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http://www.straitstimes.com/archive/thursday/premium/money/story/slump-private-home-resale-market-20130411
Slump in private home resale market
SRX data shows March volumes down by about 50% year on year
Published on Apr 11, 2013
By Melissa Tan
THE private home resale market took a major hit last month from the seventh round of cooling measures unveiled in January.
Resale volumes in March slumped by half from the same month last year.
The impact on prices was more muted, though, as average resale prices slid 2 per cent from February, Singapore Real Estate Exchange (SRX), a consortium of the country's leading property agencies said yesterday.
A total of 609 transactions were recorded in March by SRX. This was 87 per cent higher than in February, as Chinese New Year fell within that month.
But analysts noted that the figure was about 50 per cent lower than March last year.
Condo resale volumes for the January to March period were also nearly 40 per cent lower than the preceding quarter.
DWG senior manager Lee Sze Teck cited sellers' "reluctance" to lower prices. This contrasts with the new sales market, where developers have been quick to offer incentives to offset the impact of cooling measures, Mr Lee said, pointing out that new sales rose by about 12.5 per cent in the first quarter from the preceding one.
But though volumes have come down sharply, prices did not follow suit in March.
The dip in condo resale prices was largest in the suburban region, which posted a 3 per cent decline to $1,071 per sq ft on average. That is still above the psychologically daunting $1,000 psf threshold that suburban condo resale prices exceeded for the first time in February this year.
City centre average resale prices dropped 2 per cent to $1,788 psf, while city fringe prices stayed largely flat at $1,301 psf on average last month, SRX said in its flash report.
"As long as interest rates stay low, holding costs are low and sellers are not compelled to cut prices," said ERA Realty key executive officer Eugene Lim.
Softening prices combined with higher rents boosted rental yields islandwide last month.
The city fringe had the highest gross rental yield at 3.8 per cent, followed by suburban yields at 3.7 per cent. The city centre had the lowest rental yield at 3.1 per cent.
On a quarterly basis, however, overall condo resale prices grew 4.2 per cent, owing to stronger increases in January and February, SRX said.
A DTZ report yesterday said price growth across most non-landed segments slowed by more than half in the first quarter compared with the fourth quarter last year.
But sequential price growth in the first quarter was stronger than in the corresponding period last year, which was immediately after an additional buyer's stamp duty was imposed for the first time.
This could be due to buyers "getting accustomed" to the duty and earlier tighter loan restrictions, said DTZ.
March's flash report is the first time SRX has used a weighted average to compute overall average resale price.
Without this, noted OrangeTee research and consultancy head Christine Li, March resale prices would have increased from February.
[email protected]
Because not one selling or price really decline ?
I think sooner or later will publish size data.
Price drop could also mean size increase.
Not surprising to see a stalemate between seller and buyer now. It's a 'see who blinks first' situation.
Normally jitters in the macro economic environment will trigger a sell-down scenario. i.e desperate sellers match down to buyer's asking price. In my humble opinion, the probability of downside is probably higher than the upside.
Not surprising to see a stalemate between seller and buyer now. It's a 'see who blinks first' situation.
Normally jitters in the macro economic environment will trigger a sell-down scenario. i.e desperate sellers match down to buyer's asking price. In my humble opinion, the probability of downside is probably higher than the upside.
There is no one blinking.
Those who own investment properties now are very reluctant to sell anything because once sold, cannot buy back unless you can find something that is more than 20% undervalued.
So supply is shrinking. Office Boy get calls everyday asking if I wanna sell my properties. Just imagine if you own 3-4 properties now, will you want to sell one now and try to invest in another one ? The churning cost is way too high for you to find another property.
You certainly would rather sit back, watch your properties' price inch up a bit a bit every quarter and collect the FAT rental now. If you take rental minus interest expense, you will realise most landlords and now laughing silently to the bank every month. Just ask any landlord ... they will tell u secretly.
DKSG
Why need to laugh silently......we laugh loudly
[QUOTE=henryhk]Why need to laugh silently......we laugh loudly......and we are not secretive!
:cheers1: loudly :im-so-happy: :im-so-happy: :D
The agents are saying rental budget is dropping. Especially for CCR.
Anybody here experiencing it?
Or rental really still going strong?
A well deserving crash will crash and prevent all landlords from exploiting.
TravieJackie
13-04-13, 09:51
Seems like less less people willing to sell now.
Furthermore, most of them would have loan package that has low spread of as low as 0.6% and span over 30-40 years.
There is no one blinking.
Those who own investment properties now are very reluctant to sell anything because once sold, cannot buy back unless you can find something that is more than 20% undervalued.
So supply is shrinking. Office Boy get calls everyday asking if I wanna sell my properties. Just imagine if you own 3-4 properties now, will you want to sell one now and try to invest in another one ? The churning cost is way too high for you to find another property.
You certainly would rather sit back, watch your properties' price inch up a bit a bit every quarter and collect the FAT rental now. If you take rental minus interest expense, you will realise most landlords and now laughing silently to the bank every month. Just ask any landlord ... they will tell u secretly.
DKSG
The large ones with high quantum may be affected. Those asking $5-6k ones should not be a problem.
The agents are saying rental budget is dropping. Especially for CCR.
Anybody here experiencing it?
Or rental really still going strong?
Furthermore, most of them would have loan package that has low spread of as low as 0.6% and span over 30-40 years.
Actually, for the people with this kind of loan, has the best deal anywhere in the world today. I don't understand anyone who want to let go of it and sell it.
Amber Woods
13-04-13, 10:50
When the fear finally sinks in and the thought of having to hold on to an inflated asset with a mortgage to service over 30-40 years makes no sense.
When the fear finally sinks in and the thought of having to hold on to an inflated asset with a mortgage to service over 30-40 years makes no sense.
If you have multiple investment properties. Don't worry about mortgage over 30-40 years... Inflation will pay the loan for you over the long term. If need be, sell one or two to pay off the rest....
What is better than debt in a high inflation, low interest rate environment.
Amber Woods
13-04-13, 12:13
If you have multiple investment properties. Don't worry about mortgage over 30-40 years... Inflation will pay the loan for you over the long term. If need be, sell one or two to pay off the rest....
What is better than debt in a high inflation, low interest rate environment.
Agree that one may be better off selling off one or two to pay for the rest for multiple investment properties.
High inflation, low interest are only temporary and things will be back to normal unless of course you believe otherwise.
Agree that one may be better off selling off one or two to pay for the rest for multiple investment properties.
High inflation, low interest are only temporary and things will be back to normal unless of course you believe otherwise.
Make hay while the sun shines...
Adjust strategy when the situation changes....
No worry, inflated asset is no longer inflated with the massive paper money printing from US, Europe, Japan & China now going on!
When the fear finally sinks in and the thought of having to hold on to an inflated asset with a mortgage to service over 30-40 years makes no sense.
Amber Woods
13-04-13, 18:07
No worry, inflated asset is no longer inflated with the massive paper money printing from US, Europe, Japan & China now going on!
We had earlier discussed this and my response is below.
Agree that one may be better off selling off one or two to pay for the rest for multiple investment properties.
High inflation, low interest are only temporary and things will be back to normal unless of course you believe otherwise.
Inflation due to money printing will be there forever!
We had earlier discussed this and my response is below.
Amber Woods
13-04-13, 18:22
Inflation due to money printing will be there forever!
The government does not think so, IMF does not think so. Wish you well!
The government does not think so, IMF does not think so. Wish you well!
Everyone knows that once Kopi price increased from 50 cents to 60 cents to 80 cents, it never never went back ever ever again.
Money once printed, it hard to unprint it anymore.
Once your pay increase by 10%, it is very difficult for your company to cut it back.
DKSG
Well said! I wonder is Amber Woods the govt &/or IMF head to know what they think? Very often, what people think and what they say are different! What do you expect the govt to say for massive money printing? That it will reduce your inflation and hence cost of living while making your pay increase much faster than inflation? :p
While we also know that in 199x govt ask people to study IT & engineering to be IT professionals and engineers as there was a shortage, but do their children really go study IT & engineering and then work as IT professionals and engineers? :beats-me-man:
Everyone knows that once Kopi price increased from 50 cents to 60 cents to 80 cents, it never never went back ever ever again.
Money once printed, it hard to unprint it anymore.
Once your pay increase by 10%, it is very difficult for your company to cut it back.
DKSG
The government does not think so, IMF does not think so. Wish you well!
Quote:
Originally Posted by heehee
Inflation due to money printing will be there forever!
My development has zero listing. About one month plus back, it has 2 listings for rental and they are both gone now. All these years, it has always has listing until the last CM.
Amber Woods
14-04-13, 04:19
Everyone knows that once Kopi price increased from 50 cents to 60 cents to 80 cents, it never never went back ever ever again.
Money once printed, it hard to unprint it anymore.
Once your pay increase by 10%, it is very difficult for your company to cut it back.
DKSG
Well said! I wonder is Amber Woods the govt &/or IMF head to know what they think?Quote:
Originally Posted by heehee
Inflation due to money printing will be there forever!
It is strange that you are comparing kopi with property. If you think property prces will not come down once money printed, good luck to you.
The_Way_I_See_It
14-04-13, 08:40
We had earlier discussed this and my response is below.
The world is forming trading "bloc" among themselves and among the BRICS eg Aussie now trade with China using Yuan. This is just beginning of the decline of US$$$. China has literally stopped buying US debt instruments.. at some point of time, Post Bernake or post Obama era will realise American $$$ decline just as British pound lose its potency. America will realise that some of its allies will abandon her and join forces with BRICS.
US will shut down its $$$ printing machine and increase its interest rate.
The after effects of the catastrophic 2008 ..2009 are only temporarily halted n delayed .. its real ugly head will rear in next 3 years. You can bet on this.
The Mkt surge now in Dow Jones and S&P is just a prelude to a steep decline. History always repeats itself. You can bet on this.
The_Way_I_See_It
14-04-13, 08:49
Seems like less less people willing to sell now.
Put the reverse on your thought process.. more and more people are careful and not willing to "gungho" buy now given current situations ...
What happen when there is a stalemate ... r u at the tail end of a bull or beginning of a bull .. food for thought
Put the reverse on your thought process.. more and more people are careful and not willing to "gungho" buy now given current situations ...
What happen when there is a stalemate ... r u at the tail end of a bull or beginning of a bull .. food for thought
Are u expecting a sudden crash or a gradual decline?
Put the reverse on your thought process.. more and more people are careful and not willing to "gungho" buy now given current situations ...
What happen when there is a stalemate ... r u at the tail end of a bull or beginning of a bull .. food for thought
Travie is saying there are lesser and lesser people selling now.
To the agent, selling is usually the first leg.
Once u get a unit to sell,then you got chance to make money.
I think you didnt view enough resale/subsale units. If you have, you will realised that the asking prices are now still slightly higher than last transacted (maybe at most 3-5% below depending on facing/floors).
Like I mentioned earlier, lesser people selling is because people can no longer replace (other than paying extra 10% which usually eat into their 30-40% profits).
If you are holding 3 properties now, will you try to sell one of them and hope to find a replacemen with a higher profit ? Very unlikely due to the ABSD.
DKSG
It is strange that you are comparing kopi with property. If you think property prces will not come down once money printed, good luck to you.
I think there is a chance that property prices may come down 3-5% this year.
But the problem is this decline is insufficient for most investors to jump in.
The reason is because there are many many many first time investor (2 unit buyer) waiting at the sideline (due to CM) and will jump in once they see something selling for 5% below valuation.
If you dont believe, just put your property up for sale at 5% below valuation and see if got people jump in ?
At least when I did, I get quite a few offers.
DKSG
If you are holding 3 properties now, will you try to sell one of them and hope to find a replacemen with a higher profit ? Very unlikely due to the ABSD.
DKSG
Some maybe selling and divert funds to other asset class or investments which they believe it to have better upside.
Even without absd and CMs, i do not understand why we need to flip. Buy and sell then buy back again? No for me unless it is for downgrading or upgrading.
If you dont believe, just put your property up for sale at 5% below valuation and see if got people jump in ?
At least when I did, I get quite a few offers.
DKSG
Is there any offer that reflects current market value? Or seller must sell at a slight discount now?
phantom_opera
14-04-13, 10:57
amber woods are u new in Sg?
check kopi price and PUB bill in 2003, kopi price up 100pc, electicity up 40pc,
it is the same for US gas price
whether booming or recession, the era of cheap oil is over, there is still oil but expensive to extract
commodity n food prices all linked to oil price, construction of property need steel, timber etc so ultimately affected by oil price
mass market condo construction cost is 250 to 300psf, it is a fact, with tightening of foreign labor more upside
so pls dun say kopi price has nothing to do with property
McDonald black coffee now 1.95, toastbox 1.80
Amber Woods
14-04-13, 11:23
I think there is a chance that property prices may come down 3-5% this year.
But the problem is this decline is insufficient for most investors to jump in.
The reason is because there are many many many first time investor (2 unit buyer) waiting at the sideline (due to CM) and will jump in once they see something selling for 5% below valuation.
If you dont believe, just put your property up for sale at 5% below valuation and see if got people jump in ?
At least when I did, I get quite a few offers.
DKSG
The fact is that as Mr Khaw pointed out, people has not sunk-in to the idea that the days of high growth and hence high wages is at an end and property prices cannot like in the past continue to appreciate at growth rate.
Amber Woods
14-04-13, 11:27
amber woods are u new in Sg?
check kopi price and PUB bill in 2003, kopi price up 100pc, electicity up 40pc,
it is the same for US gas price
whether booming or recession, the era of cheap oil is over, there is still oil but expensive to extract
commodity n food prices all linked to oil price, construction of property need steel, timber etc so ultimately affected by oil price
mass market condo construction cost is 250 to 300psf, it is a fact, with tightening of foreign labor more upside
so pls dun say kopi price has nothing to do with property
McDonald black coffee now 1.95, toastbox 1.80
We are not talking about general cost of inflation. We are talking about the inflated prices of property. Prices of property is like gold or other investable assets. It can go up or down. I do understand some basic economic which I studied during my undergraduate years.
phantom_opera
14-04-13, 12:27
there is finite resource on this earth, 10y ago demand for resource mostly from G7, however BRICs had blistering growth, suddenly you have hundreds of millions more middle class fighting for oil, metal, commodities, prime properties
today high property prices and food inflation are not entirely due to domestic issues, it is the same in other prime booming Asian cities
Here's what phantom is trying to point out. Over the last 10 years, the price of rice went up by 100%. And most properties, excluding the star performers went up by 100%. Therefore real estate hasn't outperformed the peer real assets, it has merely tracked inflation due to a drop in the real value of fiat currency. You don't learn mcuh of these things in uni because inflation is a small topic with a few formula. Keynesian economics has taken a back seat as monetary policy has taken centre stage.
Amber Woods
14-04-13, 12:49
Here's what phantom is trying to point out. Over the last 10 years, the price of rice went up by 100%. And most properties, excluding the star performers went up by 100%. Therefore real estate hasn't outperformed the peer real assets, it has merely tracked inflation due to a drop in the real value of fiat currency. You don't learn mcuh of these things in uni because inflation is a small topic with a few formula. Keynesian economics has taken a back seat as monetary policy has taken centre stage.
You had just answered your own question. Inflation due to monetary policies. So it can also be managed through monetay policies preventing asset bubbles.
You had just answered your own question. Inflation due to monetary policies. So it can also be managed through monetay policies preventing asset bubbles.
Hi Amber,
You sound to me someone with good understanding of economic. I noted that there are always people in this forum who sole objective is to defend the high property price to support their own interest. They are not interested in the workings of economic. Most of them are not here to learn economic but to defend their interests with their own "convictions" of the market.
Yes! we should just respect what they see fit.
phantom_opera
14-04-13, 13:25
res inflation is not just due to printing machine, there is real demand from BRICs, how else australia as a net resource exporter must give face to China?? the booming economy n property prices of australia in last decade has a lot to do with rise of China
prices will not return to 2009 or 2003 level unless garmen want to subsidize
Hi Amber,
You sound to me someone with good understanding of economic. I noted that there are always people in this forum who sole objective is to defend the high property price to support their own interest. They are not interested in the workings of economic. Most of them are not here to learn economic but to defend their interests with their own "convictions" of the market.
Yes! we should just respect what they see fit.
I think people here are just trying to explain that economics in books and real world is lot different.
Can property price come down? for sure.
Can go up? unlikely
Stay Stagnate(+/-10) for salaries to catch up? very likely.
So if you have money in a bank, you are better off buying rather than waiting.
With the currency fight money is been devalued. Salaries will creep up slowly to counter inflation. 100K Salary 6 years ago and now are lot different. Everybody can testify to that, and it has nothing to do with property.
Everything has increased. Meal doesn't cost the same anymore and it won't.
If you wait for 50C kopi u will wait long long.
phantom_opera
14-04-13, 13:36
just look at Australian dollars, rise of BRICs has shifted the power to resource rich countries as they can price resources higher
now land is the only natural resource Sg has
khaw already subsidizing in non mature BTOs he can remove income ceiling to subsidize slightly more families but he can't possibly subsidize the whole housing market
phantom_opera
14-04-13, 13:42
talking abt subsidy Sg voters and opposition are not as smart as hk voters who even force hk garmen to issue ibond for all citizens to counter inflation
instead Sg opposition n voters want to send cheap labor home which further aggravate inflation
Amber Woods
14-04-13, 14:12
I think people here are just trying to explain that economics in books and real world is lot different.
Can property price come down? for sure.
Can go up? unlikely
Stay Stagnate(+/-10) for salaries to catch up? very likely.
So if you have money in a bank, you are better off buying rather than waiting.
With the currency fight money is been devalued. Salaries will creep up slowly to counter inflation. 100K Salary 6 years ago and now are lot different. Everybody can testify to that, and it has nothing to do with property.
Everything has increased. Meal doesn't cost the same anymore and it won't.
If you wait for 50C kopi u will wait long long.
I had already mentioned the differences between cost of general inflation and inflation due to the loose monetary policies through the printing of money. The kopi price is due to general inflation but the current high prices for property is due mainly to the loose monetary policies.
People are trying to confuse others that the current high property price is due to the general cost of inflation by giving the example of the price of a cup of kopi. This is flawed..
Nobody is waiting for kopi to come down to 50 cnets. They are just making it out from their own theory while pretending to be knowledgeable in the subject matter to support their own interest.
Also, don't forget about the actual demand from the flood of foreigners from 2005-now (from 3+m to 5.3m)!!!
there is finite resource on this earth, 10y ago demand for resource mostly from G7, however BRICs had blistering growth, suddenly you have hundreds of millions more middle class fighting for oil, metal, commodities, prime properties
today high property prices and food inflation are not entirely due to domestic issues, it is the same in other prime booming Asian cities
You sound to me someone in the uni to teach economics. I wonder why your are an expert in economic but still can miss the boat n always in the opposite of the market! Maybe u act against your view. Then, can bet the right side :D
Hi Amber,
You sound to me someone with good understanding of economic. I noted that there are always people in this forum who sole objective is to defend the high property price to support their own interest. They are not interested in the workings of economic. Most of them are not here to learn economic but to defend their interests with their own "convictions" of the market.
Yes! we should just respect what they see fit.
phantom_opera
14-04-13, 14:26
BRICs middle class are not only competing for resources but also jobs, many in the US outsource call centers to India, development in china
After a while Beijing n Bombay are commanding same salary as Singapore and close to US pay, these Chinese and Indians are mobile and global, they can smell good deals like Sg properties if mispriced relatively
so be prepared for brutal competition, yowetan n gang
Sg has a few millions, India has 300m middle class, china could be double soon
You sound to me someone in the uni to teach economics. I wonder why your are an expert in economic but still can miss the boat n always in the opposite of the market! Maybe u act against your view. Then, can bet the right side :D
Most people know that I am neutral. I did not miss any boat if you had read my writings. Obviously, you did not. Please do not make personal assumptions about others. If you are not sure, please ask politely and you may get a response in turn.
I for sure am the one think you are NOT neutral. Most of your posts are very bearish!!! That make people can't help to think that you miss the boat. People who didn't miss the boat and have vested interests will not never talk bad about the Market!! Who would try to talk bad about market which will affect their own pocket? This is just common sense.
Most people know that I am neutral. I did not miss any boat if you had read my writings. Obviously, you did not. Please do not make personal assumptions about others. If you are not sure, please ask politely and you may get a response in turn.
I for sure am the one think you are NOT neutral. Most of your posts are very bearish!!! That make people can't help to think that you miss the boat. People who didn't miss the boat and have vested interests will not never talk bad about the Market!! Who would try to talk bad about market which will affect their own pocket? This is just common sense.
Exactly! There are too many vested individuals who cannot tolerate views that are on the contrary.
I discuss about economic and its implications to the current market. Thus far, most economists are just as sceptical as I am in assessing the current market. Only developers, housing agents, analysts and those vested choose to say it otherwise even though they are aware of the risks. This is understandable.
At the very least, the neutralist will not disagree just for the sake of disagreeing.
Exactly! There are too many vested individuals who cannot tolerate views that are on the contrary.
I discuss about economic and its implications to the current market. Thus far, most economists are just as sceptical as I am in assessing the current market. Only developers, housing agents, analysts and those vested choose to say it otherwise even though they are aware of the risks. This is understandable.
At the very least, the neutralist will not disagree just for the sake of disagreeing.
Neutralist don't make money. To make money you have to be on one side or the other. Neutralist don't get any symphathy from the bull or the bear. Being neutral is not very helpful in giving market insight.
Regardless of inflation due to printing money or the actual cost of general inflation. These are inflation affecting everyone. GST & high commercial rental due to REIT are real coss of general inflation! I know economist Leeds won't agree to that as he is not in business world and do not understand how it works! By the way, Which economist say GST does not cause GST ?
I had already mentioned the differences between cost of general inflation and inflation due to the loose monetary policies through the printing of money. The kopi price is due to general inflation but the current high prices for property is due mainly to the loose monetary policies.
People are trying to confuse others that the current high property price is due to the general cost of inflation by giving the example of the price of a cup of kopi. This is flawed..
Nobody is waiting for kopi to come down to 50 cnets. They are just making it out from their own theory while pretending to be knowledgeable in the subject matter to support their own interest.
Neutralist don't make money. To make money you have to be on one side or the other. Neutralist don't get any symphathy from the bull or the bear. Being neutral is not very helpful in giving market insight.
I am not making money through this forum unlike many vested here. If my views are consistent with the bears, that is good if they find them useful. If my views are contrary to the bulls, it is just that way. We need to learn to live as an inclusive society.
Which economist say that government can effectively take back the money after they have printed, circulated and flooded the markets a lot of cheap monies! Which famous economist says that printing cheap monies will not cause inflation. US dont worry about inflation but they worry about deflation. That's why keep money.
At least, I know developers, housing agents, those vested investors are Correct since 2009 !!
Wow, they r right >4 yrs n r still counting!
Exactly! There are too many vested individuals who cannot tolerate views that are on the contrary.
I discuss about economic and its implications to the current market. Thus far, most economists are just as sceptical as I am in assessing the current market. Only developers, housing agents, analysts and those vested choose to say it otherwise even though they are aware of the risks. This is understandable.
At the very least, the neutralist will not disagree just for the sake of disagreeing.
April 16, 2005
An oft-voiced concern in countries introducing value-added tax is that the introduction of the tax would set in motion a spiral in which tax, prices and wages would feed on each other -- that is, VAT would be inflationary.
If the inflationary impact is taken to mean a sustained increase in the rate of inflation then the concern would be conceptually misguided. The introduction of VAT, or any tax for that matter, can never, by itself, lead to a sustained increase in the rate of change in the price level.
Such a change in the inflation rate can only be produced by an expansionary monetary policy under all circumstances. If, however, the term is interpreted as an increase in the price level (or a one-period increase in the inflation rate), then whether VAT is inflationary in this sense would depend on a number of factors.
The Crisis Over VAT: Complete Coverage (http://in.rediff.com/money/vat.htm)
Consider, some examples of VAT in other countries. After VAT was first introduced, a survey was conducted by Alan S Tait on its impact in several countries on the basis of International Monetary Fund data, which shows that VAT is never introduced in isolation.
There are a number of variables influencing price change, and therefore, it is difficult to empirically assess the effect of VAT on prices. The impact of VAT on prices, therefore, cannot be strictly segregated from the general trend in inflation. First, the taxes that have been replaced are also relevant. They could be a wholesale sales tax of the cascading type, a simpler VAT, a multistage ring system, a cascade production tax and so on.
Second, the design to yield equal or higher revenue also makes a difference.
Third, other concurrent changes such as rise in oil or steel prices in international and internal markets, increase in utility rates, changes in wage levels, administrative changes such as tighter monetary policy, price control, monitoring of prices and so on, make due impact on the price rise.
According to the survey, in 22 countries, no major impact on the consumer price index was identified.
In another eight, the introduction of VAT was associated with a highly defined once and for all shift in the consumer price index; only in one of these cases it could be said to have accelerated the rate of increase of the consumer price index.
In seven other cases, although the shift was permanent there was no acceleration in the rate of change in prices attributable to VAT.
Therefore, in 29 cases (22 plus seven) -- 83 per cent of the total sample -- the introduction of VAT did not alter the rate of price change.
Price control measures can be used effectively to dampen the potential price-wage acceleration of inflation after the introduction of VAT -- some good examples are Austria, France, Korea, Norway and the Netherlands.
Perhaps the most important conclusion of the survey is that there seems to be nothing inherently inflationary about the use of VAT. In 33 out of 41 cases reviewed -- over 80 per cent -- (the "shift" cases and the "little or no effect" cases), VAT was not a contributory factor to inflation.
There is another empirical study on the Netherlands on the issue of price rise. The Central Planning Bureau in the Netherlands calculated the price effect of VAT from 1969 to 1980.
While VAT was introduced in the country in 1970, the study goes up to 1980 and the trend in price rise due to VAT can clearly be seen as insignificant, or none at all.
In Indonesia, there were widespread apprehensions of substantial price rise before VAT was introduced in April 1985. However, in practice nothing like that happened.
In fact, price indexes for consumer products fell slightly in the first week after adoption of VAT, and domestic inflation for the subsequent year was well below that for the previous year.
It is evident from the discussion that inflation had not surfaced in the countries under the study, which cover a cross section of countries from the world over, because of VAT alone.
There may be a minor one-shot increase or once and for all impact to begin with under certain circumstances due to replacing other taxes and consequent adjustments by the traders and also because the overall number of tax payers would increase, but the crucial question is whether this one time increase would lead to further price escalation.
There would be offsetting price effects because of the elimination of the cascading tax. The media has reported that some sellers of consumer durable goods have said that the 12.5 per cent rate is higher than the previous one.
They are suppressing the fact that now the manufacturers shall be getting input credit for the sales tax paid on the raw materials and machinery.
Moreover, 4 per cent is lower than most of the existing rates. So the overall VAT rate will prove to be the same as the effective rate prevailing before.
The net price effect of VAT would be nil. If the VAT is an equal-yield tax, and that is how it has been designed to be in India, there would not be any effect on the overall price change, although there may be changes in relative prices.
The tax being revenue neutral, the aggregate demand is unchanged and so there would be no impact on the aggregate price level. There is unanimity among the economists all over the world that there seems to be nothing inherently inflationary about the use of VAT.
Thus, this brings us to another aspect related to VAT administration, that is, the potentially inflationary effect can be constrained by government policies to inform the public and traders about the expected effect of VAT on prices, the use of price controls, monitoring of prices, offsetting adjustment in other taxes and generous provisions to ensure full credit for previously paid taxes on inputs.
One can criticise VAT for other reasons, but it cannot be called inflationary.
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Which economist say that government can effectively take back the money after they have printed, circulated and flooded the markets a lot of cheap monies! Which famous economist says that printing cheap monies will not cause inflation. US dont worry about inflation but they worry about deflation. That's why keep money.
At least, I know developers, housing agents, those vested investors are Correct since 2009 !!
Wow, they r right >4 yrs n r still counting!
The answers you are looking for can be found if you google.
I will not response if people are not here wanting to learn but to disagree for the sake of disagreeing.
You had just answered your own question. Inflation due to monetary policies. So it can also be managed through monetay policies preventing asset bubbles.
Mine wasn't a question, mine was a point. Heh. I cannot tell what will happen in the next 12 to 24 months. But Voltaire has got a point about fiat money and many examples in long standing civilisations have substantiated his claims.
learn what?? what are you trying to teach?? or should be sharing??
stop buying from such high price is it? be more specific in what ppl can learn from you please. write such a long one wasting energy and then not knowing what you are trying to say. :2cents:
punchline please...:o
The answers you are looking for can be found if you google.
I will not response if people are not here wanting to learn but to disagree for the sake of disagreeing.
learn what?? what are you trying to teach?? or should be sharing??
stop buying from such high price is it? be more specific in what ppl can learn from you please. write such a long one wasting energy and then not knowing what you are trying to say. :2cents:
punchline please...:o
A sincere person who want to learn will not word this way and of course not worthy for a further response.
nothing can be learnt from cut and paste....good attempt...:2cents:
enough said
A sincere person who want to learn will not word this way and of course not worthy for a further response.
Books serve to show a man that those original thoughts of his aren't very new at all. (http://www.brainyquote.com/quotes/quotes/a/abrahamlin100002.html)
Abraham Lincoln (http://www.brainyquote.com/quotes/quotes/a/abrahamlin100002.html)
Hi Amber,
You sound to me someone with good understanding of economic. I noted that there are always people in this forum who sole objective is to defend the high property price to support their own interest. They are not interested in the workings of economic. Most of them are not here to learn economic but to defend their interests with their own "convictions" of the market.
Yes! we should just respect what they see fit.
yah lah, end of the day property crash or boom oso none of amber's business. not say if amber is bingo in the prediciton will get oscar, nobel or mediacok prize. argue, rebit so much for wat.
Please show if you can find one. Else, I just brush this out as your own opinion or wrong interpretation. :tongue3:
The answers you are looking for can be found if you google.
I will not response if people are not here wanting to learn but to disagree for the sake of disagreeing.
Super like!
Neutralist don't make money. To make money you have to be on one side or the other. Neutralist don't get any symphathy from the bull or the bear. Being neutral is not very helpful in giving market insight.
Which country has successfully managed inflation through monetary policies to prevent asset bubbles? No one! Not even US, Japan, UK, china, Hong Kong,etc..PERIOD!
Originally Posted by Amber Woods
You had just answered your own question. Inflation due to monetary policies. So it can also be managed through monetay policies preventing asset bubbles.
Which economist say that government can effectively take back the money after they have printed, circulated and flooded the markets a lot of cheap monies! Which famous economist says that printing cheap monies will not cause inflation. US dont worry about inflation but they worry about deflation. That's why keep money.
At least, I know developers, housing agents, those vested investors are Correct since 2009 !!
Wow, they r right >4 yrs n r still counting!
Concur that most property agents got it right though that should be easy for them as it is in their interest to talk up to generate new sales.
Back in 2009, one of the more pro agent selling new PC said developer already cut the price psf to be same as that of resale PC asking price and get buyer to choose between new & old so unlikely to go down. He also used basic demand, supply, costing & pricing to analyse that prop prices can only go down that much. At that point, all the analysts in major banks are still pointing to a bottoming only from 2010 onwards and bearish on prop stocks as developers continue to face uphill tasks into 2011 & beyond. :doh:
Agents who are knowledgeable & on the ground know their stuff. Those behind the computer screen only must go out there to feel the pulse before all that is written can make sense. Else it is just a paper exercise.
Please show if you can find one. Else, I just brush this out as your own opinion or wrong interpretation. :tongue3:
When Amber explained in simple layman term that GST does not contribute toward inflation, you challenged her in a very confronting way asking her to prove which economist say so. When I posted an article in this very thread an emphirical study showing that consumption tax does not contribute toward inflation, you continue your unappreciating way towards your 'teachers' instead of acknowledging them with thanks.
You learn from your own practical experience that GST is inflationery. However, today, you learn something new from your least appreciating people in this forum that your understanding has been wrong. However, you show no appreciation to the people who are so willing to share with you.
I always try to be polite with forumers here but your behaviour is simply perplexing. Why would Amber or indeed anyone else wants to continue engaging with you?
Firstly, you and Amber said "GST does not contribute toward inflation". I believe almost everybody, including me included, are even more perplex. It is the most nonsensical statement I have ever heard. I know you like to talk about economics, but yet you can't provide us your source of this statement: whether you think so or you are quoting some famous economists who said so. Whatever economic theory are just rubbish, just simply "theory", if they are some useless piece of junk if they do not conform the real situation - which is that GST when implemented contributes to inflation.
The idea is so simple: Imagine today there is no GST, tomorrow govt implement GST of 7%, won't price of everything you can buy from the shops increase by at least 7%? In fact, the price increase by much more than 7% because of multiplier effects, because some intermediate companies will impose GST of 7% and the next retailers impose another 7%, so after 3 hands, the real increase become (1.07) to the power of say 3 (after 3 hands before the goods reach us) or = 22.5% !!!
So, now, based on above example, you are still telling us that: "GST does not contribute toward inflation" ???!
I know you will say they can claim tax rebates, but in reality they claim and still pass on the 7% GST because of additional costs associated with implementing GST in their system, accounting, paper work etc etc.
As such, your statement must have been the most non-sensical statement that I have ever heard, and yet the person who said this is telling the world that this is true?! People must be a real big dumb stupid idiot to believe this statement! :doh:
When Amber explained in simple layman term that GST does not contribute toward inflation, you challenged her in a very confronting way asking her to prove which economist say so. When I posted an article in this very thread an emphirical study showing that consumption tax does not contribute toward inflation, you continue your unappreciating way towards your 'teachers' instead of acknowledging them with thanks.
You learn from your own practical experience that GST is inflationery. However, today, you learn something new from your least appreciating people in this forum that your understanding has been wrong. However, you show no appreciation to the people who are so willing to share with you.
I always try to be polite with forumers here but your behaviour is simply perplexing. Why would Amber or indeed anyone else wants to continue engaging with you?
Wow, this is the way you show unappreciative gesture towards your teacher which I tried to help you and Amber know that your understanding about economics are flawed and trying to educate you as you are still 纸上谈兵！
You n her kept kpkb about the market for months and years,still don't know what is your flawed! Many had tried to educate you but you had stubbornedly refused to face the fact.
真是艮心被狗!
When Amber explained in simple layman term that GST does not contribute toward inflation, you challenged her in a very confronting way asking her to prove which economist say so. When I posted an article in this very thread an emphirical study showing that consumption tax does not contribute toward inflation, you continue your unappreciating way towards your 'teachers' instead of acknowledging them with thanks.
You learn from your own practical experience that GST is inflationery. However, today, you learn something new from your least appreciating people in this forum that your understanding has been wrong. However, you show no appreciation to the people who are so willing to share with you.
I always try to be polite with forumers here but your behaviour is simply perplexing. Why would Amber or indeed anyone else wants to continue engaging with you?
I can also google, but can't find anybody to support what you said! Seems like what you said is your person opinion? Who would believe your personal opinion which you said as though they are time-and-trusted economic theory? Are you some famous economists whose economic theory has been time-and-implementation tested? Many economists, even Nobel Prize winners, their economic theories are not even time-and-implementation tested, not to say you? And the LTCM saga, they are the worlds' brightest economists and Nobel Prize winners in economics. What happened with their own LTCM? Bankrupt! Their economic theories which garnered them Nobel Prize have been proven to be rubbish by the real market!
quote=Leeds]The answers you are looking for can be found if you google.
I will not response if people are not here wanting to learn but to disagree for the sake of disagreeing.[/quote]
Originally Posted by teddybear
Which economist say that government can effectively take back the money after they have printed, circulated and flooded the markets a lot of cheap monies! Which famous economist says that printing cheap monies will not cause inflation. US dont worry about inflation but they worry about deflation. That's why keep money.
At least, I know developers, housing agents, those vested investors are Correct since 2009 !!
Wow, they r right >4 yrs n r still counting!
...we should nominate Amber for nobel price with his/her theory on inflation........haha, for a moment the name Amber Woods made me think that he/she was some big shot economist as Leeds was quoting Amber like some big time authority....but even students writing economic essays need to quote facts and figures and apply accepted economic theories to get a grade....otherwise its just amber and no flame....
Firstly, you and Amber said "GST does not contribute toward inflation". I believe almost everybody, including me included, are even more perplex. It is the most nonsensical statement I have ever heard. I know you like to talk about economics, but yet you can't provide us your source of this statement: whether you think so or you are quoting some famous economists who said so. Whatever economic theory are just rubbish, just simply "theory", if they are some useless piece of junk if they do not conform the real situation - which is that GST when implemented contributes to inflation.
The idea is so simple: Imagine today there is no GST, tomorrow govt implement GST of 7%, won't price of everything you can buy from the shops increase by at least 7%? In fact, the price increase by much more than 7% because of multiplier effects, because some intermediate companies will impose GST of 7% and the next retailers impose another 7%, so after 3 hands, the real increase become (1.07) to the power of say 3 (after 3 hands before the goods reach us) or = 22.5% !!!
So, now, based on above example, you are still telling us that: "GST does not contribute toward inflation" ???!
I know you will say they can claim tax rebates, but in reality they claim and still pass on the 7% GST because of additional costs associated with implementing GST in their system, accounting, paper work etc etc.
As such, your statement must have been the most non-sensical statement that I have ever heard, and yet the person who said this is telling the world that this is true?! People must be a real big dumb stupid idiot to believe this statement! :doh:
and i concur. this is also why GST is a regressive tax. to make it simple, this is like transfer pricing along a chain of business units/processes.
the longer the chain, the more inflated the end price/cost becomes.
and for the doomsday economists - pfft.
just the best known one in recent times - roubini. since the economic collapse in 2008, he has written countless articles warning about a false dawn and a bigger crash in 2009, 2010, 2011, 2012 and still counting.
NONE has materialize. all these doomsday prophets need is just one event to make their name, while most of us will forgive them for missing a 'prediction'.
Ok, if you choose the line that gst doesn't contribute inflation, I believe you can still accept that it compounds inflation. Gst for $10 is $0.70. If price inflates to $11, gst becomes $0.77. So I suppose you could say it helps to save this $0.70.
and for the doomsday economists - pfft.
just the best known one in recent times - roubini. since the economic collapse in 2008, he has written countless articles warning about a false dawn and a bigger crash in 2009, 2010, 2011, 2012 and still counting.
NONE has materialize. all these doomsday prophets need is just one event to make their name, while most of us will forgive them for missing a 'prediction'.
The world in in the process of creating the "super rich" and the "new poor". The "super rich" are now busy acquiring real assets, while the "new poor" are keeping cash.
Now they make the cash looks attractive by inflating share prices, making it hard to buy properties, lowering the price of gold and other commodities (because they are so easy to be manipulated).
Keeping cash is what the central banks want u to do, because there is not enough real asset and there is too much printed money in the circulation.
I urge u to keep your eyes open and buy real asset when your personal finance allow u to. Don't believe in the printed money illusions.
Well said, learn something new today :D
Now they make the cash looks attractive by inflating share prices, making it hard to buy properties, lowering the price of gold and other commodities (because they are so easy to be manipulated).
Keeping cash is what the central banks want u to do, because there is not enough real asset and there is too much printed money in the circulation.
I wonder if Economist Leeds and Amber are working for MAS. :doh:
The poor Middle class and upper middle class would be :scared-2:
Now they make the cash looks attractive by inflating share prices, making it hard to buy properties, lowering the price of gold and other commodities (because they are so easy to be manipulated).
90% of the wealth of the wealthiest people on earth are in shares not property.
http://www.forbes.com/billionaires/#page:1_sort:0_direction:asc_search:_filter:All%20industries_filter:All%20countries_filter:All%20states
90% of the wealth of the wealthiest people on earth are in shares not property.
http://www.forbes.com/billionaires/#page:1_sort:0_direction:asc_search:_filter:All%20industries_filter:All%20countries_filter:All%20states
Shares have too few winnners and too many losers. Property on the other hand has a few loser and many winners.
Property is a fairer game than shares, however risk-gain factor still apply in both.
Property is mentaly less demanding than shares.
Property has a utility value, whereas shares papers u can use it to wrap peanuts. Now script less trading it just dissapeared.
STI will go down tomorrow with all reds in US and Euro stock markets.
Shares have too few winnners and too many losers. Property on the other hand has a few loser and many winners.
Property is a fairer game than shares, however risk-gain factor still apply in both.
Property is mentaly less demanding than shares.
Property has a utility value, whereas shares papers u can use it to wrap peanuts. Now script less trading it just dissapeared.
90% of the wealth of the wealthiest people on earth are in shares not property.
http://www.forbes.com/billionaires/#page:1_sort:0_direction:asc_search:_filter:All%20industries_filter:All%20countries_filter:All%20states
and all these wealthy people have a few trophy homes. some more than others.
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