In earlier post, I wrote about my colleagues who had bought or sold property. Colleague A is now developing a rude awakening because she cannot find a property (specifically condominium) with the size she has in mind, with her current budget. Her original intention was to sell her current property, rent and wait for the crash. But with rents of at least SGD 6,000 being asked, any profit gained after deducting for interest and CPF will be quickly diminished. I do think that there is nothing wrong with renting a HDB. I am sure it is much cheaper over a longer period than a condominium, but that is just me. Time is now ticking for her as she has to move out by early next year.
I have got a friend who was second in the ballot for Heron Bay. He already had a slot for HDB BTO but due to some variable income which took his total income to above SGD 10,000 a month, had to appeal to keep his slot ( a low floor unit) and the results are still pending. He told me that the decision to pass on Heron Bay was extremely painful because his relatives told him that he would have choice units - the highly marketable penthouse units - and would able to make a profit once he can sell.
He told me this over coffee and my consolation was that he should get what he is comfortable with. No one knows what will happen between now and the time. Among the uncertainties are whether he or his girlfriend will still keep their jobs and whether does the property market still have legs. Of course who dares wins, but my own view is that unless you already have an existing property (my friend stays with his mother), you should not try to flip them. The reason is same as with my Colleague A. If you already have two properties, you can easily switch between them without incurring rental costs which will be market rate. In the case of my friend, it is the weight of monthly repayments on a close to SGD 1.3 million mortgage that frightened him off. But if he could well afford it there would be nothing wrong for him to take that good slot.
This reminded me of a quote from someone who spoke at a HDB/CPF talk as well as the Russian writer Tolstoy. The man who was speaking at the HDB/CPF event said that it is very fair because what size of house you buy, when you sleep at night, it feels the same. I guess in this sense, you should not take on too big a mortgage, otherwise you cannot sleep well at night (same goes for shares). Tolstoy on the other hand said in some way that all the land that a man needs is six feet long. In Singapore, this is much lesser since some of us may be holed up in a columbarium.