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doraemon88

Cov - Where Is It Heading?

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Prob for most pple on buying spree nv even realise whats their housing budget and not to mention their limit on raising interest rate. Take a dip on PM latest interview with reuters, more measure if prices cont to raise after this wait and see period.

Most banks in Singapore tied up with the Fed rates which is currently at 0.25%. Already rock bottom.

Also cannot go up, otherwise why quantitative easing 2, if not manage properly, will flood Asia including Singapore with equidity. Property bubble... stock rally.. etc.

 

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Just to add on, If interest rate up by 2%, monthly installment up by few times this rate.

The longer the tenure, the monthly installment up % is even higher.

Bro, few time of what? Don't scare me leh, my heart is getting weaker.

Just did a calculation from 1% to 5% interest increase with curve, a bit hyperbolic, but still considered straight with tangent of abt 30 deg (agar agar).

http://img29.imageshack.us/img29/9991/loan...teffecpage1.jpg

Edited by bepgof
 

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Actually the truth is COV hv indeed plunged. Coz the current sentiment is too much confusing with so many new rules kicking in. For first time buyers impt factor is cash and housing need so low cov is a must. as for valuation i think not much need to worry as we using can see no touch CPF. The ones who really will be hit is those 1st timers who bought resale juz before the 30aug rule at highest valuation and cov. existing sellers who buy earlier or later actually no different as we sell n buy high or sell low n buy low.

 

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I've benefitted a lot from this forum, just want to contribute my two cents...

This is just my opinion.

I've been looking for a resale flat since six months ago.

In end Sep, I viewed a flat which I liked very much. I made an offer of 62K

two days after viewing. I thought the COV was reasonable (last offer was 60K).

However, I was told it was already optioned. My wife and I both felt it was a pity

as we missed a flat that we like and the COV was reasonable.

This location/cluster that we are aiming commands a higher COV as it is very near MRT.

Previously(before 30 Aug) we made two offers of 70K for similar units but were rejected.

As I am actively looking for house myself, I can see COVs coming down quite a bit. In fact, for the

past two weeks, there were other units with last offers of only 35K++ . (I am comparing units of same location

and similar size). So it could be a blessing in disguise that I missed the opportunity to purchase the flat

in end Sep. If not, I could have overpaid a lot.

Well, I don't know but it seemed to me that COVs have come down quite a bit and this is probably

just the beginning.

I am no guru to give any advice, just want to caution buyers that they should observe the COV trend

closely during this period as agents may not warn them of the market conditions. As for me, I'm willing

to wait patiently for COVs to come down.

Above is just my experience and opinion. Pls do not hold me responsible for your decisions.

Yes ladyluck is really on yr side. but since u aiming at premium location is advisable not to wait too long or too low cov. if u think is the rgt unit with reasonable cov.GRAB. coz traditionally premium locations do have cov range of 20 to 30k even before the recent property boom and cov saga.

 

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Actually the truth is COV hv indeed plunged. Coz the current sentiment is too much confusing with so many new rules kicking in. For first time buyers impt factor is cash and housing need so low cov is a must. as for valuation i think not much need to worry as we using can see no touch CPF. The ones who really will be hit is those 1st timers who bought resale juz before the 30aug rule at highest valuation and cov. existing sellers who buy earlier or later actually no different as we sell n buy high or sell low n buy low.

Errr... sorry to burst your bubble. but prices are not going south since the announcement.. Thus, 1st buyer that bought before 31 aug still can smile ! :)

 

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Errr... sorry to burst your bubble. but prices are not going south since the announcement.. Thus, 1st buyer that bought before 31 aug still can smile ! :)

and you know that because.......

 

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Most banks in Singapore tied up with the Fed rates which is currently at 0.25%. Already rock bottom.

Also cannot go up, otherwise why quantitative easing 2, if not manage properly, will flood Asia including Singapore with equidity. Property bubble... stock rally.. etc.

I'm not too sure the interest rate will stay forever low... check this->Bernanke Asset Purchases Risk Unleashing 1970s Inflation Genie

Edited by FD1976
 

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Sorry. Just checking . did you overpaid in term of COV or in term of the full amt paid for the flats? The way i see it , prices continue to climb..

2 mths ago a flat similiar to mine sold for $638k , 80k cov.. Last mth, another unit was sold at $680k with only 50k cov..

But again, the guy that bought 2mths ago saved cos' he paid 638k..

I dun see how you could have overpaid earlier and save now ?

your eg doesnt factor in the lag time in which the Aug 31 measures take to kick in.

The value of a flat is based on the series of last transacted prices for similar units. In your eg the first flat which sold for 638k at 80k would have been valued at 550k prior to the aug 31 announcement. Hence, assuming that similar flats were sold at tt price at that time, then the valuation would then go up for subsequent flats, as is evident in your second eg. In that eg the 680k transacted price with a COV of 50k puts the new valuation at 630k.

Now consider that if the COV comes down as a result of the new measures which have made buyers more cautious; lets say eventually down to 30k, then the next flat will be sold at 630k +30k making it 660k; lower then the 680k and at a lower cov as well. Moreover, if this trend then continues, valuation could even go below 630k. Of course, all this depends on whether buyers are prepared to wait. Eventually, it will all boil down to sentiments and demand and supply and of course, who can hold out longer.

 

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your eg doesnt factor in the lag time in which the Aug 31 measures take to kick in.

The value of a flat is based on the series of last transacted prices for similar units. In your eg the first flat which sold for 638k at 80k would have been valued at 550k prior to the aug 31 announcement. Hence, assuming that similar flats were sold at tt price at that time, then the valuation would then go up for subsequent flats, as is evident in your second eg. In that eg the 680k transacted price with a COV of 50k puts the new valuation at 630k.

Now consider that if the COV comes down as a result of the new measures which have made buyers more cautious; lets say eventually down to 30k, then the next flat will be sold at 630k +30k making it 660k; lower then the 680k and at a lower cov as well. Moreover, if this trend then continues, valuation could even go below 630k. Of course, all this depends on whether buyers are prepared to wait. Eventually, it will all boil down to sentiments and demand and supply and of course, who can hold out longer.

Sorry bro.. I missed something ... The 2nd selling price is $680k.

Thus, the valuation is probably be ard $650k and never 630k as you mention.. Thus, it wont happened.

... i know that the similar units in the same area is now asking for 720k...

Edited by Jgal
 

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aniway.. its still a seller's mkt. The way i see it most HDB seller are moving out to make $$ that they dont really have urgent need for. If they dont get the price they wanted, they will stay put.

 

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Bro, few time of what? Don't scare me leh, my heart is getting weaker.

Just did a calculation from 1% to 5% interest increase with curve, a bit hyperbolic, but still considered straight with tangent of abt 30 deg (agar agar).

http://img29.imageshack.us/img29/9991/loan...teffecpage1.jpg

Relax bro, your liu par par, no sweat :)

To see the difference, test 2 cases, variable of loan amount, and interest for both must be constant.

Only varies the tenure (loan term)

Eg. A loan 200k for 5 years,

1% $3,419

2% $3,505 2.52%

3% $3,593 5.09%

4% $3,683 7.72%

5% $3,774 10.38%

Eg. B loan 200k for 20 years,

1% $920

2% $1,012 10.00%

3% $1,109 20.54%

4% $1,212 31.74%

5% $1,319 43.37%

 

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Relax bro, your liu par par, no sweat :)

To see the difference, test 2 cases, variable of loan amount, and interest for both must be constant.

Only varies the tenure (loan term)

Eg. A loan 200k for 5 years,

1% $3,419

2% $3,505 2.52%

3% $3,593 5.09%

4% $3,683 7.72%

5% $3,774 10.38%

Eg. B loan 200k for 20 years,

1% $920

2% $1,012 10.00%

3% $1,109 20.54%

4% $1,212 31.74%

5% $1,319 43.37%

What is more scary is a larger loan (500k) when stretched to the max 30 yrs.

1% $1608

2% $1848 14.93% +$240

3% $2108 31.09% +$500

4% $2387 48.45% +$779

5% $2684 66.92% +$1079

Make sure you can tahan the hikes when it comes.

 

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Sorry bro.. I missed something ... The 2nd selling price is $680k.

Thus, the valuation is probably be ard $650k and never 630k as you mention.. Thus, it wont happened.

... i know that the similar units in the same area is now asking for 720k...

If your 2nd selling price was 680k and you mentioend that the COV was 50k, then the valuation must have been 630k.

If however, you're saying that the valuation was $650k then that would make the COV only 30k. That's a drastic drop in COV from the 1st unit that was sold at 80k COV. While the valuation may have gone up from the first unit that was sold, the fact that he COV has fallen so much is a good indication that buyers sentiments are weakening and they are not prepared to pay such a high COV. Given time, if this trend continues even valuation will hold, rise very slowly or in a worse case scenario, fall. It's not going to move as rapidly as was experienced between the first and second sales.

With regard to the 720k asking price that you mentioned, well, valuations arent based on asking prices, they're based on transacted prices.

 

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About valuation...

Among the 3, Market data approach is most frequently used in residential value appraisal, there is one main drawback for this market data approach:

If seller is under certain pressure, or under auction, to sell house "cheap", the "cheap record" will be "integrated" in the future appraisal. This applies to when there is an econ downturn and sellers "desperate" for $, then valuation wil be down.

Pray hard LKY still healthy & LSL can steer the vehicle steadily slowly uphill, if downhill drive, make sure be the first to jump hor.

Hope this throws some light as to the "valuation up or down" doubt.

Edited by bepgof
 

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My in-laws recently bought an AMK 4-room, 11th floor, upgraded, good amenities nearby, windy... for S$423K. Valuation was S$400K, COV at S$23K. We're pretty pleased with the purchase. When we first saw the unit, it was valued at S$390K but the asking was S$60K COV (did not budge even with a S$50K offer).

So I guess in this case, while the valuation inched up slightly, we still "saved" by waiting a few months. Think the owner got down to earth after the new measures were announced and the offers of high COV disappeared, and his time was running out (as their new HDB flat was arriving soon).

 

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