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Thread: Property mass-market starts post-ABSD recovery

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    Default Property mass-market starts post-ABSD recovery

    http://www.businesstimes.com.sg/sub/...45540,00.html?

    Published February 29, 2012

    Property mass-market starts post-ABSD recovery

    NUS SRPI also shows upmarket homes in Central Region are still softening

    By KALPANA RASHIWALA


    (SINGAPORE) The mass- market segment has begun to recover from its knee-jerk reaction to the additional buyer's stamp duty (ABSD) introduced in December, but the upmarket private homes in the Central Region are still suffering.

    Prices of completed private apartments (excluding smaller ones) in Non-Central Region rose 1 per cent in January, compared to December.

    But according to the flash estimates of NUS' Singapore Residential Price Index (SRPI), prices of completed properties in the Central Region softened a further 1.9 per cent, relative to the previous month. Small apartments (up to 506 sq ft) also saw their prices fall 1 per cent, compared to December.

    'This suggests that the ABSD has affected units in the Central Region, where buyers are more likely to be foreign-based or institutional, as well as shoebox units, where buyers tend to be more speculative,' said Associate Professor Lum Sau Kim of the Institute of Real Estate Studies (IRES).

    'Despite announcements of continued government land supply into 2012, the robust market activity in the non-luxury segment has created sufficient demand tension to boost the secondary market for Non-Central units.'

    SRPI tracks prices of completed private apartments and condos (excluding executive condos).

    Starting from the January 2012 indices published yesterday, IRES has introduced a new basket - the sixth in the series - to make the indices more in tune with projects completed up to September last year.

    'We formed Basket 6 by adding 113 new projects, out of which 52 were from Central Region, and dropping 106 older projects that had been completed between October 1998 and September 2001,' said Prof Lum.

    Basket 6 comprises 370 projects totalling 74,015 units located across 25 districts in Singapore that were completed between October 2001 and September 2011. Basket 5 comprised 363 projects with 74,150 units completed between October 1998 and September 2009.

    Weights for computing the capital-weighted SRPI indices were assigned based on the market value as at December 2011 of all the units in the latest Basket 6.

    Without reconstituting the basket, the SRPI flash index values (based on Basket 5) for January 2012 would have been lower and hence there would be marginally larger percentage declines in prices, says Prof Lum. 'The difference arises from a substitution of newer projects for older ones going from Basket 5 to Basket 6. We can infer that newer units enjoyed better price performance than 10- to 12-year vintage units,' she added.

    Based on Basket 5, SRPI for Central Region - comprising Districts 1-4 (which include the financial district and Sentosa Cove) and the traditional prime residential districts of 9, 10 and 11 - would have dipped 2.4 per cent month on month in January 2012, compared with a 1.9 per cent drop based on Basket 6.

    The sub-index for Non-Central Region dipped 0.4 per cent m-on-m in January based on Basket 5, but rose 1 per cent based on Basket 6.

    Over the same period, SRPI for small apartments islandwide declined 4.1 per cent going by Basket 5. Based on Basket 6, however, the drop was a much smaller 1 per cent. 'The small unit SRPI is more volatile in Basket 5 as small units are less well represented there. Basket 6 is better as we have captured more of these units and the sub-index would be less susceptible to outlier transactions,' says Prof Lum.

    The overall SRPI fell 1.2 per cent based on Basket 5 and a smaller 0.4 per cent on Basket 6.

    On both baskets, however, the Non-Central Region subindex fared better than the subindices for Central Region and small apartments islandwide.

    DTZ's Southeast Asia chief operating officer Ong Choon Fah said: 'There's a perception that in the Central Region and for small units, the risks could be higher following the ABSD because these units attract more investors. So owners of such properties may be more willing to take a profit and accept prices that are a bit lower.' She expects the trend to continue.

    Credo Real Estate executive director Ong Teck Hui added: 'The fall in the overall SRPI is reflective of a slower secondary market which has dropped 25 per cent in sales volume over the past year and is manifesting itself in price sluggishness.

    'This is also the case for Central, where secondary market transactions fell 27 per cent in 2011, due mainly to falling demand in the prime sub-market. Also the ABSD has been expected to weigh more heavily on the prime districts due to the relatively higher proportion of foreign buyers compared to Non-Central.'

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    such articles merely draw the cm policy makers attention...

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    It just means there are less speculators in the suburbs and buyers of suburban properties are prepared to hold out the ABSD, which is consistent with most of our understanding. That's why prices are resilient.

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    main reason rental still ok except big high end ccr units

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    interesting conclusion. But still doesn't explain why most of these buyers willing to Pay >50% premium for a new launch condo vs a relatively new resale condo in same location? They got not enough cash to do renovation or even pay 40% cash immediately? Until we know the real reason of this strange phenomenon, I will avoid all these new launch condos (unless they are only <10% more than resale).


    Quote Originally Posted by Wild Falcon
    It just means there are less speculators in the suburbs and buyers of suburban properties are prepared to hold out the ABSD, which is consistent with most of our understanding. That's why prices are resilient.

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    Quote Originally Posted by felicia_sg
    interesting conclusion. But still doesn't explain why most of these buyers willing to Pay >50% premium for a new launch condo vs a relatively new resale condo in same location? They got not enough cash to do renovation or even pay 40% cash immediately? Until we know the real reason of this strange phenomenon, I will avoid all these new launch condos (unless they are only <10% more than resale).
    parc vera lor.....8xxpsf only....go buy!

    palette aso can wat...8xxpsf....slightly cheaper den livia....go buy!

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    teddybear is offline Global recession is coming....
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    Why you see people no up? Their aspiration/or capability may be is no less of Paterson Suites, St Regis, or the like?

    Quote Originally Posted by devilplate
    parc vera lor.....8xxpsf only....go buy!

    palette aso can wat...8xxpsf....slightly cheaper den livia....go buy!

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    Quote Originally Posted by teddybear
    Why you see people no up? Their aspiration/or capability may be is no less of Paterson Suites, St Regis, or the like?
    u out of point liao....

    y come disturb me

    "Until we know the real reason of this strange phenomenon, I will avoid all these new launch condos (unless they are only <10% more than resale)."

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    Maybe here is the answer from Dennis Ng.

    By Dennis Ng
    In 2011, buyers from China were the biggest group of foreign property buyers in Singapore. But if you are counting on foreigners to continue buying properties in Singapore in 2012 and 2013, I am afraid to say that you may be disappointed.
    The following factors are worthy of our consideration when studying the prospects of the property market in the next two years.
    Factors that determine Singapore's property market
    Since interest rates are at a historical low now, it can only go up from here, and not down. In fact, interest rates on home loans can shoot up to 3 per cent to 4 per cent. In my opinion, this could probably take place in 2013 when U.S. interest rates start to climb due to the threat of rising inflation.
    In the next two years, more than 30,000 condominium units will be completed. With a huge supply of new condominiums, do you think rental rates would go up or down? So when rental rates indeed go down and interest rates go up, would this make property investments more attractive or less attractive? With rental yield now at 3 per cent to 4 per cent, what would the revised rental yield be when rental rates drop? Would some properties go from yielding positive cashflow, where monthly rental income exceeds monthly housing loan installment, to having a negative cashflow?
    In addition, HDB built 8,000 units in 2008. But in 2011 and 2012, HDB is going to build 25,000 units in each year, totaling 50,000 units in the span of two years. With supply of both condominiums and HDB flats expected to surge in the next two years, coupled with an economic slowdown as a result of the next global financial crisis, do you not think that the demand for properties would drop?
    Singapore aside, given that the U.S. and Europe, each constituting 23 per cent of the global economy, are likely to experience an economic slowdown in 2012, the rest of the world seems to be headed for another recession. And when that happens, would a global recession, coupled with global sovereign debt problems, especially in the Euro zone and U.S., not trigger a global financial crisis?
    By considering all the above using an upside / downside analysis, do you think Singapore's property market presents more upside potential or downside risks? And what will your decision be as to whether you should invest in condominiums now?
    We should not just look at Singapore's property market alone
    Apart from casting our sights on the local economic situation, we must also track closely the activities in Hong Kong. Why is this so? Well, this is because Singapore and Hong Kong are always closely linked in terms of property market trends and movements.
    With respect to this, most market players have the impression that property prices in Singapore are slightly lower than prices in Hong Kong. So if Hong Kong's property prices fall, Singapore's property prices might fall as well.
    So, with the latest land sales in Hong Kong fetching prices that are below market expectations, could this be a possible sign that the Hong Kong property market is beginning to go downhill?
    As it is, Hong Kong's government—which is boosting the supply of land to try and curb a more than 70 per cent surge in home prices since early 2009—has already sold two sites in August 2011 that missed estimates as home price gains have stalled. This is due to concerns that the economy is sliding into recession. The Hang Seng Index (HSI) also fell 23 per cent from its November 2010 peak to below 18,000 points in September 2011.
    According to figures released by the Hong Kong Land Registry, August 2011 home transactions experienced the biggest drop since February 2009. An index tracking home prices, compiled by Centaline, fell in June and July—the first consecutive monthly drop since December 2008.
    Vincent Lo, chairman of Shui On Land Ltd., had reportedly said, "The last few weeks, the property market has come down a little and transactions have virtually stopped."
    Echoing similar sentiments, Yu Kam-hung, a Hong Kong-based senior managing director for valuation and advisory services in Greater China at CB Richard Ellis Group Inc., said, "Property prices will start to decline soon and we are likely to see that in the rest of the year."
    He reportedly added that "Prices will trend down by about 10 per cent in the next two years and I don't rule out the chance that they may fall as much as 20 per cent in the worst case scenario."
    Property buyers from China may not continue their buying spree in Singapore. As it is, I am beginning to hear from some Chinese business owners that there is increasing difficulty for them to obtain loans in China. And some of them already know of friends who are starting to have cashflow problems in China. So if China business owners have cashflow problems, do you think they will have the ability or willingness to continue snapping up properties in Singapore in 2012 and 2013? Probably not.
    In my opinion, the global financial crisis has already started, but most people just do not feel it yet. In fact, they won't find anything amiss until things become very ugly. When that happens, market sentiments can make a 180 degree flip within a very short time.
    Many people, especially the middle-class Singaporeans are still happily buying properties. That said, my millionaire mentors and I are least interested in buying properties, especially condominiums, because the proposition simply failed our rule that upside must be at least double the potential downside.
    But it must be said that I could always be wrong. When it comes to investing, we cannot afford to be overly confident. We must be mindful of the possibility of being wrong. So even if property prices rise instead of fall, I would only make less money by not buying more properties now, which is fine by me.
    Personally, the number one investment question that I always ask is, "What if I'm wrong, will I be financially okay?" Next, I would do a simple upside / downside analysis and only invest when the upside is at least double the downside.
    While these two investment rules may seem too simple to be true for some people, they have indeed helped me make millions of dollars and prevented me from suffering substantial losses thus far.
    In this respect, it seems like I am able to see the future not because I have some supernatural abilities, but because I train myself to be logical and rational when analysing information and drawing my own conclusions.
    In my books and seminars, I share this thought process that I personally go through, before making any investment. Since this thought process is made based on hard facts, anyone can arrive at the same conclusion by going through this process, unless he or she already has a biased view of the market.
    And if you think that instead of investing in condominiums, you would be better off investing in commercial properties, as some seminar trainers are now advocating, do think again. Recently, I spoke with two multi-millionaires who specialise in investing in commercial properties. And they shared with me that the upside / downside is not working in the investors' favor. In fact, they are also not considering buying more commercial properties, but may sell if the price is attractive enough.
    I also have a friend who bought a commercial property near Tai Seng MRT station in 2010, where its location is obviously rather convenient. The property's temporary occupation permit (TOP) was in May 2011, but even after a few months, he still has not found a tenant. This is in spite of the theoretical rental yield of about 5 per cent to 6 per cent based on current property prices.
    With all above information provided, you should be in a position to decide for yourself the prospect of Singapore's property market. At all times, do remember that hope is not an investment strategy. Every investment can only be taken into consideration after doing your homework. Only after doing your research based on the available information, would you be able to take a calculated risk.
    Dennis Ng is director of Leverage Holding and Master Your Finance. This article is posted courtesy of www.Propwise.sg, a Singapore property blog dedicated to helping you understand the real estate market and make better decisions. Click here to get your free Property Beginner's and Buyer's Guide.

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    even old old hougang green MM 764sqft 2bdr sold for 8xxpsf liao.....parc vera similar size and similar px! wat u guys waiting for? LOL

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    where got all new launches priced 40-50% higher den resale...

    i oredi pointed out new launches selling similar price!!!! palette even cheaper den just TOP ones! so who say flour more ex den bread????

    ripplebay average px shd be around 900psf.....nearby 999LH apts r transacted 8xx-1kpsf liao......for this case, 99 new launch vs older 999lh, full condo vs boutique

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    Explanation full of holes lah! Need my point to point clarification to see the tree from the forest?

    [1] No more lah, with massive paper money printing! Interest rate at about 2.5% will be the new norm! Interest rate in US will not rise much other US govt got to pay huge bills!

    [2] 30,000 condominiums? Oh I see, mostly in OCR regions! Better be careful of OCR condos! Pay 50% premium for new launch to see them drop 50% to resale condo price in same vicinity?

    [3] Wah! The OCR condos over-supply already bad, still got ECs (they missed this) and HDB flats to compete! How to justify 50% premium for the new launch condos vs resale condos like that? If these people got no cash to pay for renovation &/or 40% cash immediately for completed units, you think they got holding power?

    [4] What a joke! Everybody already know that US is recovering! I expect super boom in late 2013 - 2015 with US, Europe, China, Japan all simultaneously on recovery path from a low base! Imagine what pyschological effect that will have on investors? Almost everybody will rush in from 2013 onwards! Only those who "iron teeth" ones will invest in by 2016 because they perceive "everything so safe & clear" just nice for people to sell to them at HIGH HIGH price!

    [5] Stop spreading rumours lah! What a joke! That time HK recession worst than Singapore! Yet now their prime property prices are 3x that of Singapore's! Singapore really hopeless!

    [6] You talking about the middle-income businessmen in Singapore? Just the 0.1% rich in China come to Singapore and our property price will shoot to S$100,000 psf!

    [7] His opinium worth how much?
    Mark my words: The financial crisis will soon be over! Yes, before end of 2012!

    [8] Only this is true, but am afraid they are buying the wrong ones! Ops!

    [9] Talk so much he not a millionaires yet?



    Quote Originally Posted by Leeds
    Maybe here is the answer from Dennis Ng.

    By Dennis Ng
    In 2011, buyers from China were the biggest group of foreign property buyers in Singapore. But if you are counting on foreigners to continue buying properties in Singapore in 2012 and 2013, I am afraid to say that you may be disappointed.
    The following factors are worthy of our consideration when studying the prospects of the property market in the next two years.
    Factors that determine Singapore's property market
    [1] Since interest rates are at a historical low now, it can only go up from here, and not down. In fact, interest rates on home loans can shoot up to 3 per cent to 4 per cent. In my opinion, this could probably take place in 2013 when U.S. interest rates start to climb due to the threat of rising inflation.
    [2] In the next two years, more than 30,000 condominium units will be completed. With a huge supply of new condominiums, do you think rental rates would go up or down? So when rental rates indeed go down and interest rates go up, would this make property investments more attractive or less attractive? With rental yield now at 3 per cent to 4 per cent, what would the revised rental yield be when rental rates drop? Would some properties go from yielding positive cashflow, where monthly rental income exceeds monthly housing loan installment, to having a negative cashflow?
    [3] In addition, HDB built 8,000 units in 2008. But in 2011 and 2012, HDB is going to build 25,000 units in each year, totaling 50,000 units in the span of two years. With supply of both condominiums and HDB flats expected to surge in the next two years, coupled with an economic slowdown as a result of the next global financial crisis, do you not think that the demand for properties would drop?
    [4] Singapore aside, given that the U.S. and Europe, each constituting 23 per cent of the global economy, are likely to experience an economic slowdown in 2012, the rest of the world seems to be headed for another recession. And when that happens, would a global recession, coupled with global sovereign debt problems, especially in the Euro zone and U.S., not trigger a global financial crisis?
    By considering all the above using an upside / downside analysis, do you think Singapore's property market presents more upside potential or downside risks? And what will your decision be as to whether you should invest in condominiums now?
    We should not just look at Singapore's property market alone
    Apart from casting our sights on the local economic situation, we must also track closely the activities in Hong Kong. Why is this so? Well, this is because [5] Singapore and Hong Kong are always closely linked in terms of property market trends and movements.
    With respect to this, most market players have the impression that property prices in Singapore are slightly lower than prices in Hong Kong. So if Hong Kong's property prices fall, Singapore's property prices might fall as well.
    So, with the latest land sales in Hong Kong fetching prices that are below market expectations, could this be a possible sign that the Hong Kong property market is beginning to go downhill?
    As it is, Hong Kong's government—which is boosting the supply of land to try and curb a more than 70 per cent surge in home prices since early 2009—has already sold two sites in August 2011 that missed estimates as home price gains have stalled. This is due to concerns that the economy is sliding into recession. The Hang Seng Index (HSI) also fell 23 per cent from its November 2010 peak to below 18,000 points in September 2011.
    According to figures released by the Hong Kong Land Registry, August 2011 home transactions experienced the biggest drop since February 2009. An index tracking home prices, compiled by Centaline, fell in June and July—the first consecutive monthly drop since December 2008.
    Vincent Lo, chairman of Shui On Land Ltd., had reportedly said, "The last few weeks, the property market has come down a little and transactions have virtually stopped."
    Echoing similar sentiments, Yu Kam-hung, a Hong Kong-based senior managing director for valuation and advisory services in Greater China at CB Richard Ellis Group Inc., said, "Property prices will start to decline soon and we are likely to see that in the rest of the year."
    He reportedly added that "Prices will trend down by about 10 per cent in the next two years and I don't rule out the chance that they may fall as much as 20 per cent in the worst case scenario."
    Property buyers from China may not continue their buying spree in Singapore. [6] As it is, I am beginning to hear from some Chinese business owners that there is increasing difficulty for them to obtain loans in China. And some of them already know of friends who are starting to have cashflow problems in China. So if China business owners have cashflow problems, do you think they will have the ability or willingness to continue snapping up properties in Singapore in 2012 and 2013? Probably not.
    [7] In my opinion, the global financial crisis has already started, but most people just do not feel it yet. In fact, they won't find anything amiss until things become very ugly. When that happens, market sentiments can make a 180 degree flip within a very short time.
    [8] Many people, especially the middle-class Singaporeans are still happily buying properties.
    That said, [9] my millionaire mentors and I are least interested in buying properties, especially condominiums, because the proposition simply failed our rule that upside must be at least double the potential downside.
    [10] But it must be said that I could always be wrong. When it comes to investing, we cannot afford to be overly confident. We must be mindful of the possibility of being wrong. So even if property prices rise instead of fall, I would only make less money by not buying more properties now, which is fine by me.
    Personally, the number one investment question that I always ask is, "What if I'm wrong, will I be financially okay?" Next, I would do a simple upside / downside analysis and only invest when the upside is at least double the downside.
    While these two investment rules may seem too simple to be true for some people, they have indeed helped me make millions of dollars and prevented me from suffering substantial losses thus far.
    In this respect, it seems like I am able to see the future not because I have some supernatural abilities, but because I train myself to be logical and rational when analysing information and drawing my own conclusions.
    In my books and seminars, I share this thought process that I personally go through, before making any investment. Since this thought process is made based on hard facts, anyone can arrive at the same conclusion by going through this process, unless he or she already has a biased view of the market.
    And if you think that instead of investing in condominiums, you would be better off investing in commercial properties, as some seminar trainers are now advocating, do think again. Recently, I spoke with two multi-millionaires who specialise in investing in commercial properties. And they shared with me that the upside / downside is not working in the investors' favor. In fact, they are also not considering buying more commercial properties, but may sell if the price is attractive enough.
    I also have a friend who bought a commercial property near Tai Seng MRT station in 2010, where its location is obviously rather convenient. The property's temporary occupation permit (TOP) was in May 2011, but even after a few months, he still has not found a tenant. This is in spite of the theoretical rental yield of about 5 per cent to 6 per cent based on current property prices.
    With all above information provided, you should be in a position to decide for yourself the prospect of Singapore's property market. At all times, do remember that hope is not an investment strategy. Every investment can only be taken into consideration after doing your homework. Only after doing your research based on the available information, would you be able to take a calculated risk.
    Dennis Ng is director of Leverage Holding and Master Your Finance. This article is posted courtesy of www.Propwise.sg, a Singapore property blog dedicated to helping you understand the real estate market and make better decisions. Click here to get your free Property Beginner's and Buyer's Guide.

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    This Dennis Ng has no analytical skills. He makes statements completely un-based on facts.

    For example, he only looks at the number of condos coming online, but not at the corresponding demand trends.

    What a joker.

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