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12/07/2010

COV slipping down, is it good?

Why are people making comments like as if it is a good thing that COV is coming down? If it is good to keep it down, it should not have gone up so high in the first place. Oh, market forces, can’t be helped. But the govt is helping to push it down with all the curbs and cooling measures, which means it can be helped. A young couple was happy that they could afford a resale flat at $350k with a $15k COV. Happy like shit, as if striking lottery. Their combined income is $3,500 pm. Even with a $50k grant, it is still more than $300k for that unit. With the mortgages and interest, it is probably something like $600k by the time the loan is fully repaid. How many months or years of income is that? Nearly 20 years. It means that this couple would have to work for 20 years for free just to pay for that flat. Don’t they need money to survive, to bring up children? Never mind, these are the losers in our society. Think about the good stuff. Many residents are owning properties worth millions and feeling so rich. And their properties are going to go up in value with more investors flooding here. Singapore is now the top city for property investment. To maintain this shining title, our property prices must go up. And for COV to come down, that is bad. It is working the other way. Maybe it is temporary as election is around the corner. Singaporeans will have more to cheer after the election when their property prices shoot to the sky once more. And the young couple mentioned above can pat their own back to congratulate themselves for making a wise decision. Their $350k flat may then be worth $500k and they will be sitting on a fat profit, and feeling very rich.

8 comments:

Matilah_Singapura said...

I say man, the entitlement mentality is alive and well, it seems.

Fuck the bloody children lah -- can't afford? Don't expect "free lunch" from everyone else -- buy condoms instead or ask your bitch to go on the pill.

It is up to people to organise their finances. What is this shit expecting the govt to "come to the rescue" all the time?

COV coming down? Is that a trend or just a 'spike'? No one can tell -- but most people just gasak buta.

COV is a "put up or shut up" -- i.e. "entry fee" into the market. Now I'll bet there are people who think that COV is "greedy", and that it should be ZERO.

Ah...dreamers everywhere...

Chua Chin Leng aka redbean said...

This is the new world of finance where people buy pieces of paper like COV, COE, insurance, licences, minibonds, derivatives instead of the real stuff.

The big banks and govts are making big money selling these papers.

Anonymous said...

Eversince money come in paper form, the World have much less men of integrity. Paper money, another human construct that makes the World crazy. No difference from religions and science.

patriot

Matilah_Singapura said...

Might be "pieces of paper" but they have to paid for in "real money".

COV = piece of paper? Are you sure?

That is cash up-front man. "Dear Sir/ Madam, the COV is a cash premium, payable your good self, after which we'll proceed with the finalization of the sale."

Translate to Heartland-ese: Nah beh cheebye... bo lui mai kong lah! Chiak pa pak ka chng IZZIT?!? HONG KAN!

Anonymous said...

And ever since money came to be denominated in electronic form, we now have something like US$600 trillion (?) in various form of derivatives, floating around in the world's financial system, all conjured out of thin air.

Our housing bubble, is like a drop in the ocean lah! We want a bigger share, because we always like to punch above our weight. That is why we allow all kinds of investment products marketed to our citizens. Obviously we can still blow the bubble further and bigger.

Watch for it after the election is over. The curbs on properties are just wayang to sweeten the ground.

Matilah_Singapura said...

Actually it is close to one quadrillion, by some estimates -- i.e. one thousand trillion (10^15) in derivatives, mostly toxic.

And you are right, there is essentially nothing behind them except for fancy mathematical formulae which most people -- even smart ones -- don't understand.

"Investment" products are marketed flashy -- people get mesmerized by the magic and start counting their gains in their dream-state. Human-apes are easily hypnotised, it is part of the nature of the species.

All those curbs on property speculation might as well go away, and hopefully they will. What is needed is the damn thing to overheat and crash naturally -- without any interference. Like I said before, I don't have any sympathy for those fuckers who are over-leveraged and bid up the prices on their cheap banana money.

No sympathy, whatsoever.

Chua Chin Leng aka redbean said...

COV is worst. You just pass your money to the other person without even a piece of paper except a receipt.

Yes, should not have any curbs and let it go full steam ahead. The collapse is unimaginable. And all the govts are drunk and praying that it will be alright.

Murphy's Law will come into play. What is not alright will become not alright and kaboom!

Wait for that day. And those highly geared are going to cry for mercy. High property price is good. Asset enhancement is good. Everyone is feeling damn rich...with banana currency aplenty.

Matilah_Singapura said...

actually I defend the COV. It is all part of "Heartlander-nomics", i.e. the free market working in the heartlands.

COV is an arbitrage price: the price for you to voluntarily engage in a market exchange so that the party soliciting the premium (COV) can at least realise some "profit" on their "property" before CPF/ HDB/ bank/ lender "makan" their money.

Of course it is "off the record" as it is technically not legal, and is actually TAXABLE under IRAS code.

If it was in Aust, you can guarantee that the Aust Tax Office will be taxing people on the COV and fining those who are caught not declaring.

So thank your lucky stars Heartlanders. You get a little bit of "free market" profit there from the COV. The PAP knows it. They let you "eat a bit". Tax free, some more...

Sounds like a bribe to me ;-)