HDB Fully paid up ?

[Mecisteus]

Maybe the HK unrest will trigger a regional crisis?

I think Cramer is reading this forum.

https://www.cnbc.com/2019/08/12/cramer-hong-kong-protests-more-serious-than-us-china-trade-war.html

 

[BBCWatcher]

I guessed because buying a property is a much more tangible asset ?

Is it?

It’s the interior space of a portion of a much larger building (but not the land), with a three dimensional set of boundaries and recorded in a title office. This set of coordinates comes with a set of restrictions and obligations that can be changed repeatedly and without your consent. A mortgage lender holds a lien on these 3D coordinates for the loan that you’re personally fully responsible for, and the lender can adjust the interest rate after a maximum of 3 years. Title to these 3D coordinates can be transferred to another party, but there is no public exchange. It’s all arranged via private sale, and with high transfer costs including stamp duties. The coordinates are not further divisible, or at least not much. In other words, it’s a title that’s illiquid and “lumpy.”

Owning shares of stock or a stock fund means you own defined portions of real businesses, including all their assets (physical plants, offices, patents, copyrights, trademarks, trade secrets, etc.), also recorded in a title office. With a stock fund you can own portions of hundreds or even thousands of real companies around the world. Those businesses often borrow to fund expansions, but you are not personally liable. Stock fund increments/minimums are available in as little as one dollar.

I don’t think one is less tangible than the other. Indeed, nobody really owned particular “floating” 3D coordinates in an apartment building until well into the 20th century since it was considered pretty silly and artificial — and, dare I say, not “tangible” enough. Shares of company stock are centuries older and date back at least as far as 1602.

And even in a downturn, you can still hold onto something tangible and await it to rebound ?

Nobody forces anybody to sell stock in a downturn, not even a mortgage lender when the downturn could mean you miss mortgage payments. There is no personal lender in straight stock ownership.

And I see Singapore as a familiar and politically stable place for holding physical assets. The lack of expertise knowledge in the stock market puts us off in dabbling stock in a big time.

But you’re at least an above average real estate expert and have at least 10 years of experience owning and managing a dozen or more properties?

I think you should do your homework regardless, but humility ought to apply everywhere. I readily admit I am not the world’s foremost expert in many particular sectors, which is why I’d much rather hire experts who are. A stock fund does that, and so does a REIT fund if you want a narrow real estate sector bet.

 

[JuniorLion]

I know I know !

I guessed because buying a property is a much more tangible asset ? And even in a downturn, you can still hold onto something tangible and await it to rebound ? And I see Singapore as a familiar and politically stable place for holding physical assets. The lack of expertise knowledge in the stock market puts us off in dabbling stock in a big time.

So, are you an expert in dabbling in real estate?

Wait till you start seeing the interest you are paying on your mortgage. Oh boy, that'd be fun.

 

[Meemoosaa]

......

I think you should do your homework regardless, but humility ought to apply everywhere. I readily admit I am not the world’s foremost expert in many particular sectors, which is why I’d much rather hire experts who are. A stock fund does that, and so does a REIT fund if you want a narrow real estate sector bet.

Thanks. I appreciate your thoughts about the concept of owning shares of stocks. I had thought about REIT fund from reading some of the threads around here and get what you mean. I guessed it's an area of unfamiliarity and I naturally hesitate but never too late to start learning !

I am no expert in real estate either but I do have some modest experiences of managing some properties albeit they do not belong to me! (Am not an agent though.) . So again, we tend to gravitate towards familiarity I guess !

 

[Meemoosaa]

So, are you an expert in dabbling in real estate?

Wait till you start seeing the interest you are paying on your mortgage. Oh boy, that'd be fun.

No I'm not an expert in dabbling real estate but surely this is not a closed forum where one has to be an expert in everything before being allowed to post thoughts and personal circumstances to solicit feedback and comments ?

Otherwise, I wouldn't be here at all.

 

[JuniorLion]

No I'm not an expert in dabbling real estate but surely this is not a closed forum where one has to be an expert in everything before being allowed to post thoughts and personal circumstances to solicit feedback and comments ?

Otherwise, I wouldn't be here at all.

You said your lack of expertise gives you the fear in dabbling in stocks.

Since you have the courage to dabble in real estate, a reasonable assumption is that you are an expert in real estate.

 

[Meemoosaa]

You said your lack of expertise gives you the fear in dabbling in stocks.

Since you have the courage to dabble in real estate, a reasonable assumption is that you are an expert in real estate.

No - it is not reasonable to assume it is one or the other polarity especially when I did not claim that I am an expert to begin with. That's just jumping to certain conclusions you have about me. It doesn't have to be that way.

People dabble in things for all sort of reasons and it is not necessarily because they are an expert.

I appreciate your reminder about interest payment though.

 

[BBCWatcher]

Here are some fun historical facts....

The first condo in the United States dates to 1958, in Puerto Rico (a U.S. territory). Within the 50 U.S. states, 1960 (Utah). New York City didn't have any until 1965.

Canada's first condo was built in 1967, in Edmonton.

Sweden's first condo was built in 2009, although that country has/had bostadsrättslägenheter (housing cooperatives) earlier.

In Hungary they're pretty old but still still less than a century: 1924.

The U.K. really doesn't have many condos as such since commonholds, the equivalent, were introduced only in 2004.

Beverly Mai, completed in 1974, is widely considered to be Singapore's first condo development -- yes, only 45 years ago. In terms of public housing, the Singapore Improvement Trust was founded in 1927 but didn't do much. (Block 55 in Tiong Bahru, the first SIT public housing, wasn't opened until the end of 1936. And public housing back then was rented.) The HDB took over from SIT in 1960, and the HDB leasehold then emerged. But I don't think it was as long as 99 years at the beginning, and maybe somebody else knows the exact number.

Shares of company stock were issued at least as early as 1602 when the Dutch East India Company was established. There was a public stock flotation that closed in September, 1602. And stockholders were well rewarded for the first 94 years, or more than double the age of Singapore's oldest condo, with a steady stream of variable (and high) dividends. The company survived the tulip craze and a big swing in its share price, although the share price remained well above its 1602 IPO price at all times amidst that crazy ride. The company dissolved in 1800 after nearly 200 years in business. There are no more dividends, but the surviving share certificates now have increasing value as collectibles. In short, history's first stock IPO was a big total return winner.

Until recently (2006) Kongo Gumi was probably the world's oldest privately owned company. (Kongo Gumi had shareholders, but its stock was not publicly traded.) Kongo Gumi was (and is -- more on this in a moment) in the temple building business in Japan, an excellent core business and locale since the company was in business for "only" 1,428 years. Takamatsu, a larger and more generalized construction company, acquired Kongo Gumi in 2006, and it's now a subsidiary of that larger company.

Even in Singapore, public stock trading is older than Singapore's oldest condo and just about as old as HDB. Public stock trading began on May 9, 1960, on the Malayan Stock Exchange in Kuala Lumpur. (This was pre-independence. The Singapore Stockbrokers' Association was founded even earlier, in 1930, and handled private sales of securities before the public exchange opened.) In 1961 a stock trading floor was established in Singapore, and the two floors were linked via telephone circuits to form one virtual exchange. That single virtual exchange was named the Stock Exchange of Malaysia and Singapore when Singapore became independent in 1964, and then the exchange split into two in 1973 when the currencies decoupled (albeit with cross-listing, infamously as it turned out later).

Anyway, my point here is that company shares are hardly new. Publicly traded shares are over four centuries old, privately much older than that. It's the condo inventions -- the fanciful, wild, "bizarre" notion that it's possible to carve up a single building into walled/partitioned units (in all three dimensions) that are separately titled and private market traded -- that are much, much newer. Dare I say that condos are "exotic derivatives" in comparison? To a mid-20th century observer, yes, I suppose they were. They're still utterly novel in places like Sweden and the United Kingdom.

Condos aren't the last word in "exotic" real estate products. For example, how about timeshares, where you add in another dimension to the product mix beyond 3D coordinates and various covenants: time?

....Study up on this stuff, basically. If shares of company stock, and stock funds, are new to you, OK, fair enough, then crack open a book -- Shiny Things has one -- and study up. You "only" have 400+ years of financial history you've missed.

 

[Toni90]

Here are some fun historical facts....

The first condo in the United States dates to 1958, in Puerto Rico (a U.S. territory). Within the 50 U.S. states, 1960 (Utah). New York City didn't have any until 1965.

Canada's first condo was built in 1967, in Edmonton.

Sweden's first condo was built in 2009, although that country has/had bostadsrättslägenheter (housing cooperatives) earlier.

In Hungary they're pretty old but still still less than a century: 1924.

The U.K. really doesn't have many condos as such since commonholds, the equivalent, were introduced only in 2004.

Beverly Mai, completed in 1974, is widely considered to be Singapore's first condo development -- yes, only 45 years ago. In terms of public housing, the Singapore Improvement Trust was founded in 1927 but didn't do much. (Block 55 in Tiong Bahru, the first SIT public housing, wasn't opened until the end of 1936. And public housing back then was rented.) The HDB took over from SIT in 1960, and the HDB leasehold then emerged. But I don't think it was as long as 99 years at the beginning, and maybe somebody else knows the exact number.

Shares of company stock were issued at least as early as 1602 when the Dutch East India Company was established. There was a public stock flotation that closed in September, 1602. And stockholders were well rewarded for the first 94 years, or more than double the age of Singapore's oldest condo, with a steady stream of variable (and high) dividends. The company survived the tulip craze and a big swing in its share price, although the share price remained well above its 1602 IPO price at all times amidst that crazy ride. The company dissolved in 1800 after nearly 200 years in business. There are no more dividends, but the surviving share certificates now have increasing value as collectibles. In short, history's first stock IPO was a big total return winner.

Until recently (2006) Kongo Gumi was probably the world's oldest privately owned company. (Kongo Gumi had shareholders, but its stock was not publicly traded.) Kongo Gumi was (and is -- more on this in a moment) in the temple building business in Japan, an excellent core business and locale since the company was in business for "only" 1,428 years. Takamatsu, a larger and more generalized construction company, acquired Kongo Gumi in 2006, and it's now a subsidiary of that larger company.

Even in Singapore, public stock trading is older than Singapore's oldest condo and just about as old as HDB. Public stock trading began on May 9, 1960, on the Malayan Stock Exchange in Kuala Lumpur. (This was pre-independence. The Singapore Stockbrokers' Association was founded even earlier, in 1930, and handled private sales of securities before the public exchange opened.) In 1961 a stock trading floor was established in Singapore, and the two floors were linked via telephone circuits to form one virtual exchange. That single virtual exchange was named the Stock Exchange of Malaysia and Singapore when Singapore became independent in 1964, and then the exchange split into two in 1973 when the currencies decoupled (albeit with cross-listing, infamously as it turned out later).

Anyway, my point here is that company shares are hardly new. Publicly traded shares are over four centuries old, privately much older than that. It's the condo inventions -- the fanciful, wild, "bizarre" notion that it's possible to carve up a single building into walled/partitioned units (in all three dimensions) that are separately titled and private market traded -- that are much, much newer. Dare I say that condos are "exotic derivatives" in comparison? To a mid-20th century observer, yes, I suppose they were. They're still utterly novel in places like Sweden and the United Kingdom.

Condos aren't the last word in "exotic" real estate products. For example, how about timeshares, where you add in another dimension to the product mix beyond 3D coordinates and various covenants: time?

....Study up on this stuff, basically. If shares of company stock, and stock funds, are new to you, OK, fair enough, then crack open a book -- Shiny Things has one -- and study up. You "only" have 400+ years of financial history you've missed.

Playing your lying and misleading trick again? Why compare condo to stock? U should only compare properties to stock. If really want to compare condo, at least compare with tech stock.

Ask you a question. Why u need to spread lying and misleading just to prove some idiot point like this?

 

[Aaron_soh80]

Just would like to find out more when you paid up for your HDB flat.
I can see from the threads many couples are paying in full for their flats before they hit 35. Do do see a trend that many are opting for bank loans instead of the traditional HDB loan.

bank loan offer better interest rate & at the same time if you hit their multiplier requirement u can earn another interest..

 

[dork32]

i am really impressed by the trash from bbc.

he really knows how to skew his argument. imagine quoting the dutch east india company. we just celebrated our bicentenial. the case he quoted is double the 200 years we just mentioned. what happened then is not going to happen again.

there are also many examples where people invest in stocks and lose money.

you want a real example on property? i used to stay in a 4room hdb in marine parade. my parents bought it for 25k sgd in 1975. today it is worth 600k. this is not to mention the rental that we could have collected along the way. It was worth a lot more a few years ago, till some stupid minister say something about old hdb flats

it is 24 000% increase in investment value.

does it mean that all youngster should rush in and buy from hdb today? does it mean that a 250k hdb flat today is going to worth 6 million in 50 years time? i really doubt so.

what i want to say is quoting a one off example that happened long ago is not reflective of what is going to happen in the future.

 

[BBCWatcher]

you want a real example on property? i used to stay in a 4room hdb in marine parade. my parents bought it for 25k sgd in 1975. today it is worth 600k. this is not to mention the rental that we could have collected along the way. It was worth a lot more a few years ago, till some stupid minister say something about old hdb flats

it is 24 000% increase in investment value.

The market value has increased ~2300%, to be precise. You've got an extra zero in there. It will fall to zero eventually (99 year leasehold), by the way.

Would you like another example? Yes, of course you would.

People who invested US$25,000 in mid 1975 in a low cost U.S. S&P 500 stock index fund, and who ticked the "reinvest dividends" checkbox, would have approximately US$2.7 million on a pre-tax basis today. Tax pulled that down somewhat (unless in a tax free or tax deferred retirement account), but tax also pulls down real estate -- along with upkeep, which a stock index fund doesn't require.

And we should also adjust for currency, so let's try this again in Singapore dollar terms. Let's take S$25,000 on July 1, 1975. Back then that was worth about US$10,500, so that's our principal in this exercise. Today that would be worth about S$1.56 million on a reinvested dividend pre-tax basis.

does it mean that all youngster should rush in and buy from hdb today? does it mean that a 250k hdb flat today is going to worth 6 million in 50 years time? i really doubt so.

I do too.

what i want to say is quoting a one off example that happened long ago is not reflective of what is going to happen in the future.

Correct, especially when you've picked the most impressive boom in real estate...and it still wasn't that impressive.

"Just saying." To repeat, I'm not opposed to real estate! I just don't think you should overweight that particular sector or any other, except as a primary owner-occupied residence.

 

[doody_]

This thread has lost its focus. We should be discussing whether to fully pay up HDB or not.

 

[Mecisteus]

The Marine Parade flat for dork's example went up 7.5% pa.

I calculated before.

Marine Parade flats went down a little compared to the other estates in the last 5 years.

 

[NewInvestor]

The market value has increased ~2300%, to be precise. You've got an extra zero in there. It will fall to zero eventually (99 year leasehold), by the way.

Would you like another example? Yes, of course you would.

People who invested US$25,000 in mid 1975 in a low cost U.S. S&P 500 stock index fund, and who ticked the "reinvest dividends" checkbox, would have approximately US$2.7 million on a pre-tax basis today. Tax pulled that down somewhat (unless in a tax free or tax deferred retirement account), but tax also pulls down real estate -- along with upkeep, which a stock index fund doesn't require.

And we should also adjust for currency, so let's try this again in Singapore dollar terms. Let's take S$25,000 on July 1, 1975. Back then that was worth about US$10,500, so that's our principal in this exercise. Today that would be worth about S$1.56 million on a reinvested dividend pre-tax basis.


I do too.


Correct, especially when you've picked the most impressive boom in real estate...and it still wasn't that impressive.

"Just saying." To repeat, I'm not opposed to real estate! I just don't think you should overweight that particular sector or any other, except as a primary owner-occupied residence.

BBC, you didn't take into account the fact that dork and his parents had the benefit of living in their flat all these decades? Your stocks example assumed that all dividends were reinvested.

 

[dork32]

People who invested US$25,000 in mid 1975 in a low cost U.S. S&P 500 stock index fund, and who ticked the "reinvest dividends" checkbox, would have approximately US$2.7 million on a pre-tax basis today. Tax pulled that down somewhat (unless in a tax free or tax deferred retirement account), but tax also pulls down real estate -- along with upkeep, which a stock index fund doesn't require.

yeah, how many people invested in s&p in 1975 and held it till today?

you see how large marine parade estate is? many of the units have held onto the units till today. this is not to mention people in toa payoh, queenstown....
it is really much easier to hold onto these units. you need somewhere to stay afterall.

 

[dork32]

The market value has increased ~2300%, to be precise. You've got an extra zero in there. It will fall to zero eventually (99 year leasehold), by the way.

so, i failed my maths.

nobody deny that it will fall to 0 when the lease expire. so what can we do now?

sell the flat at 600k and bto the next 4 room unit at 350k+ resale levy. i suddenly extend our lease by another 50 years.

 

[BBCWatcher]

BBC, you didn't take into account the fact that dork and his parents had the benefit of living in their flat all these decades? Your stocks example assumed that all dividends were reinvested.

That’s another adjustment to make, yes (the value of imputed rent during the past 44 years). That adjustment would likely close some but not all of the gap.

yeah, how many people invested in s&p in 1975 and held it till today?

Probably many more than the number of people who bought HDB leaseholds in 1975 in Marine Parade. Does my grandfather count? I wasn’t looking at his brokerage statements in 1975 (!), but it’s highly likely.

nobody deny that it will fall to 0 when the lease expire. so what can we do now?

sell the flat at 600k and bto the next 4 room unit at 350k+ resale levy. i suddenly extend our lease by another 50 years.

Yes, HDB BTOs remain a good deal in my view. Not as good as in the past, probably, but good.

 

[BBCWatcher]

The 1975 Marine Parade example is quite interesting when looking at the data. It appears that the very best return was achieved up to just before the Asian Financial Crisis, so over the first half of the 44 year period under consideration here. (The BTO/MOP bump is also quite important to this story.) For the second half of the 44 year period, there’s much less appreciation. Indeed, I’m not even sure there’s been any real appreciation since, or at least it’s close enough that I have to check that.

Should you sell your HDB unit at about the 20 to 25 year mark? Well, maybe. With hindsight that looks to me like the smartest play for the circa 1975 HDB buyers. The lucky few who cleared sales just before the AFC look like big winners to me.

Anybody see anything different in the data?

 

[Mecisteus]

Should you sell your HDB unit at about the 20 to 25 year mark? Well, maybe. With hindsight that looks to me like the smartest play for the circa 1975 HDB buyers. The lucky few who cleared sales just before the AFC look like big winners to me.

I think the real winner is the one holding on to the flat and renting it out till now.

The rentals returns must be really a lot.

The aged owner may have moved in together with their children.