupled with urban migration.
The part on 1.74m loan to show $8000+ mortgage cost already factors in 75% LTV
What I meant was that the rental income should be calculated against the initial real cash outlay + repayments on principal + interest, rather than the entire $1.74m purchase price, since the property is not fully paid. It should also be noted that property is the only way for most people to obtain a sizeable line of credit since the property itself is the security for the loan. Aside from property, it is highly likely that the same buyer would not be able to obtain funding up to $1.3m (75% of the purchase price as home loan) otherwise to have an effective comparison for investment returns. This is likely why property investment remains attractive to many.
If so, the computation would actually be $4,500 * 11.5 (if not wrong agent's commission for rentals is 1 month per 2 year lease term therefore 0.5 mth per year), divided by ($1.74m * 25%) + ($8,161 * 12) = $532,932, which would result in a gross ROI of 9.7%. However, the interest portion is effectively a real loss though unlike the initial payment and principal repayments.
On the loan of $8,161 as shown if we purely go with interest cost alone and treat tenant rent as paying down capital, at 2.9% interest cost is $4,205/m.
That leaves $4500 (net rent) -$4205 (interest) that leaves $295/m
You may use 11.5mth but here isnt much left in yield because the raw gross yield is low and its below the cost of borrowing.
You wont get an decreased ROI
Hope it clarifies k
Hi Josh, thanks for putting up these videos! Very insightful. What do you think about investing in funds via Robo advisors platforms? I hold a number of funds in these platforms as I don’t have the time to pick stocks. Do you think this is a good strategy?
Hi Sharon, robo advisors have value. They help you rebalance a portfolio over time. Have 1 if not 2 at most. There are major overlaps. Too many small pieces are not helpful for retirement planning 👌🏻
Hi Josh, thanks for your response. That makes sense. Just noted many overlaps with the funds I bought, they are mostly investing in the same equities. Will probably do some deep dive on the ones to keep.
On a separate note, do you think we should put “payback” the money that we used to fund our properties downpayment so that we don’t lose the 2.5% interest rate generated from Cpf? Or wiser to put in Tbill?
When things go down local scare,,when up local snap up..like that how to make profit n exit..
You have not addressed the total interests payable to the banks at the end of d tenor of 25 years. The amount can be significant unless there are capital repayment along d way.
Yes agree there is substantial interest cost in todays high interest environment
Sg is still a much attractive market compared to HK.
PSF of $3000 plus is common in HK for an old apartment.
Not mentioning the quality of life in Sg is so much better.
Happy to hear that!
Jai Hind. Indian origins can now rent condo cheaper than HDB apartment and enjoy resorts like facilities like free parking, BBQ, Gym, tennis, swimming and Jaga too.
People still believe in property investment because they have grown up with the property prices in a general uptrend. It is also sort of a consensus that property investment is sure win in Singapore. Sg bonds can give higher yield but you can’t borrow money to invest in it. But for property, you can take a big bank loan and hence the profit quantum is much higher compared to investing in sg bonds. I’m not a property investor but I’m just trying to understand why sg property market is still going up whereas it is the opposite in many other countries. Are money artificially pumped into our system to hold the market up?
Australia saw a big correction but also rebounded. Investor confidence is still strong at this moment
Singapore property market is structurally different from most countries.
1. It is supported by a strong public housing namely HDB and hybrid ECs
2.. Stringent government policy to eradicate speculation in the form of high downpayment 25%, limited leverage using MSR and TDSR, ABSD etc
3. Limited land supply, GLS is tuned to demand and supply
4. Inherent asset inflation via land cost, construction, labour, material costs etc
Edited as Josh has explained his calculation.
Id keep this comment because clearly I understand leverage.
6:50 Cashflow from property investment - for 3bdrm is negative cashflow if rent is $5,000 and loan is $8,161 as shown.
Even if we purely go with interest cost alone and treat tenant rent as paying down capital, at 2.9% interest cost is $4,205/m of the $8,161.
Clearly I have used a amortization calculator. Net rent of $4500 should be less this $4,205 over the capital invested. You may try using it first and look at the comments before you before criticising k. Even if I am wrong, say where its wrong objectively. Retract using the word mislead. Thank you
@@joshconsultancy ok my bad. Based on the example u used, it’s indeed correct. But good to inform viewers that for majority of the current rental market, the returns are still substantial due to leveraging.
Anw, grateful for the time to explain and will retract my words 🙏
hope for crash! 😆
No signs of crash. A 2013-2016 gradual decline is my best guess
Be careful what u hope for!.. unless you are not holding any assets.
But will you be emotionally able to buy assets when there is a crash?
Its always easy in theory, humans are known to follow the herd mentality because there is saftey in nos
Very very good news . Ha ha.