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Thursday, 31 January 2013

Eradicating The Leviathan Mindset

3 comments:

  1. Could i get your insight on the current rental market? From what i see the pricing is incredibly high..

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  2. Hi Doug

    Do you mean rental for residential pty? I am not a pty agent so I do not know well how high is high. Agents should know better. Logically, rentals should be high when there is insufficient supply and there is still demand for new properties.

    But when you talk about rental market, you have to consider in terms of investment returns and or yield vs costs of investment. Considering the current high property prices this is very low in Singapore. As I commented before, it is even better to invest in say KL.

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  3. I find it interesting that you would choose to reference Hobbes on the Leviathan, yet it would seem that the opposition parties would do no better than the incumbent PAP in reducing the size of government in Singapore.

    As to the question about rental rates... When you calculate the rental rate it should be a function of the cost of ownership. There is a premium placed on renters as they do not bear the risk of owning a property. Generally, property owners need to bear the cost of financing, condo/maintenance fees and property taxes. If I have a $500,000 unit and my loan payments are $850 per month, with $150 in fees and $100 in taxes, my cost of ownership is $1,100. With an appropriate rental yield of around 4%, I should be charging $1,150 per month for someone to rent my property.

    Contrast that today with HDB units renting for $2,500 in some instances at a $500,000 valuation. Simply exorbitant.

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