Singapore Property Weekly Issue 181

8/10/2019 Singapore Property Weekly Issue 181

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Issue 181Copyright 2011-2014 www.Propwise.sg. All Rights Reserved.
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CONTENTS

p2 Should You Buy a Property Before You Reach

55 to Use Up Your CPF?

p10 Singapore Property News This Week

p15 Resale Property Transactions

(October 22 October 28 )

Welcome to the 181st edition of the

Singapore Property Weekly.

Hope you like it!

Mr. Propwise

FROM THE

EDITOR
mailto:[email protected]://www.propwise.sg/advertise/http://www.propwise.sg/advertise/mailto:[email protected]


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SINGAPORE PROPERTY WEEKLY Issue 181

Page | 2Back to Contents

By Paul Ho (guest contributor)

For Singaporeans, reaching 55 years old

marks a major milestone from the perspective

of personal financial planning. At 55, you can

withdraw a portion of your Central Provident

Fund (CPF) savings. Yes, finally after years ofwaiting, you can use the money locked up in

your CPF!

But hang on before you start planning for

your next holiday destination or researching

your second property, reaching 55 does not

mean you can simply go to the CPF to

withdraw any amount you want. The CPF,

Singaporespension scheme, has other plans

for your funds.

Should You Buy a Property Before You Reach 55 to UseUp Your CPF?


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What happens to your CPF when you turn

55?

First, you need to make sure that you have

enough savings in your Special Account (SA)and Ordinary Account (OA) to make up the

Minimum Sum (MS) of $155,000 in your

newly set up Retirement Account (RA).

Up to 50% of the Minimum Sum (MS) can be

accounted for with your property if you had

used CPF savings to pay for your property.However, if you sell your property after 55,

any amount drawn down from the CPF

previously to purchase the property plus

accrued interest will now have to go back to

your CPF.

On top of that, there is still the Medisave

Account which has a mandated Minimum

sum of $43,500 which will have to be topped

up before any funds are withdrawn.

This means that the Total Minimum sum is a

whopping $198,500 (Minimum Sum (MS) +

Medical Minimum Sum (MMS) = $155,000 +

$43,500).

CPF Life a Compulsory National Annuity

Scheme

Most of the funds in your RA will be for a

compulsory national annuity scheme, also

known as CPF Life, which gives you a

monthly payout when you reach 65 for aslong as you live.

There are two plans:

a) CPF Life Standard Plan, which provides

higher monthly payouts and lower bequests;

and

b) CPF Life Basic Plan, which provides lower

monthly payouts and higher bequests.


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Under the CPF Life Standard Plan, the first

installment of your annuity premium of up to

$77,500 (or half the MS) will be deducted

from your RA.

And before you hit 65, the rest of your money

in the RA will go into the second installment of

your annuity premium.

This means that basically all the money in

your RA will go towards an annuity scheme

under this CPF Life Standard plan, whichhappens to be the default plan if you do not

select one.

Under the other plan, CPF Life Basic Plan, a

small portion of about 10% of your RA

savings will go into your first installment and

another portion will be made for the second

installment as you approach 65. The amount

of annuity premium deducted depends on

your age and gender.

Buy a Second Property Before 55 to

Protect Your CPF Money?

Many people have called us to enquire about

buying a second property using their CPF asthey are afraid that the money gets taken

away into Retirement account. Also the

controversies regarding how the CPF funds

are channeled by the government has

increased the anxiety of some.

Lets take the scenario of Mr. Tan who iscurrently 54 years old and evaluating whether

to buy a property. He currently owns a private

property. This property is used as a pledge for

50% of the Minimum Sum. He has the

following savings in his CPF:

Ordinary Account = $120,000

Special Account = $55,000

Medisave Account = $23,500


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At 55 years old, a Retirement Account would

be created. All the monies will be transferred

from the Special Account (SA) into the

Retirement Account (RA) and his Medisave

Account (MA) will be topped up. After this

transfer his account situation will look like

this:

Retirement Account = $155,000

Ordinary Account = $0

Special Account = $0

Medisave Account = $38,500 (Medisave

Minimum Sum is $43,500)

Only a $5000 withdrawal is possible.

There is still a Medisave Account (MA)Shortfall of $5,000.

However, only $5,000 can be withdrawn at 55

years old. This means that between 55 and

65 years old, there is practically no additional

income.

Many people who are now in their early 50s

and who have some CPF monies are

approaching us to discuss using their CPF

Ordinary account to buy another house. If

they buy a second house, they only need to

meet 50% of the Minimum Sum, which is

$155,000 * 0.5 = $77,500. Anything in excess

of $77,500 can be used. We can see this rulefrom the CPF website:

C. USE OF CPF TO PURCHASE MULTIPLE

PROPERTIES

If you already own a property bought with

your CPF and wish to buy another property

with CPF, you should take note that you may

do so only after you have set aside half of the

prevailing Minimum Sum in your Ordinary and

Special Accounts.


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The maximum amount of CPF you and you

co-owner(s) may use for your second and

subsequent property is capped at its VL.

* The Minimum Sum changes every July.

Please refer to the CPF website fo

information on the prevailing Minimum Sum.

(Source: CPF)

Mr. Tan, has $120,000 in his OA and $55,000

in his SA. In other words, since he already

has a private property as a pledge towards

the Minimum sum of $155,000, he can use

any sum of money in excess of $77,500 for

his second property purchase, provided it is in

the Ordinary account (OA).

$120,000 + $55,000 - $77,500 = $97,500.

Thus Mr. Tan can use $97,500 for his second

property purchase.

If this money is used ahead of him turning 55,

it does not go into the Retirement Account.

However buying a second property has the

following implications:

The Additional Buyer Stamp Duty of 7%

(for the second property) is a whopping

$70,000 of tax if the cost of the property is

$1 million.

His first property is used as a pledge and

upon sale of the property, proceeds from

the sale will go into topping up his CPFaccount together with accrued interest.

He can only borrow up to a reduced

Loan-to-Value of 50% (i.e. only 50% loan

size and 50% downpayment) if his first

residential property has an outstanding

loan.

Mr. Tan is already 54 years old. Hence the

loan eligibility is lower as the Total Debt

Servicing Ratio criteria is tough.

SINGAPORE PROPERTY WEEKLY I 181


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His loan tenure will be short at 10 to 11

years tenure (max 65 years old for 80%

loan). If he earns $10,000 a month, he

can only pass the TDSR if his loan

amount is around $656,000. He will need

another borrower to join him if he wants to

buy a dearer property.

SINGAPORE PROPERTY WEEKLY I 181


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Issues you should consider if you are

approaching 55

While a monthly payout in your old age

sounds good, having a substantial portion of

your savings being tied down for this

compulsory annuity scheme raises a few

issues worth considering:

Am I better off reinvesting the money on

my own?

Will I live long enough to be able to use

my hard earned money?

What can I do now to better plan for

myself financially?

Should I downgrade to a smaller flat since

funds received from the sale of property

now goes into meeting the MS in my RA?

Should I take the opportunity to buy

another property now to use up my funds

before all the money goes into my RA

when I reach 55?

Should I use my CPF to pay down my

existing housing loan (if it is not paid up in

full)?

Each individuals needs and aspirations are

different. And it helps if you think about these

issues so as to prepare yourself for this majormilestone.

Buying another residential property at 55 is a

major decision. The repayment commitment

is heavy given the short loan tenure. Apart

from that, you still have to do proper research

to make sure you are not overpaying.



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Suggestions for the Government

While the governments plan to make

everyone compulsorily save for retirement is

legitimate, it places an undue strain on

citizens. Structural income inequalities need

to be sorted out. Part of the inadequacy in

retirement funds could be due to the low

returns from CPF funds. Hence the

government can explore ways to ameliorate

this shortfall this would ensure that

Singaporeans can live and age gracefully.

By Paul Ho, holder of an MBA from a

reputable university and editor of

www.iCompareLoan.com, Singapores first

Cloud-based Home Loan reporting platform

used by Property agents, financial advisors

as well as Mortgage brokers.

http://www.icompareloan.com/http://propertymarketinsights.com/http://www.icompareloan.com/http://www.icompareloan.com/http://www.icompareloan.com/http://www.icompareloan.com/http://www.icompareloan.com/


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Singapore Property This Week


Residential

L u x u r y h o m e p r i c e s f e l l b y 1 0 % o v e r t h e

last year

According to Knight Franks Prime Global

Cities Index, luxury home prices in Singapore

have fallen by 10 percent, despite an average

of 4 percent growth in most other leading

cities, from September 2013 to September

2014. Nonetheless, luxury home prices have

also fallen in six other cities. For example,

luxury home prices in Hong Kong have fallen

by 1.1 percent. Market experts believe that

home prices in Singapore have fallen due to

the cooling measures that were implemented

in the recent years. Alice Tan from Knight

Frank predicts that prices for luxury homeswill continue to fall as transaction volumes are

typically low during the festive seasons at the

end of the year. Comparatively, in the United

States, annual prices have risen between 6.7

percent and 16.3 percent in cities such as Los

Angeles, San Francisco, Miami and New

York.

(Source: Business Times)

TR E R esidenc es pr iced at $1,560 psf

TRE Residences, which is located in

Geylang, will be sold at an average indicative

price of $1,560 psf when it is launched on

November 15. A 5 per cent early bird discount

will be offered during the launch.



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With the discount, prices at TRE Residences

will start from $690,000 for a one bedroom

unit; $899,900 for a two bedroom unit; $1.179

million for a three bedroom unit and $1.38

million for a four bedroom dual key unit.Nicholas Mak from SLP International believes

that the average indicative pricing for TRE

Residences is steep compared to prices of

neighbouring projects. The condominium has

a 99-year leasehold and its unit sizes start

from 420 square feet to 947 square feet.


H D B r e s a le p r i c e s u p b y 0 .1 % m o n t h - o v e r -

m o n t h

In October, HDB resale prices rose by 0.1 per

cent from the previous month according to

SRX. Prices of executive flats increased by

0.8 per cent while prices of four room and five

room HDB flats fell by 0.4 per cent and 0.1

per cent respectively. Nonetheless, market

experts believe that the market will soften

further given that the governments cooling

measures have not been lifted. Yet, resale

volumes have improved in October from theprevious month by 5.7 percent as 1,553 HDB

flats changed hands in October this year.

According to SRX, this was the highest

monthly resale volume for 2014. Ong Kah

Seng from RSTResearch believes that high

resale volumes and the slight increase inprices show that buyers may be rushing to

close deals before the year ends.


The Terrace is launc hed

The Terrace which is located near Punggol

Waterway, has been launched at an average

indicative price that is between $770 and

$840 psf.



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More specific quantum prices will be provided

by the developer, Kheng Leong, when closer

to the start of its e-application on November

21. The executive condominium comprises of

a total of 747 units. Unit sizes range from1,001 square feet for a three bedroom unit to

1,711 square feet for a penthouse unit. Ong

Kah Seng from RST Research expects 40

percent of The Terrace to be sold within the

first two months as it is priced reasonably. Not

only so, it is conveniently located nearamenities such as the upcoming Waterway

Point shopping mall.


H olland Park GC B t o be sold f or $30m

A brand new Good Class Bungalow at

Holland Park will be sold for $30 million, or

$1,989 psf. The property has a built up area

of 11,368 square feet and is freehold. The

bungalow has a pool, lift, five bedrooms and

is two storeys high. It has received its

Temporary Occupation Permit a few months

ago. Market experts believe that the asking

price of the bungalow is slightly high, givencurrent market conditions. Not only so, the

property is not situated in the top-tier Good

Class Bungalow area.


23 GC Bs sold t h is year

According to the Business Times, 23 Good

Class Bungalows (GCB) were sold this year

for a total of $526 million. This was only

slightly lower than last years tally of 29

transactions. Ku Swee Yong from Century 21

said that there is a steady demand for GCBs

because high-net-worth Singaporeans prefer

the low density environment of GCB areas.



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Thus, the sale of GCBs is less affected as

compared to the sale of properties at Sentosa

Cove. This year, only 2 bungalows located at

the Sentosa Cove waterfront have been

transacted for a total of $27.5 million. This issignificantly lower than the $367 million that

was amassed from the sale of 18 bungalows

at Sentosa Cove last year.


S i t e a t S e r a n g o o n t o b e l a u n c h e d a s f i r s t G L S u n d e r n e w p o l i c y

From November 1, new rules to improve

productivity in the construction sector will be

rolled out. Under the new ruling, government

land sale (GLS) sites have to higher building

design and constructability standards. Also,

developers have to meet certain levels of

prefabrication. A site at upper Serangoon

Road will be the first GLS site that will be

affected by the new ruling. The site has a 99-

year leasehold and has a plot size of about

10,000 square meters. It can yield about 340

homes. Market experts believe that the sitewill attract about 10 bidders. Besides the

Serangoon site, other sites at Yishun and

Jurong have also been selected for

prefabricated pre-finished volumetric

construction (PPVC), which involves

assembling whole rooms that aremanufactured off-site. The Building and

Construction Authority (BCA) has said that it

is still identifying more GLS sites for PPVC.

Nicholas Mak from SLP International believes

that the increase in construction costs may

push GLS tender prices down or be passed

on to property buyers.




15/16



Commercial

Oxley H ot el on auct ion

Oxley Hotel, which is located at Lorong 6

Geylang, is a freehold site that has eightstoreys. It has a plot area of 3,725 square

feet and a total gross floor area of 12,238

square feet. Its indicative price is $25 million

and has been put up for sale on auction. The

hotel has 56 guest rooms and has a gross

plot ratio of 2.8. It has been zoned forresidential or institution use in 2008. The

auction will begin on November 21. Grace Ng

from Colliers International believes that the

auction will attract many bidders as it is

unlikely for new hotel sites to be approved in

the vicinity.


R eit as w i l l engage regulat ors

The Reit Association of Singapore (Reitas)

has been formed by several real estate

investment trusts to promote the growth of

SingaporesReit sector. The association will

be helmed by nine committee members that

are from major Reits and sponsors such as

Mapletree, CapitaLand and Keppel. Reitas

aims to engage regulators and to educate

investors. According to market experts,

SingaporesReit market is the third largest in

Asia pacific, and as such, it is important to

manage the sector. Reitas has been

engaging MAS and IRAS on issues such as

tax exemptions for foreign-sourced income as

well as stamp duty remission for properties

sold to S-Reits. According to the Business

Times, Reitas will officially launch on

November 17.




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S G O O ssue 8


Non-Landed Residential Resale Property Transactions for the Week of Oct 22 Oct 28

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

1 MARINA BAY SUITES 2,691 7,263,000 2,699 99

3 QUEENS 915 1,200,000 1,312 99

4 THE INTERLACE 5,253 3,560,000 678 99

4 CARIBBEAN AT KEPPEL BAY 1,227 1,930,000 1,573 99

5 HERITAGE VIEW 1,163 1,350,000 1,161 99

5 HERITAGE VIEW 969 1,170,000 1,208 99

8 KERRISDALE 1,270 1,400,000 1,102 99

8 KENTISH COURT 1,227 1,200,000 978 99

9 THE TATE RESIDENCES 3,208 7,150,000 2,229 FH

9 VISIONCREST 1,152 2,200,000 1,910 FH

9 MACKENZIE REGENCY 990 1,335,000 1,348 FH10 HOLT RESIDENCES 2,067 3,400,000 1,645 FH

10 LUSH ON HOLLAND HILL 1,561 2,618,000 1,677 FH

10 GLENTREES 1,711 2,460,000 1,437 999

11 PARK INFINIA AT WEE NAM 1,464 2,600,000 1,776 FH

11 THE PARK VALE 1,701 2,350,000 1,382 999

12 VISTA RESIDENCES 1,313 2,065,000 1,572 FH

12 ECOVILLE 1,184 1,380,000 1,166 FH

12 CASA FORTUNA 710 780,000 1,098 FH

13 ONE LEICESTER 958 1,200,000 1,253 FH14 SIMSVILLE 1,528 1,250,000 818 99

14 EUNOSVILLE 1,679 980,000 584 102

15 MARINE MEADOWS 1,690 1,950,000 1,154 FH

15 WATER PLACE 1,216 1,500,000 1,233 99

15 PALMERA RESIDENCE 893 1,050,000 1,175 FH

15 SUITES @ AMBER 474 738,000 1,558 FH

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

16 COUNTRY PARK CONDOMINIUM 1,227 1,230,000 1,002 FH

16 TANAMERA CREST 1,206 1,130,000 937 99

17 DAHLIA PARK CONDOMINIUM 1,862 1,380,000 741 FH

17 LIGHTHOUSE 1,841 1,230,000 668 99

17 BALLOTA PARK CONDOMINIUM 1,421 900,000 633 FH

18 ELIAS GREEN 1,518 980,000 646 99

18 CHANGI RISE CONDOMINIUM 1,130 978,000 865 99

19 CHILTERN PARK 1,518 1,270,000 837 99

19 COMPASS HEIGHTS 1,755 1,250,000 712 99

19 SUNGLADE 1,001 1,180,000 1,179 99

20 BRADDELL VIEW 1,453 1,100,000 757 9921 FLORIDIAN 1,862 2,850,000 1,530 FH

21 SIGNATURE PARK 1,421 1,480,000 1,042 FH

23 CASHEW HEIGHTS CONDOMINIUM 1,658 1,550,000 935 999

23 TREE HOUSE 1,292 1,300,000 1,006 99

23 PALM GARDENS 1,938 1,300,000 671 99

23 HILLVIEW REGENCY 1,130 920,000 814 99

23 REGENT GROVE 1,173 858,000 731 99

23 NORTHVALE 1,087 820,000 754 99

25 CASABLANCA 1,184 990,000 836 9926 MEADOWS @ PEIRCE 1,830 1,976,400 1,080 FH

27 YISHUN EMERALD 1,152 880,000 764 9 9

NOTE: This data only covers non-landed residential resale propertytransactions with caveats lodged with the Singapore Land Authority.Typically, caveats are lodged at least 2-3 weeks after a purchasersigns an OTP, hence the lagged nature of the data.

Documents

Singapore Property Weekly Issue 181