Condo resale prices rise for 22nd straight month in May, more units sold

Condo resale prices rise for 22nd straight month in May, more units sold

Kumar Properties

Condo resale prices rise for 22nd straight month in May, more units sold

Prices of resale condominium units edged up for the 22nd straight month in May, with transactions rising as buying sentiment improved despite property cooling measures. In May, condominium resale prices rose 0.3 per cent, lower compared with April’s 0.7 per cent, according to flash figures from real estate portals 99.co and SRX released on Tuesday (June 14).

Compared with May last year, prices were up by 8.4 per cent, data showed. In May, prices of condominiums in the city fringes went up by 0.7 per cent and those in the suburbs rose by 0.5 per cent, while those in the core central region fell by 1.2 per cent.

Huttons Asia chief executive Mark Yip said the successful launches of two projects in the city fringes – Piccadilly Grand in Farrer Park and LIV@MB in East Coast – resulted in demand spilling over to the resale market last month, which supported the rise in prices. Meanwhile, resale volume climbed by 1.6 per cent, with an estimated 1,572 units changing hands in May, up from 1,547 units in April.

Resale transactions declined by 11 per cent compared with May last year, but were still 40.2 per cent higher than the five-year average for the month of May. This could indicate the resale market is on its road to recovery, five months after property cooling measures were introduced last December, analysts said.

In December, the additional buyer’s stamp duty (ABSD) rates were raised from 12 per cent to 17 per cent for citizens buying their second residential property, and from 15 per cent to 25 per cent for those buying their third and subsequent ones.

For foreigners buying any residential property, the ABSD is 30 per cent, up from 20 per cent. Resale volume has been rising since March with the easing of Covid-19 restrictions, rebounding from the six-month decline starting last September.

The strong buying sentiment in the condominium resale market was reflected in the new sale market last month, noted OrangeTee & Tie senior vice-president of research and analytics Christine Sun.

“This indicates that buying sentiment has generally improved across the different housing segments and may pick up further in the coming months,” she said.

“Growing macroeconomic uncertainty may also spur more investors to park their money in safe-haven assets like properties,” she added.

PropNex Realty head of research and content Wong Siew Ying said some of the firm’s real estate agents noted that the supply of resale condominium stock has been tight as some owners choose to hold on to their properties.

“With the hefty additional buyer’s stamp duty, some owners who have purchased multiple residential properties prior to the cooling measures may be unwilling to sell now,” she said, adding that the strong home rental market could also be a reason.

Given the tight supply and demand from Housing Board upgraders, property analysts expect condominium resale prices to remain firm this year. Mr Yip said the resale market in June may be quiet as it coincides with the school holidays and there are no planned new project launches.

“Nevertheless, the return of foreigners to the property market will support further growth in prices for the rest of 2022,” he added. In May, condominiums in the suburbs accounted for 60.2 per cent of the total sales volume. Homes in the city fringes accounted for 24.7 per cent, while the remaining 15.1 per cent were in core central Singapore.

The highest transacted price for a resale condo in May was $20 million for a unit at The Nassim, a freehold development in the Tanglin area. In the city fringes, the highest transacted price was $4.85 million for a 99-year leasehold unit at Silversea in Marine Parade. In the suburban areas, a freehold unit at Clementi Park in the Sunset Way area sold for $6.5 million.

This news article is from the Straits Times Graphics. For more property articles please contact us +6582828214

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Why do People in Singapore Buy Property Under Their Children’s Names?

Why do People in Singapore Buy Property Under Their Children’s Names?

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Why do People in Singapore Buy Property Under Their Children’s Names?

In these recent years, many people are purchasing property under their children’s names. Buying property is the biggest dream for many people. In 2019 there are some articles mentioned there is no data about it but there are some signs that a number of wealthy families are buying private property under their children’s names.

There are some queries about this topic. Why do parents purchase property under their children’s names? Are there any benefits in the future for their children? Any financial concerns involved – should follow this rule? In this way, there are many things people have confused about purchasing a property. 

To answer these kinds of questions we are sharing this article here. Please read this article and share it with other people who have queries. Let’s know more.

What Are The Benefits of Buying Property in Singapore Under Child’s Name?

1. In the Future Good Investment For Your Child

Indeed some parents are anxious about the rise in private property prices in the future, if they purchase now in their child’s name they will make a profit. These are the reasons which made buying a property now, but in their children’s names, a decision popular among some parents who are cash-rich and able to afford the mortgage payments.

If a person is good at financial situations such as who can take a mortgage loan and without a break pay installments and if you are sure that your property value will increase in future. Then this is the right decision to purchase for your child. Otherwise, you need to face the hurdle of confirming whether your home loan is approved or not approved in such situations as purchasing property under a child’s name. 

If you need any kind of guidance, feel free to contact Kumar Properties for recommendations and advice. 

2. At An Early Age, Better Chance To Earn Income For Yor Child

To purchase private property under their child’s name, some parents will use a trusted system and rent that property. Later they put rent money towards the savings account for their child’s future. Alike investments or stocks, Your child’s financial future is reliably the safest space in Singapore’s property market. Genuinely property is a gift for the future, it is the benefit for your child to buy a Singapore property now because of the rise in future prices.

Another important note is that if your buy property by using a trust system for your child, you will not be allowed to take a home loan to finance it.  If you want to take a home loan you need to wait until your child is at least 21. 

3. Get Better Fund on the Next Home Loan

This is the best strategy for the people who already own one property and they want to afford a second property. Then the loan to value (LTV) ratio for a second property loan will be 45%. If you want to get more funds for the property’s cost as well as higher LTV, you need to opt for this approach, since it is taken into consideration as the first property for your child and eligible for the full LTV.

However, when your child matures only the full payment for your second property will be paid. During this period they look to move out from their current family, so they are financially free to make their own property and apply for their own lines of credit.

What are the drawbacks of buying property under a child’s name?

There are many advantages to buying property in Singapore under your child’s name. But, there are also some disadvantages that might affect your child’s future if you decide to buy a second property.

1. New ABSD (Trust) of 35%

On May 9th, the Ministry of Finance (MOF) announced an ABSD of 35% will be imposed on any transfers of residential properties into a living trust. For instance, if you buy a property for $2 million in trust for your child, you need to pay $700,000 in ABSD.  

A new ABSD is imposed by the MOF in order to ensure equality among people. ABSD will be due regardless of whether the beneficial owner of the property is unknown at the time of the transfer. Many parents wish to leave a legacy for their children, but others feel that doing so risks worsening inequality.

Related Article: There is an article about Things to know about the new ABSD (Trust): 35% rate and conditions for the remission.

2. High Investment Risk May Affect a Child’s Future Credit Score.

You could adversely affect your child’s credit if you cannot afford to pay the mortgage installments on time and end up in arrears. If your child has a history of late payments and other mistakes, they may be unable to get loans for important things like education or cars in the future as a result of involvement in a mortgage. Your child is likely to end up with a money pit, and if they wish to buy public housing (e.g. an HDB flat) in the future, this ability may be impeded if they cannot sell the “investment property”.

Assuming you are still paying off the mortgage for the private property and your child wishes to settle down but is having difficulty letting go of the property, this may leave you in a difficult situation. You will still cause your child delays and inconvenience if you do sell the property easily, as HDB rules state that your child must wait 30 months before he/she can purchase a BTO from you after selling the property.

3. Disagreements regarding family property can result in legal disputes

The child becomes a legitimate owner of a property when it is placed under his or her name. Some parents fail to recognize this fact. Upon reaching that age, your child has the legal right to sell, rent, or take possession of your property. It is imperative that you take precautions when dealing with your child. Your child will be the one who determines what happens to the property.

It has been noted that legal disputes have arisen within families when parents and children cannot reach an agreement on what to do with the property in question, and many families have been strained or even broken by these disagreements.

4. Subsidies or vouchers will not be available to your child

Almost every child who owns at least one private property will not qualify for government subsidies, bonuses, or welfare cuts. In other words, GST vouchers and so on will no longer be considered part of the child’s assets. 

Some parents neglect this when they buy their child a second home. If the above is not possible, you might want to reconsider putting the second home under your child’s name.

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Things to know about the new ABSD (Trust): 35% rate and conditions for remission

Things to know about the new ABSD (Trust): 35% rate and conditions for remission

Kumar Properties

Things to know about the new ABSD (Trust): 35% rate and conditions for remission

An  Additional Buyer’s Stamp Duty (ABSD) of 35% will be imposed on any transfer of residential property into a living trust from 9 May onwards, as announced by the Ministry of Finance late on 8 May.

Previously, when a residential property is transferred into a living trust, Buyer’s Stamp Duty(BSD) is payable. Depending on the profile of beneficial owner,  ABSD is also applicable. When there is no identical owner at the time of transferring the residential property, ABSD may not apply.

Now, with the latest change, a trustee have to pay ABSD even if there is no identical owner at the time of transferring the residential property.

According to the press release, “ABSD aims to promote a stable and sustainable property market, and as such, it should apply to transfers of residential properties into all living trusts, irrespective of whether there are identifiable beneficial owners of the residential properties transferred into such trusts.”

The ABSD (Trust) is to be paid upfront while transferring a residential property into any living trust.

Refunding of ABSD (Trust):

A beneficiary may apply to IRAS for a refund of ABSD (Trust), if the following conditions are met:

 

  • All beneficial owners are identifiable individuals of a residential.
  • Now, the beneficial owner must own a property and not in the future.
  • The beneficial ownership of the residential property has been vested in all of them and cannot be revoked, varied or subject to subsequent conditions.
According to Inland Revenue Authority of Singapore, the ABSD treatment for the residential properties must be equalised, irrespective of whether a beneficiary is involved or not.

The refund application must be sent within 6 months after the instrument is executed. This refund amount will be based on the difference between the ABSD(Trust) rate of 35% and the corresponding profile of the beneficial owner with the highest applicable ABSD rate. 

The refund will not be applicable if the property is held in trust for a child who gains authority when they turn 21.

Singapore Property inheritance
Under the new ABSD (Trust), the trustee will have to pay 35% when buying a residential property and hold it as a trust for a minor. 
To be eligible for the remission, the trustee can apply via the IRAS e-Stamping portal within six months from the date of the execution of the instrument.

The supporting documents for the refund:

  • The Option to Purchase or sale and Purchase Agreement copy.
  • Trust instrument copy.

Here it is article about ABSD 35% rate and Conditions. And we will share more articles in future about the Singapore Properties. Do not wait anymore. If you are keen to have the next article, please register below! You should not miss this. See you soon.

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How Will Budget 2022 – Property Tax Increment Impact The Housing Market?

How Will Budget 2022 – Property Tax Increment Impact The Housing Market?

Kumar Properties

How Will Budget 2022 – Property Tax Increment impact the housing market?

Budget 2022 – Tax rates for Residential Properties will be raised, this was announced by Singapore Government Finance Minister Lawrence Wong on 18 Feb 2022. They want to increment in two steps, starting with the Tax payable in 2023, with Singapore real estate properties at the higher end seeing steeper hikes.

The property tax rates for owner- occupied Singapore properties for the segment of yearly value more than $30,000 will be raised from 4% to 16% presently, 6% to 32%. And tax rates for non-owner-occupied residential Singapore properties, will increase from 10% to 20% currently, to 12% to 36%.

Impact on Owner-Occupied Properties

For owner-occupied properties, property tax raise will impacts the portion of annual values in excess of $30,000. This will only affect the top 7% of all owner-occupied residential properties in Singapore, acc to the Ministry of Finance (MOF). Therefore, many Singapore real estate property holders that are living in HDB flats or private homes in the suburban areas – whose yearly value of residence is $30,000 or below – will not be affected by the change.

For example, there is a 4 bedroom HDB flat in city fringe with an annual value (AV) of $11,040 will continue to pay $121.60 in Singapore property tax  – even with the tax payable under existing tax treatment. Further example about an owner- occupied condo in central location with an annual value of $40,000 will be a final tax raise of $200 in 2024 as the real estate property tax payable increase from the current $1,280 to 1,480. ( See Illustration B)

Eventually, a property owner who is living in a large sized landed Singapore property will have to fork out more on property tax after the revision, with tax payable increasing from the current $2,780 to $3,930 in 2023 and to $5,080 in 2024 (See Illustration C).

Most of the householders need to manage the raise in Singapore property tax on owner-occupied homes. However, a certain people find difficult to bear property tax hike like retire people who are living in a extra size landed property and don’t have a lot of savings amount.

Impact on Non-Owner-Occupied Properties

Let’s see how real estate property tax increment impact for non-owner-occupied properties. From 2023, the revised rates will kick in over two phases.
For Example, Annual value of a non-owner-occupied HDB flat is $10,000 and for this property tax payable by $100 to $1,100 in 2023 and it rise to $1,200 in 2024 (See Illustration D).

Meanwhile there is a non-occupied condo in the suburbs with an annual value of $30,000 will be a raise of $600 in Singapore property tax payable to $3,600 from 2024 (See Illustration E).

We believe mostly the future Singapore property tax rates are not seriously decrease buying interest nor affect the residential market significantly. Most of the Singapore real estate property investors investing Singapore properties take a longer-term view on property purchases, focusing on the long-term returns, capital growth potential and to preserve their wealth – rather than looking at the holding cost in the form of property tax.

Any Singapore property tax or cooling measures arrive, they won’t affect buyer’s interest or won’t stop people to invest in properties. Additionally, Singapore remains attractive investment destination for most of the people, with currency and political environment.

We will provide different articles about current market situations and what things you should do for property investment. Follow us and contact us for more information.

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To Choose Right Property All First-Time Buyers Need To Know

To Choose Right Property All First-Time Buyers Need To Know

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To choose right property all first time buyers need to know

As you are going to buy for the first time, there are many things to fear. Most people do not have proper knowledge in buying & selling properties so it may be difficult to choose the perfect property that could possibly enjoy growth and fit within affordable budget.  Mostly the first time buyers number one choice is either the next BTO or a resale flat close to their families and they think of their future and consider that they can afford of the public housing. Is this the right choice.

If all you want a peaceful life, this is the right choice. But if you want earn more for a better future and lifestyle, then you have to consider other options. Let’s have a look.

 

 

Mostly the young buyers do not consider lengthy timeline, one have to realise their first fortune you made in your life.

Actually the 4 years long waiting of a couple to complete with the Minimum Occupation Period of 5 years which locks a young couple of 30 years old for a period of 9-10 years it means that the young couple reach at age 40.

We know that time is money and this is the unchangeable fact of life! Many people have the misunderstanding that property investment should start in the late stage of life but due to the mortgage limitations in Singapore, they get the shorter loan tenure which sadly means  that the monthly loan repayment will be heftier with additional expenses like child care and educational commitments. This makes many people miss the high speed train of property investment, having still advantage.

So, if you can afford to get a very nice home with the first investment which have a high potential of making decent profit in 5 years,  wouldn’t it be great jumpstart to your property investment journey? It is crucial to know that you have to start this journey as soon as your finances sound.

Remember I mentioned that being sensible is important. I cannot stress enough that success of your first investment depends on careful planning. Now we can see that private homes going to hit new highs in 2021 in the given figure. Each time the market falls down, it rebounds with more height, and those having fear to invest in the market and choose to wait end up with paying more for which they have to pay. These are the basic mistakes which can be avoided easily.

Even though by seeing the chart show that the home prices continuously climb but we have to consider the truth that some inexperienced “investors” who made losses too. This is because of various factors and most of the common factors are not setting aside reserve funds, wait to invest and misunderstanding the property market without proper knowledge. This can be easy and much safe if you follow our proven strategy.

Private property price index percentage from 2000Q1 to 2021Q3

The historical price chart of a private property Changi Green, as a first-timer, do you buy property since prices now are at its previous high in 2014? Do you believe that the price will continue to increase in the next three years?

Changi Green historical monthly price (psf) range.

Now, let me show you in the given figure, some of the transactions that occurred in the recent years at Changi green. Some buyers brought up with resale property and end up with not making any profits and some of them incurred loses too. Do not repeat these expensive mistakes made by others!

Changi Green transaction history

Then a question arises, how will one select a right property?

Here, we consider 2 important factors – potential upside & risk involved. With this careful analysis of the facts, and market insights of these 2 points determine if the property is safe to enter. No one can guarantee that you will definitely make money, so we have to consider that risk is as important as the potential upside.

One last example to determine the further points. Looking at the figure, between Queens and Commonwealth Tower, one would have been very upset and utterly disappointed  if you choose to purchase the former because of its low entry price. As we can see, even tough the commonwealth tower has higher entry price, the profits earned much has been increased. Do you think is this the case?

 Historical price for Queens & Commonwealth Tower

With all these questions keeping in mind, you have to know that it is key to understand how to select the right singapore property market. The essential factors listed above will have the criteria in determining the right property, this makes you to start you real estate investment journey in the right direction. It can be easier if you know all the fundamentals of choosing right property it can also be applied for future properties when you upgrade. Try to avoid repeating mistakes done by others.

 

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