Following the latest measure to set the best practices for banks in Singapore, many property observers have adjusted their outlook of the property market in view of TDSR framework.
To recap, the main highlights of the TDSR framework are
1) All Guarantors have to be mortgagor.
2) In the case of joint application, loan tenors is derived from the subjection of income weighted average age from the age at the end of loan tenor.
3) HDB MSR still applies at 30%.
4) Liabilities calculation for home loan installment is at 3.5%
At this point of time, Singaporeans should start asking if this will be the last cooling measure there ever will be. This is a common question I get from friends, customers and even colleagues.
If there will be more cooling measures, one thing for sure is that the measures on bank will impact consumers, property agents and property developers. This sounds obvious but in most occasion, these questions raised seemed to be telling me that everyone is unaffected. To be objective, strategizing yourself in new measures is the only way to stay as much unaffected as possible.
For Consumers
Consumers should always re-assess your wants from needs. If you want a property for own stay or perhaps this is required in your core investment portfolio, then take a serious look at your income and disposable net worth. Identify which group of net worth you fall within
1) disposable net worth less than $200,000
2) disposable net worth $200,000 – $400,00
3) disposable net worth less than $400,000 – $1,300,000
4) disposable net worth more than $1,300,000
If your income is less than $7570, you are still within the condo property segment. If your income is less than this, you may have to look at HDB purchases. This is based on a 30 year loan tenor calculation.
If you do not fall within this category, it is time to seek help in your financial planning. Are you holding on to too many cards, line of credit or liabilities? Re-assess your situation and do what is necessary to increase your income and lower your liabilities. This golden rule will be staying for a long time.
Property Agency and Agents
In view of the situation, the identifiable opportunities will come from Overseas Properties, BUC EC, some competitively priced BUC private properties and HDB Resale markets.
Opportunities for Oversea Properties need no further explanation. For BUC EC and BTO, consumers are least affected by the TDSR liability for EC and BTO installment calculation. Hence, buyers from these markets are least affected. Prudence on the buyers’s secured and unsecured credit is still necessary.
As the investment horizon for Singapore properties is around 5-7 years, cooling measures within these 3 years will come and pass. Competitively priced properties for BUC condo will still have upside in the long run.
For HDB resale market, you may want to capture more seller listings. In view of the number of BTO projects that will TOP at certain months of the year, there will be sudden bursts of opportunities for buyers to come in quick to close your case.
Contact LoanGuru at 6602 8200 to get the lowest fixed rates for residential, Guaranteed. Read the full article at blog.loanguru.com.sg or search for “LoanGuru” on Facebook and “Like” us to receive timely updates.
