Monday, February 7, 2011

Why property is no longer an excellent Investment-Part 2 ( Continued)

This post is a continuation of part 1. Please read the link first. Based on the parameters and the given scenario ( Price stagnates, no capital appreciation) , below is the layout of the spreadsheet.

Sold within 1 year of purchase

By the end of the 1st month, if the property is sold, the percentage loss is 42.85%. When this loss is annualised, the percentage loss is 514% per annum.
By the end of the 12th month, if the property is sold, the percentage loss is 37.80%. When this loss is annualised, the percentage loss is 254.34% per annum.
The above is due to the horrific 16% stamp duty.
Sold after 1 year of purchase but within 2 years


By the end of the 24th month, if the property is sold, the percentage loss is 22.73%. When this loss is annualised, the percentage loss is 11.36% per annum. The above is due to the horrific 12% stamp duty.

Sold after 2 year of purchase but within 3 years
By the end of the 36th month, if the property is sold, the percentage loss is 7.58%. When this loss is annualised, the percentage loss is 2.53% per annum. The above is due to the horrific 8% stamp duty.

Sold after 3 years of purchase but within 4 years
By the end of the 48th month, if the property is sold, the percentage gain is 7.64%. When this loss is annualised, the percentage gain is 1.91% per annum. The above is due to the horrific 4% stamp duty.

Sold after 4 years of purchase but within 5 years


By the end of the 60th month, if the property is sold, the percentage gain is 22.94%. When this loss is annualised, the percentage gain is 4.59% per annum. There is no longer any seller stamp duty.

From the 6th years onwards, i will hide some columns and leave only the End of month, Percentage gain and Annualised percentage gain columns.

As can be seen, if one has holding power to wait, there is still some meat left but seriously the reward is greater than the horrific risk of capital depreciation, excess supply resulting in lower rents, increase in mortgage rates Do remember that this model is assuming the house is constantly being rented out and that commission for renting out the house has not been included. Repairs, renovations have also not been included.

1 comment:

  1. Hi, I came across your site and wasn’t able to get an email address to contact you. Would you please consider adding a link to my website on your page. Please email me back.

    Thanks!

    Harry
    harry.roger10@gmail.com

    ReplyDelete