{"id":12092,"date":"2017-10-16T08:49:40","date_gmt":"2017-10-16T00:49:40","guid":{"rendered":"https:\/\/www.99.co\/blog\/singapore\/?p=12092"},"modified":"2022-07-01T04:09:45","modified_gmt":"2022-06-30T20:09:45","slug":"private-property-affordable-reasons","status":"publish","type":"post","link":"https:\/\/www.99.co\/singapore\/insider\/private-property-affordable-reasons\/","title":{"rendered":"4 reasons a private property may be more affordable than most Singaporeans think"},"content":{"rendered":"
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(Credits<\/a>)<\/p>\n

Most Singaporeans tend to overestimate the price of a private property. Right now, there are probably some of you who estimate the price of a suburban condo to be somewhere from $2 million, to two times the national debt of France. It\u2019s just how we\u2019re trained to think. Well, here are some reasons a private property more affordable than most Singaporeans assume:<\/span><\/p>\n

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  1. \n

    The misconception that \u201cno condo is below a million dollars\u201d<\/b><\/h3>\n<\/li>\n<\/ol>\n

    How much would you say is the minimum price for a condo? A million dollars? $800,000? Well, a quick search for condos priced at $700,000 or below<\/span> yields over 3,300 results on 99.co<\/span><\/a>.<\/span><\/p>\n

    And before you jump to conclusions, no, they\u2019re not all tiny shoeboxes. This three-bedroom, 850 square foot apartment at<\/span> The Visionare<\/span><\/a> is just $690,000. This one at<\/span> Northwave<\/span><\/a> is 893 square feet, at just $686,100.<\/span> The Criterion<\/span><\/a> in Yishun has equally large units, for just $677,600.<\/span><\/p>\n

    These are just slightly beyond the price of, say,<\/span> a resale flat in Tampines<\/span><\/a> ($649,000), and two of the units are actually <\/span>cheaper <\/span><\/i>than this<\/span> resale flat in Ang Mo Kio<\/span><\/a> ($680,000).<\/span><\/p>\n

    These $600,000 to $700,000 condos have all the facilities you expect: tennis courts, jacuzzis, pools, gyms, etc. Despite many developments like these, plenty of Singaporeans can\u2019t wrap their heads around the idea that \u201ca real condo\u201d costs anything below a million dollars.<\/span><\/p>\n

    If you\u2019ve been operating under this assumption, it\u2019s time to browse a little more.<\/span><\/p>\n

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      The belief that condos \u201ccost $4,000 a month\u201d to stay in<\/b><\/h3>\n<\/li>\n<\/ol>\n

      Although home loan interest rates are rising, there are two things to note: first, they are still cheaper than the HDB loans used for public housing. Second, banks have managed to innovate to handle the rising costs, through loan options like Fixed Deposit Home Rate (FHR) loans.<\/span><\/p>\n

      Consider the monthly repayments, if you were to buy an $800,000 condo. You would make a downpayment of 20 per cent, but only five per cent of the property price needs to be in cash (15 per cent can come from CPF, and the bank can finance the remaining 80 per cent). That\u2019s a cash down payment of $40,000, and $120,000 down payment that comes from CPF.<\/span><\/p>\n

      Next, let\u2019s assume you use a 30-year loan, with an interest rate of about 1.8 per cent per annum. At the time of writing, this is the typical loan rate. With a loan quantum of $640,000, the monthly payments over 30 years come to $2,302 per month.<\/span><\/p>\n

      Let\u2019s look at that amount, split between you and one co-borrower (parent, partner, or spouse): it\u2019s $20,000 in cash each, and $60,000 from your respective CPF accounts. The monthly repayments \u2013 <\/span>which can be paid with CPF<\/span><\/i>, despite a common misconception \u2013 is just $1,151 on both sides.<\/span><\/p>\n

      Now we\u2019re not saying that\u2019s cheap. We\u2019re just pointing out that it\u2019s below what many Singaporeans expect, as it\u2019s a common belief that condos \u201ccost $4,000 a month\u201d to stay in.<\/span><\/p>\n

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        The interest rate on your mortgage is tax deductible (as are a whole bunch of other property-related costs) if you’re renting your private property out<\/b><\/h3>\n<\/li>\n<\/ol>\n

        A lot of people forget \u2013 or don\u2019t realise – that the interest payments on a home loan are tax deductible.<\/span><\/p>\n

        According to the Inland Revenue Authority of Singapore (IRAS),<\/span> claimable tax deductions<\/span><\/a> are:<\/span><\/p>\n