July 6, 2007

Think hard before buying that property

THE article, '40-storey condo-like blocks for Boon Keng' (ST, June 21), stated that it would work out to about $645,000 for a 1,290 sq ft five-room flat, and that a 29th-storey five-room flat in Kim Tian Place was sold for a record $720,000.

The property market is all the rage nowadays, with almost-weekly media reports of record prices.

The current less than two-year-old bull market may need to be reflected upon, in view of the fact that we went through an almost decade-long bear market from 1996.

At its worst, the private-property index was down by about 40 per cent. Even with all the euphoria now, we should not forget that the market is still about 20 per cent below its peak in 1996.

If we compare Singapore with the United States, ours is one of the longest property bear markets in history, as we are still under water.

The worst housing bust in US history took place during the Great Depression when 'the average price of a home fell 24 per cent from 1929 to 1933' ('When does a housing slump become a bust?'; International Herald Tribune, June 17).

Singapore's decade-long bear market, which is still recovering, may pale in comparison. When a market is 20 per cent down, it would take another 25 per cent jump before it breaks even to the 1996 level. When will this happen - after 12, 13 years or longer?

Practically every week in my volunteer work doing financial counselling of bankrupts, I meet people who have lost their homes and CPF and have been made bankrupt by the mortgagee.

How many Singaporeans have lost their homes, CPF, and maybe made bankrupt too through buying property?

Leong Sze Hian