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For the past few months, the media has been reporting record breaking en bloc transactions and high property prices.

It seems that everyone is trying to outdo each other in prices.

A discerning buyer will ask: Are the high-priced properties bought up by wealthy foreigners or investors wanting to chase up the market so that they can sell it later at even higher prices?

Are these transaction prices indicative of the overall market?

A discerning buyer should also ask why there is a sudden rush of people changing property, private as well as HDB, at this time.

I’ve personally encountered people paying $100,000 cash above valuation for a five-room HDB apartment which is 20 years old. Word gets around. Now almost every seller in the same district is asking for absurd cash amounts, regardless of the condition of their flat, just because someone sold it at a premium. This is pure greed.

For the buyer looking for a HDB apartment now, I have these to say:

Don’t let kiasuism rule your head and make impulse purchases that are way above market value.

Property valuators have a bird’s-eye view on the valuation of an apartment. Trust their assessments, they are the experts. Don’t pay more than 5 per cent above valuation.

Don’t pay more than you can afford to, or you’ll pay for it for a long time. Interest rates are not as good as before. You can end up paying twice your buying price.

Learn from history - don’t fall into the same trap many did six years ago, when they paid more than half a million dollars for a five-room HDB apartment.

Don’t buy when everybody is buying. If you can wait, hold out.

Know the HDB rules. You have to pay the cash above value, plus 5 per cent cash of the selling price, plus stamp duty and lawyers’ fees.

Finally, no matter how ‘good to move in’ a condition the flats are, there will always be some level of renovation that needs to be done. Toilet bowl replacement is mandatory for me.

Source :  Straits Times - 1 Jun 2007