The government has changed the rules again for non-first time property buyers. One of the new rules that the Monetary Authority of Singapore has declared recently states that banks are not allowed to loan more than 40% of a property’s selling price if the buyer’s first property is not paid off.
What does this mean for me?
Firstly, this reduces the pool of available buyers for private property and I suspect that the mass market condo prices are going to drop. This means that my condo valuation is going to fall. However, I cannot sell my condo for the next three years anyway, so I am not particularly worried about any immediate impact, as long as the rental market holds up. But it is still not good news to have.
Secondly, I had originally planned to save up for a second smaller property in about five years’ time – probably a studio apartment costing around 800K. I would have needed around 350K cash for the mandatory 40% down payment and stamp duty, which was going to be no mean feat anyway.
With the new rules, I would need to fork out over 500K in cash for the same property. I cannot see myself managing to save 100K cash a year, so this kind of puts paid to the plan. Unless prices fall more than 20% within the next five years, which may make it possible.
But do I really want to tie up so much cash in property given how hard the government is trying to sit on the prices?
Anyway, there is not much point in discussing all this at this point. I just need to keep saving as much as I can and watch the property market closely for now. But honestly, it makes me feel depressed as hell.
Sometimes, when I read the North American centric PF blogs, I wonder who is worse off, North Americans with cheap investment opportunities all around (as far as I can see), but no money to spend, or us Singaporeans, who have thousands and thousands of savings, but no affordable investment to spend on?