With the recent 20-40% rise in property prices following gains in stock market. There are a few interesting observations which seems to highlight possible money generating schemes. An estimate 100% profit is being suggested here.
Increase in housing prices, especially in public housing with higher COVs and HDB's new estimated land prices. Who will stand to gain from the increase?
1) Stamp fee will be payable to Inland Revenue Authority of Singapore (IRAS). For properties above S$360,000, stamp fee payable will be 3% of the purchase price minus S$5,400.).
2) Bank loan, with higher loan, longer period and possible increase in SIBOR rates - more interests to be paid out as local banks can collectively raise their rates.
3) Legal fees - conveyancing transactions, disbursements, solicitors' fees (sometimes peg to % depending on law firms); Lawyers and law firms make $, and pay respective taxes.
4) Higher annual property tax from increased valuations from IRAS.
I bet the budget next year will be showing signs of overspilling coffers. Despite the $20 billion estimate spending in the recession, I guess as usual our effective government will find ways to make it back (from old studies of for-the-poor GST, to ERPs, COEs etc).
I do think we are in the verge of an absolute recovery...that is if this is actually sustainable. A newly met acquaintance broke it down for me how it might actually be possible. Newly weds have parents with life-savings to loan or give cash for deposits or partial payment of the houses (so if you think about it, their old parents' $90k cheap HDB is effectively used to pay for their children's' current purchases as well). Apparently a couple wanted to purchase a flat from their parents at the cost price which is $190k below valuation, HDB disapproved it. Since there are laws preventing hand-me-downs, effectively the couple has to purchase at valuation with the above mentioned four observations of gains. Also with the recent rise in equities have resulted in 100-200% reap in profit for many who have bought into this incredible run since March 2009 which will pay easily for 10-20% of the housing price. Let's just pray all this is sustainable, otherwise many might end up in great debt.
