Page 1 of 2 12 LastLast
Results 1 to 10 of 17

Thread: Property market seen growing on a strong Sing dollar

  1. #1
    Any complaints please PM me
    Join Date
    May 2006
    Posts
    8,129

    Default Property market seen growing on a strong Sing dollar

    Published April 17, 2008

    Property market seen growing on a strong Sing dollar

    Fast income growth, falling interest rates will keep the sector buoyant, says report


    HERE'S some good news for those feeling down after recent bearish reports on the local property market.

    Canadian-based BCA Research this week issued a Buy Singapore Property Stocks report, arguing that a strong Singapore dollar will depress interest rates, which will continue to fuel the property market.

    It also pointed to strong income growth and other fundamentals - for instance, the transformation of Singapore's economy and favourable supply-demand dynamics - which it says will continue to underpin the Singapore real estate bull market.

    'While real estate prices in Singapore have been rising for a while, the pace of appreciation is unlikely to slow much given the solid fundamentals of this market,' BCA Research argues.

    'The bull market in property stocks will resume given the positive backdrop of the real estate sector. The valuations of real estate stocks have become very attractive, based on almost all price ratios. Dividend yields for this sector, at 2.1 per cent, compare extremely favourably with domestic bonds that are yielding 1-2 per cent.

    'Property stocks have underperformed the Singapore equity benchmark since early 2007 and it appears a trend reversal is under way.'

    In its report, the research house notes that the supply-demand dynamics in Singapore's real estate market are positive and valuations are not overly expensive. The government's measures last year have cooled housing activity somewhat, which has dented the performance of real estate stocks, BCA notes.

    'Nevertheless, strong income growth and depressed interest rates suggest that the property market in Singapore will stay buoyant,' it adds.

    The report also says that 'when measured against the long-term trend of income per capita, property prices are still in a catch-up phase after a major undershoot in the aftermath of the Asian crisis'.

    Housing affordability has not yet deteriorated, thanks to fast income growth and a plunge in interest rates. Rental yields have gone up as rent increases have been outpacing property prices.

    'Rising rental yields in the wake of plunging interest rates are not sustainable, as the arbitrage opportunity will be exploited,' says BCA. 'Given the supply-demand dynamics in Singapore's real estate market, a further increase in property prices is the most likely scenario at the moment. Despite the three-year dramatic appreciation in property prices, housing supply has not become excessive.'

    According to BCA, the supply of residential and office real estate is far from the level at the peak of the last bubble in 1996. It also says the impact of scrapping the Deferred Payment Scheme in slowing activity in the housing market appears to be waning.

    The Singapore economy is also unlikely to weaken substantially during this global growth downturn, as it has become more diversified in recent years.

  2. #2
    analyst101
    Guest

    Cool Re: Property market seen growing on a strong Sing dollar

    This is an interesting contrarian position.

    The report from the local based UBS research (issued 11 April 2008) was less optimistic.

    My own take is that Singaporeans will simply follow the herd mentality again. Until such time that the newspapers report a favourable uptake on some major project, there will not be much buyer interest. When such news is announced, everyone will stream in.

    Aside from Sing dollar appreciation and low interest rates, there are several other plus factors. The 2008 masterplan and location of Bukit Timah MRT station announcement is likely to take place quite soon (maybe as early as next month). This will spur interest in some areas. As the F1 e.t.c. projects come on stream, Singapore will also be put in the spotlight, and higher end interest will be aroused. Finally, inflation alone will result in higher construction costs, and hence higher price homes. Alternatively, developers may simply decide to `sit' on their empty plots, until either construction costs come down sufficiently (expected post 2011), or buyer interest is sufficient to make up for the higher priced units.

    Balanced against that is the sub-prime uncertainties, and also fear of further gov intervention to cool the market.

    Perhaps, a good compromise is to buy a ready made relatively new resale unit, rather than from developers. The latter is not likely to lower their asking price much, since they have shareholders to account to, and they also do not want to spook the market, especially if they already have many other projects to look at.

    All in all, a good buyers market for the next 6 months at least. After that, market likely to uptrend. Even the rather pessimistic UBS report seems to hold this view.

  3. #3
    Newbie
    Join Date
    May 2007
    Posts
    107

    Default Re: Property market seen growing on a strong Sing dollar

    UBS got burned bad how can they talk of good times when they have to borrow heavily for their gambling and investments.

  4. #4
    Junior
    Join Date
    Apr 2008
    Posts
    1,286

    Default Re: Property market seen growing on a strong Sing dollar

    Quote Originally Posted by analyst101
    My own take is that Singaporeans will simply follow the herd mentality again. Until such time that the newspapers report a favourable uptake on some major project, there will not be much buyer interest. When such news is announced, everyone will stream in.
    "Herd mentality" is the mentality of the common man - the masses.

    It's not just in buying properties, likewise in their careers. They'll rush into "what's hot", and they find out (usually too late) that it's overcrowded.

    The Straits Times

    April 17, 2008

    HDB's April sale draws 5,700 applicants for 490 flats

    Take up rate is higher because the flats are ready or near completion.

    By Joyce Teo

    THE Housing Board's April sale of four-room and bigger flats closed on Wednesday with 5,700 applications for 490 flats offered.
    The board said the applications and take-up rates for the Bi-monthly sales exercises are higher because the flats offered are completed or nearing completion.
    But it noted that while demand is high in its recent sales exercises for its unsold stock, a significant number of applicants do not end up buying a flat.
    The board is currently reviewing the flat application system, following feedback that non-serious applicants are crowding out those with more pressing housing needs. National Development Minister Mah Bow Tan had disclosed this move earlier this month.
    HDB flats are now mainly sold via the build-to-order system, where projects are built only when a majority of units are booked. This means buyers have to wait about three years for the flats to be built. In the next six months from April to September, HDB plans to offer 5,000 new built-to-order (BTO) flats in towns such as Punggol, Sengkang, Woodlands and Bukit Panjang. The next two two BTO launches will be in Punggol and Sengkang at the end of this month. As HDB's unsold stock has shrunk significantly, the board has been asking buyers to plan ahead and buy under the BTO system. It advised urgent buyers to consider resale flats.

  5. #5
    Newbie
    Join Date
    Apr 2007
    Posts
    72

    Default Re: Property market seen growing on a strong Sing dollar

    Quote Originally Posted by mr funny
    Canadian-based BCA Research this week issued a Buy Singapore Property Stocks report, arguing that a strong Singapore dollar will depress interest rates, which will continue to fuel the property market.
    Why is it that people think lower interest rates will fuel the property market? If we've had an extended lull period, and there is really nothing going on in the markets and there are really no other leads to follow, then I say yes, it will be a consideration. But right now, there are many other considerations to take into account which overshadow this i.e. just because interest rates are 1-2 percent lower doesnt necessarily mean its a good time to invest in properties. When times are bad, even zero interest rates cannot spur people into investing in properties. Just ask the Japanese. Likewise, when times are good, higher interest rates are no deterrent to a property boom. That the Americans will vouch for in recent years. So it's really too simple to say that just because rates are low(er), one should buy properties - rates are low for a reason & it's not a positive reason.

    The same goes for calling a buy on properties as a hedge for inflation. Are you to tell me we should then sell properties if we are in a deflationary environment? A long term buy-and-hold strategy again inflation I agree but people make it sound as though its just because the headlines in the papers are presently screaming "rising prices!!" daily, it is a good enough reason to buy at this point. In fact, once central banks reach their respective tipping points and start raising rates to combat inflation, it will be mortgage holders who will feel the inch from rising monthy installments.

  6. #6
    Junior
    Join Date
    Apr 2008
    Posts
    1,286

    Default Re: Property market seen growing on a strong Sing dollar

    Quote Originally Posted by Boon
    Why is it that people think lower interest rates will fuel the property market? If we've had an extended lull period, and there is really nothing going on in the markets and there are really no other leads to follow, then I say yes, it will be a consideration. But right now, there are many other considerations to take into account which overshadow this i.e. just because interest rates are 1-2 percent lower doesnt necessarily mean its a good time to invest in properties. When times are bad, even zero interest rates cannot spur people into investing in properties. Just ask the Japanese. Likewise, when times are good, higher interest rates are no deterrent to a property boom. That the Americans will vouch for in recent years. So it's really too simple to say that just because rates are low(er), one should buy properties - rates are low for a reason & it's not a positive reason.

    The same goes for calling a buy on properties as a hedge for inflation. Are you to tell me we should then sell properties if we are in a deflationary environment? A long term buy-and-hold strategy again inflation I agree but people make it sound as though its just because the headlines in the papers are presently screaming "rising prices!!" daily, it is a good enough reason to buy at this point. In fact, once central banks reach their respective tipping points and start raising rates to combat inflation, it will be mortgage holders who will feel the inch from rising monthy installments.
    If there is anyway to predict property price trends from interest rates trends, a person who knows how to do that will become an instant billionaire.

    Look at the chart below which superimposes the 3-Month Interbank Interest Rate against Property Price Index between 1988 to 2008.



    From Mar 1988 to Jun 1990 (8 Quarters), interest rates rose and property price rose (Boon wins; BCA Research loses).

    From Jun 1990 to Sep 1992 (9 Quarters), interest rates fell and property price rose (BCA Research wins; Boon loses).

    From Sep 1992 to Dec 1994 (9 Quarters), interest rates rose and property price rose (Boon wins; BCA Research loses).

    From Dec 1994 to Jun 1998 (14 Quarters), interest rate movement is inversely correlated to property price index (BCA Research wins; Boon loses).

    From Jun 1998 to Jun 2006 (32 Quarters), interest rate movement tracks the property price index (Boon wins; BCA Research loses).

    From Jun 2006 to Mar 2008 (7 Quarters), interest rate movement is inversely correlated to property price index (BCA Research wins; Boon loses).

    Final score:

    Boon wins 49 Quarters; BCA Research wins 30 Quarters.

    I declare Boon the winner.

  7. #7
    Newbie
    Join Date
    Apr 2007
    Posts
    72

    Default Re: Property market seen growing on a strong Sing dollar

    Quote Originally Posted by jlrx
    If there is anyway to predict property price trends from interest rates trends, a person who knows how to do that will become an instant billionaire.

    Look at the chart below which superimposes the 3-Month Interbank Interest Rate against Property Price Index between 1988 to 2008.



    From Mar 1988 to Jun 1990 (8 Quarters), interest rates rose and property price rose (Boon wins; BCA Research loses).

    From Jun 1990 to Sep 1992 (9 Quarters), interest rates fell and property price rose (BCA Research wins; Boon loses).

    From Sep 1992 to Dec 1994 (9 Quarters), interest rates rose and property price rose (Boon wins; BCA Research loses).

    From Dec 1994 to Jun 1998 (14 Quarters), interest rate movement is inversely correlated to property price index (BCA Research wins; Boon loses).

    From Jun 1998 to Jun 2006 (32 Quarters), interest rate movement tracks the property price index (Boon wins; BCA Research loses).

    From Jun 2006 to Mar 2008 (7 Quarters), interest rate movement is inversely correlated to property price index (BCA Research wins; Boon loses).

    Final score:

    Boon wins 49 Quarters; BCA Research wins 30 Quarters.

    I declare Boon the winner.
    Haha..not bad..you should copyright it as JLRX Research!..I noticed you;re quite good with getting such charts together. Will you be able to provide a superimposed stock market vs property market index chart?

  8. #8
    Ordinary
    Join Date
    Apr 2008
    Posts
    91

    Default Re: Property market seen growing on a strong Sing dollar

    Quote Originally Posted by Boon
    Why is it that people think lower interest rates will fuel the property market? If we've had an extended lull period, and there is really nothing going on in the markets and there are really no other leads to follow, then I say yes, it will be a consideration. But right now, there are many other considerations to take into account which overshadow this i.e. just because interest rates are 1-2 percent lower doesnt necessarily mean its a good time to invest in properties. When times are bad, even zero interest rates cannot spur people into investing in properties. Just ask the Japanese. Likewise, when times are good, higher interest rates are no deterrent to a property boom. That the Americans will vouch for in recent years. So it's really too simple to say that just because rates are low(er), one should buy properties - rates are low for a reason & it's not a positive reason.

    The same goes for calling a buy on properties as a hedge for inflation. Are you to tell me we should then sell properties if we are in a deflationary environment? A long term buy-and-hold strategy again inflation I agree but people make it sound as though its just because the headlines in the papers are presently screaming "rising prices!!" daily, it is a good enough reason to buy at this point. In fact, once central banks reach their respective tipping points and start raising rates to combat inflation, it will be mortgage holders who will feel the inch from rising monthy installments.
    Are you saying BCA is wrong in saying a "growing" SGD will help the property market growth?

    Or are you changing the topic to interest rate in an attempt to challenge them?

  9. #9
    Newbie
    Join Date
    Apr 2007
    Posts
    72

    Default Re: Property market seen growing on a strong Sing dollar

    Quote Originally Posted by Teana
    Are you saying BCA is wrong in saying a "growing" SGD will help the property market growth?

    Or are you changing the topic to interest rate in an attempt to challenge them?
    As BCA pointed out "a strong Singapore dollar will depress interest rates". In Singapore, monetary policy is based on the S$ policy unlike other countries whereby the central bank uses interest rates. So there is no attempt to change topic.

  10. #10
    Junior blackjack21trader's Avatar
    Join Date
    Jun 2007
    Location
    D15
    Posts
    5,095

    Default Re: Property market seen growing on a strong Sing dollar

    Quote Originally Posted by Boon
    As BCA pointed out "a strong Singapore dollar will depress interest rates". In Singapore, monetary policy is based on the S$ policy unlike other countries whereby the central bank uses interest rates. So there is no attempt to change topic.
    Although I personally has high regards for BCA Research, I must say Boon has made some very good points that deserved good food for thought.

Page 1 of 2 12 LastLast

Similar Threads

  1. Growing stability seen in HDB resale market
    By reporter2 in forum HDB, EC, commercial and industrial property discussion
    Replies: 0
    -: 11-10-16, 17:16
  2. MAS stuns market by flattening Singapore dollar policy band
    By reporter2 in forum Finance and Legal
    Replies: 7
    -: 16-04-16, 15:18
  3. Growing interest in Philippine property market among Singapore investors
    By princess_morbucks in forum Coffeeshop Talk
    Replies: 2
    -: 14-12-13, 11:55
  4. The growing GCB market
    By mr funny in forum Landed Property
    Replies: 3
    -: 30-09-09, 02:41
  5. Thai Beverage chairman looks to growing property portfolio here
    By mr funny in forum Singapore Private Condominium Property Discussion and News
    Replies: 0
    -: 13-04-07, 06:40

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •