Tuesday, 25 March 2008

Playing the Property Game, Level 1

Since we look like being in Singapore for a while, continuing to rent a flat is not necessarily the best fiscal policy, so we have joined the great Property Game. We started by saying we were just educating ourselves but it has to turn serious at some point otherwise the effort cannot be justified. Since we are in a pretty nice HDB flat in Yishun, we started there.

The property market is crazy; some prices have doubled in 9 months and there is rampant speculation and padding of asking prices. Since we are just looking, I haven't worried about price and negotiation yet. Finding a guide to the property maze is ludicrously easy. Singapore has thousands of full and part-time estate agents, hence the mass of junk mail. It's like the American system of independent, commission-based agents and you meet them at parties, shopping malls, everywhere. We got chatting to Sally as she was the agent that let the next door flat. She's a full-time agent for one of the major companies. That'll do for a start.

Perhaps I should give some background. HDBs are Government built since 1960 as cheap housing for the masses. Akin to council housing; think working family, no car, maybe a maid / nanny. They are predominately blocks of flats, 12 - 16 stories high using a common design with a void deck. Arranged in clusters around shops, amenities and transport, such estates are commonly referred to as the Heartlands. There's been some tweaks to this scheme over the decades with Executive Condos and high quality flats for senior civil servants, but we'll get to those later.

Initially they were for rent, now many have been purchased and after a grace
period, may be re-sold or let, so there is a flourishing market. Early models were small, to suit the times and budgets while later models grew a bit. The layout is a hall (living room) with bedrooms and kitchen off. One bedroom usually has ensuite (lavatory, shower, no bath) and there's a common lavatory off the kitchen. Where there is a box room off the kitchen, that's a +1 for storage or maid's quarters. So a 1,200sqft flat might be 3+1, that is, 3 bedrooms plus maids room. Many HDBs had a sun room (think balcony that doesn't protrude) but mostly these are now glazed in and join the main room. To save money, the elevators of older flats only served a few floors (e.g. 5, 9, 12) so you take the elevator and then stairs for other floors. The iUP programme is installing new elevators serving all floors.

Singapore is hot, and window direction is crucial. Air con is a common addition but I've never seen double glazing or any other form of insulation. Flats on the top floor may get hot from the roof, of even suffer water ingress. There is an ancient Chinese belief (sometimes attributed to Feng Shui) that your door should face North and have a hill behind you. This has its origins when houses where close together and a good stiff breeze from a hill swept clean (non-foul), cooling air through the house. So agents will tell you immediately which way the door faces. Chinese also like to have a view of water as it's considered prosperous. Bizarrely, a pool full of screaming kids counts. And to round out the Chinese beliefs, because numbers also sound like words, the address is important: 4 = death, 8 = prosper, 10 = certain. But 3 or 4 digits string together to form phrases, so 814 means "wealthy whole life". A really bad number puts Chinese buyers off; good when buying, bad for re-sale.

Typical renovations include replacement windows, air con, floor tiles or laminate, new bathroom fittings, new kitchen cabinets/sink/cooker, coving and painted walls.

Only citizens or PRs (permanent residents) can own property. PRs cannot own a piece of Singapore, so landed properties (houses) are unavailable. Private condos and apartments are Okay, as are private HDB (once passed the 5yr grace period - check the certificate). Most property is leasehold 99 years, some 999 years and in rare cases, freehold.

Singapore specifies racial ratios under the ethnic integration policy. An HDB estate might be 70% Chinese, 20% Malay and 10% Unknown. As a white foreigner, I'm an unknown. Once the quota is reached in an area, you can't buy a flat unless you are replacing the same racial type. You can look up the allocation online at the HDB site.

Each vintage of HDB flats has consistent floor areas which expanded over time and are normally quoted in square feet (1sqm = 10.5sqft), so 1,100sqf is a smallish
3B, 1,300sqf is a more spacious 3B, 1,700sqf is 4B, anything over 2,000sqf is a big house here.

So we can now make some sense of the adverts filling the newspapers and mail boxes:

3S - 3 bedrooms, standard
3+1 - 3 bedrooms plus maids cubby hole
3NG - next generation, bigger than 3S
3A - advanced, a later HDB model, but about the same size as 3S
3I - improved
Jumbo - a 2B and 3B knocked through to create larger flat
EA - Executive Apartment, a nicer, bigger HDB
EM - Executive Mansionette, a 2-level, bigger, nicer HDB
Condo - private development with shared amenities, pool, gym, ...
Apartment - private development but no shared facilities

We started with HDBs in the surrounding area, 3B, 3B+1, an EA and even a Jumbo. The fundamental problem with HDB is the high-density of housing. You are almost always over-looked by the next block, if not all windows, then certainly living room or bedrooms. Finding blocks with some space means moving away from the amenities and MRT, to the point where you need a feeder or shuttle bus to get to the station. An open aspect is an unblock, although the term seems to mean "has a view", rather than "not overlooked" which is a significant difference. Neighbours are always a lottery.

Gawping at other people's houses has its fun moments. The sellers often have an agent, so a viewing appointment is a pantomime of viewer -> agent -> agent -> seller -> agent -> agent -> viewer mobile phone calls and SMS to arrange. On arrival, the agents exchange cards between themselves, sometimes not even addressing the buyers. A Malay family we visited was memorable for having to tiptoe around the people sleeping in the beds. At this end of the market, there's little concept of dressing a house for sale. The Jumbo flat was a 3D puzzle to try and reverse engineer the layout of walls, pillars and nooks. The Executive Apartment was a empty shell and would have needed a complete re-fit, knock out walls, new kitchen but it was closely overlooked.

Frustratingly, buying is strictly an oral process. There are no printed flyers, pictures, floor plans, room sizes, descriptions or asking price; just location and size. Agents won't tell you in advance which floor or whether it's unblock because they want to ensure a visit and avoid being bypassed. So more wasted time with unsuitable properties. Often you only get to know the asking price in the elevator on the way up to viewing. This gives the seller maximum chance to adjust the price according to the look of the buyer. In this regard, Internet sites are better as sellers directly advertise with pictures & and there is often an historical record of prices.

So after 2 weeks, our main requirements seem to be:

3 or 4 bedroom, minimum 1,200sqf
unblock, not overlooked
close to MRT for easy commute

We've stopped looking at HDBs for now, next stop: Condos.


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