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Thread: Big fall in property prices unlikely: report

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    Default Big fall in property prices unlikely: report

    http://www.businesstimes.com.sg/prem...eport-20121207

    Published December 07, 2012

    Big fall in property prices unlikely: report

    Only interest rate shock or poor growth will hit prices

    By ong chor hao


    IT would take an interest rate shock, poor GDP growth, or both, to bring down private property prices here noticeably over the next five years, a study said.

    The Credit Suisse report noted that analysts are anticipating that prices will fall as a record supply of land comes on stream and as the US Federal Reserve tightens monetary policy.

    But it forecast that prices will rise by about 8 per cent by the end of 2017, based on the central scenario from its modelling. The report also said that not all of the government's cooling measures have been effective in bringing down prices, even if they have dampened transactions temporarily.

    "Contrary to the view of many, our analysis shows that prices will only correct marginally by 2017, if the government pushes out the supply of property as aggressively as it has over the last three years through its Government Land Sales programme," said Michael Wan, the analyst at Credit Suisse behind the report.

    If government land releases stay at the same "rapid pace" of around 16,000 units each year, prices will come down around one per cent by 2017, the report said, which indicates that an oversupply is unlikely.

    "However, if this scenario coincides with a meaningful GDP or interest rate shock, prices would obviously fall much more," the report said.

    Credit Suisse defines a GDP shock as a scenario where output expands by a total of 5 per cent over the next five years, and assuming that loans and the Straits Times Index grow at the same pace.

    Property prices will drop 16 per cent under this scenario.

    Describing such a development as "unlikely" but "not impossible", Credit Suisse said the bank had predicted that GDP will shrink by more than 9 per cent in the scenario of a full-blown eurozone break-up.

    But if nominal output can grow by 7 per cent each year, with the same assumptions, prices will surge 23 per cent by 2017.

    As for interest rates, Credit Suisse expects prices to fall a cumulative 14 per cent between 2013 and 2017 if the Singapore Interbank Offered Rate rises to 7 per cent in that time.

    It said rates have not reached that level since the 1998 Asian financial crisis, and there has to be a very strong growth or a sharp pick-up in inflation in the US economy to see such a high rate returning, due to the close links between the US and Singapore economies.

  2. #2
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    where is that guy shouted crash 50% by 2015....


    **YAWN**

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    http://www.propertyguru.com.sg/prope...-by-2017-study

    S'pore home price to rise 8% by 2017!!

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    8% by 2017 ??...

    even inflation is at 3-5% per year... put in stock market better lah... anyway, still win bank's FD...



    **YAWN**

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    Quote Originally Posted by ikan bilis
    8% by 2017 ??...

    even inflation is at 3-5% per year... put in stock market better lah... anyway, still win bank's FD...



    **YAWN**
    Bro did u include in rental yield? Based on downpayment amount?

    Increase 8% on absolute term, what if based on 20% down payment? It becomes 8%x5 = 40% of downpayment leh?

    I hope I correct hor, sometime I blur .. Hahahaha

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    bro... cannot compare like that 1 lah....

    stock also got dividends mah.... may be 3-5% net dividends vs gross rental yield of 4-5%... and you wanna gear/margin your stock also can mah...


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    Quote Originally Posted by ikan bilis
    bro... cannot compare like that 1 lah....

    stock also got dividends mah.... may be 3-5% net dividends vs rental gross yield of 4-5%... and you wanna gear/margin your stock also can mah...

    Bro, the fact is not many gear for stocks. Almost all gear for property... It is a fact.

    Out of 100 friends u know, how many gear stocks?

    When u sell your property, absolute counts over downpayment rite?

    Technically u correct, but practical lah bro... I hate theory, practical make money...

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    Quote Originally Posted by chestnut
    Bro, the fact is not many gear for stocks. Almost all gear for property... It is a fact.

    Out of 100 friends u know, how many gear stocks?

    When u sell your property, absolute counts over downpayment rite?

    Technically u correct, but practical lah bro... I hate theory, practical make money...
    bro... how to explain to you hur ??...
    me not real smart investor... so me advocate "Property is for you to hold tight tight, keep long long"....

    the real investor guru is some1 like warren buffett.... he hor... 20% per year proven track record !!....

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    Bro, u underestimate yourself.. U are sharp leh...

    I don't believe property to keep long long... U only do this if you have 1 or 2... If you have more, u need to unlock the ones that have minimal profit going forward...

    Like stocks, once u see minimal potential in a particular stock, come out and re-invest...

    I damn opinionated lah... Need to be so can come to conclusion.. But I open to ideas lah...

    Warren different lah, he can move mountains with just his investment...

    You follow him where he invest can Liao...

    Quote Originally Posted by ikan bilis
    bro... how to explain to you hur ??...
    me not real smart investor... so me advocate "Property is for you to hold tight tight, keep long long"....

    the real investor guru is some1 like warren buffett.... he hor... 20% per year proven track record !!....

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    Quote Originally Posted by chestnut
    Bro, u underestimate yourself.. U are sharp leh...

    I don't believe property to keep long long... U only do this if you have 1 or 2... If you have more, u need to unlock the ones that have minimal profit going forward...

    Like stocks, once u see minimal potential in a particular stock, come out and re-invest...

    I damn opinionated lah... Need to be so can come to conclusion.. But I open to ideas lah...

    Warren different lah, he can move mountains with just his investment...

    You follow him where he invest can Liao...

    Interesting thought on "u need to unlock the ones that have minimal profit going forward..."

    What about those which have already maximised their profits, that is, have already shot up to the roof, way ahead of their neighbours?

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    If u sell now cau u still get the same leverage? If u have 2 properties now with loan outstAnding 20y and u are 55y old, u sell next time buy bk can loan how many years ...
    Ride at your own risk !!!

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    Asset based loan used to be only 30% downpayment and loan tenure used to be able to stretch till 75.

    Many older property owners will be holding on to their properties.

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