QEs and property prices

[plastic]

I keep hearing QEs drive up the property prices. Can someone enlighten me how does it actually work? How does printing money or buying up debts/ bonds translate into the rise in prices?

I know printing money devalues the currency and thus people are flocking to real properties which deem to be a safe or safer haven. How is that determined to be safer?

Is it also because governments pump in money and enabling banks to give out more loans, thus easier for consumers to secure mortgages, and drive up the prices?

Is there anymore to that? Can someone explain in some details of the chain reaction (in simple terms please)? Thanks

[august]

i also want to know...

[Arcachon]

Year 2006 - 2 Bedroom @ Southbank cost SGD 535,000.

Year 2008 - Subprime crisis



Year 2008 Nov 25 - QE1





Year 2010 - 2 Bedroom TOP. Valuation by UOB at SGD 1,500,000.

CM5 - 07 Dec 2011

http://app.mnd.gov.sg/Newsroom/NewsP...RA1=&RA2=&RA3=

CM4 - 13 Jan 2011

http://app.mnd.gov.sg/Newsroom/NewsP...RA1=&RA2=&RA3=

CM3 - 30 Aug 2010

http://app.mnd.gov.sg/Newsroom/NewsP...RA1=&RA2=&RA3=

CM2 - 19 Feb 2010

http://app.mnd.gov.sg/Newsroom/NewsP...RA1=&RA2=&RA3=

CM1 -14 Sep 2009

http://app.mnd.gov.sg/Newsroom/NewsP...RA1=&RA2=&RA3=

[ikan bilis]

I keep hearing QEs drive up the property prices. Can someone enlighten me how does it actually work? How does printing money or buying up debts/ bonds translate into the rise in prices?

I know printing money devalues the currency and thus people are flocking to real properties which deem to be a safe or safer haven. How is that determined to be safer?

Is it also because governments pump in money and enabling banks to give out more loans, thus easier for consumers to secure mortgages, and drive up the prices?

Is there anymore to that? Can someone explain in some details of the chain reaction (in simple terms please)? Thanks

ummm...
don't have to care whatever fed's botak ben is buying.... the net result is they are injecting US$40bil per month onto the market....

gold is "safer" bcoz you cannot man-made it. property is "safer" bcoz there is "location, location, location" and other factors.... but if an asteroid is hitting earth, then nothing is safe and nothing worth $$...

there will be other factors that will drive up property prices... building material, GLS, construction cost, salary spiral up, higher Tax/GST, higher energy cost, population growth/migrate, more infra-structure continued built...

sigh... very soon my Kopi-O S$3 per cup, meesiam S$20 per plate, hdb S$2mil per 3rm flat liow...

[Mr.Keh]

I keep hearing QEs drive up the property prices. Can someone enlighten me how does it actually work? How does printing money or buying up debts/ bonds translate into the rise in prices?

I know printing money devalues the currency and thus people are flocking to real properties which deem to be a safe or safer haven. How is that determined to be safer?

Is it also because governments pump in money and enabling banks to give out more loans, thus easier for consumers to secure mortgages, and drive up the prices?

Is there anymore to that? Can someone explain in some details of the chain reaction (in simple terms please)? Thanks

I am no economist, just sharing my personal view.

Basically QE leads to more money "printed" and this liquidity will chase assets such as gold, property and stocks and drive up their prices. Fewer people will want to hold money in the bank as people expect the value of cash to depreciate as more of it becomes available in future.

In the last two rounds of QEs, it appears that a lot of that money flowed into asia to chase higher returns from our booming economies. This time round, asia's economy is slowing and it remains to be seen if investors would use the QE3 cash to invest here.

Generally, i guess most people think QE3 would continue to push up asia's asset prices. That is also why Hong Kong introduced new property cooling measures on the very next day of the QE announcement. The speed of the reaction by the HK govt is shocking to me. I can imagine the HK civil servants staying up all night to monitor the FED so that their govt can react to it first thing in the morning. That is a clear indication to me that they are very sure that QE3 would push up HK property prices.

[DC33_2008]

It is rental increzse that pushes the price of a bowl of noodle, a cup of kopi, etc. ingredient has gone up but not that much in absolute term.

[minority]

basically it devalues money. Drives up inflation and thus property price which is one form of assets.

But What QE will do is also with added liquidity suppose to spur investment and business. Thus creating jobs and moving economy.

Its a 2 edged sword. over use we all pay a price.

[carbuncle]

it all depends whose pockets the hot money eventually flow into.

new businesses and startups
property
stocks and shares
hard assets
consumer consumption
religious benefits
charities
political campaigns
war and defence
terrorist activities

will have different ramifications.

[radha08]

qe = more money in market = more people buy property...NO brainer but just dont buy in....

WATTEN ESTATE..

[samuelk]

qe = more money in market = more people buy property...NO brainer but just dont buy in....

WATTEN ESTATE..

cham ai lah .. my neighbour just ready his A&A and move to Watten Est.
Is te damage by the MRT that bad. I remeber ther y were told to take pictures of the place before the construct starts so that they can cliam if in the event that there are defectes due to the movement of the earth.

[Arcachon]

I keep hearing QEs drive up the property prices. Can someone enlighten me how does it actually work? How does printing money or buying up debts/ bonds translate into the rise in prices?

I know printing money devalues the currency and thus people are flocking to real properties which deem to be a safe or safer haven. How is that determined to be safer?

Is it also because governments pump in money and enabling banks to give out more loans, thus easier for consumers to secure mortgages, and drive up the prices?

Is there anymore to that? Can someone explain in some details of the chain reaction (in simple terms please)? Thanks

First, know what is Money.

http://www.youtube.com/watch?v=lsmbWBpnCNk

Second, understand what is Banking.

http://www.youtube.com/watch?v=on513...&feature=share

Third, Know what going on in the World.

http://www.youtube.com/watch?v=lXfnH...eature=related

[phantom_opera]

Discussed many times ... just read back

In summary, QEs and low rate in a country like SG / HK allows the rich risk takers to exploit the more prudent middle class

Still dun understand? If you have been putting your $$ in FD since 2009 ... do u feel like getting poorer?

[chestnut]

That's why, born during right time is also important. Those who are rich, can refinance their house at say 1.25% with say 1 mil and place in bond at 3.5% netting 2.25% flat. So rich and poor divide gets wider.

[plastic]

First, know what is Money.

http://www.youtube.com/watch?v=lsmbWBpnCNk

Second, understand what is Banking.

http://www.youtube.com/watch?v=on513...&feature=share

Third, Know what going on in the World.

http://www.youtube.com/watch?v=lXfnH...eature=related

Gee, thanks.

[andy]

In summary, QEs and low rate in a country like SG / HK allows the rich risk takers to exploit the more prudent middle class

Do you mean the developers are main ones profiteering in an environment of QEs and -ve real interest rate?

[phantom_opera]

Do you mean the developers are main ones profiteering in an environment of QEs and -ve real interest rate?

Not just developers, it is best time to raise debt for any biz organization and HNWIs

It is very simple, if you are loan shark, NTUC income come to borrow money from you for 15y and inflation currently running close to 5%, would you lend NTUC Income at 3.65%? How a hell NTUC Income can borrow so cheaply when inflation is running at 5%? Don't u think there is something wrong with the system?

[carbuncle]

kawan kawan lah

[Arcachon]

Do you mean the developers are main ones profiteering in an environment of QEs and -ve real interest rate?

Do you know any banker, ask them how is money created you will understand who profit the most.

[speculator]

HK curbs home loans to prevent bubble after Fed stimulus
http://www.reuters.com/article/2012/...8KE2II20120914


http://www.reuters.com/article/idUSBRE88D0IX20120914

They implement CM straight after QE3 announcement. So do you think QE3 will push up property prices

[kane]

They do this they better prepare for a stock market bubble.

[leesg123]

Our gov better do something, cos the funds will come here in great force of they cant access hk!

[kane]

They don't have absd for foreigners in HK right?

[lajia]

The money has to be channelled somewhere...if not stock, then gold, if not gold then property...

CM is good, at least they are trying to moderate the situation. So if US don't recover so fast, drag and drag...then I think price will still go for a while.

[samuelk]

They don't have absd for foreigners in HK right?

US citizen exempted I think.

[kane]

US citizen exempted I think.

Exempted in HK or in SG?

[carbuncle]

while you guys are still talking about the effects of QE we have a new record 1.28mio for Shunfu HUDC.... and over 1000 others cheonging the Hero Bay showflat

[Localite]

IMHO this is not QE3, it is QE unlimited.

A blank check has been issued to print money and keep interest rates at near zero.

It is stupid to keep money in the bank now. It is almost stupid not to borrow to buy some asset. You will lose 15% in the value of money in 3 years assuming 5% inflation if you did nothing.

Even if you borrow money you will only spend 1% per year on interest charges.

No brainer situation IMHO.

But what happens after 2015 in anyone's guess. I am not convinced the US will have a roaring growth even by then. I think this whole economic trouble is a depression, but perfumed to look like something else.

[lajia]

agree, this is my opinion as well. As long as the US economy drags on with QE, property price should go in one direction

IMHO this is not QE3, it is QE unlimited.

A blank check has been issued to print money and keep interest rates at near zero.

It is stupid to keep money in the bank now. It is almost stupid not to borrow to buy some asset. You will lose 15% in the value of money in 3 years assuming 5% inflation if you did nothing.

Even if you borrow money you will only spend 1% per year on interest charges.

No brainer situation IMHO.

But what happens after 2015 in anyone's guess. I am not convinced the US will have a roaring growth even by then. I think this whole economic trouble is a depression, but perfumed to look like something else.

[samuelk]

Exempted in HK or in SG?

exempted in SG. Hk dun noe

[stl67]

IMHO this is not QE3, it is QE unlimited.

A blank check has been issued to print money and keep interest rates at near zero.

It is stupid to keep money in the bank now. It is almost stupid not to borrow to buy some asset. You will lose 15% in the value of money in 3 years assuming 5% inflation if you did nothing.

Even if you borrow money you will only spend 1% per year on interest charges.

No brainer situation IMHO.

But what happens after 2015 in anyone's guess. I am not convinced the US will have a roaring growth even by then. I think this whole economic trouble is a depression, but perfumed to look like something else.

agree fully.. same thought but dont know how to put it in writing or rather lazy to type..
actually this can be very scary for those retirees, poor or those who still have the mentality of saving money in the bank for retirement..