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Thread: Wave of recovery to spread to mid and high end properties: UOB

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    Default Wave of recovery to spread to mid and high end properties: UOB

    Wave of recovery to spread to mid and high end properties: UOB

    PC Lee / The Edge Singapore | September 19, 2017


    SINGAPORE (Sept 18): Singapore property prices are expected to rise by 5-10% next year after bottoming out this year as the nascent recovery spreads to the mid-range and high-end segments in the next wave, says UOB Kay Hian.

    This is driven by replacement demand from buyers who have sold their homes in en bloc sales and a pickup in home buying interest from foreigners, says UOB Kay Hian lead analyst Vikrant Pandey in a Monday report.

    The next wave of recovery in the property sector will predominantly be driven from bottom up, starting from the mass-market and flowing over to the high-end segment. The return of enbloc sales and greater scope for foreign participation should power the high-end segment ahead, benefitting developers with such landbank exposure.

    Already, the collective sales value transacted from Jan to Aug has topped $3 billion, exceeding the combined transactional value in the previous four years from 2013 to 2016.

    However, Vikrant believes the market is still in the early stages of the en bloc fever, which could run until the end of next year, as a surge in en bloc sales could span between six to eight quarters.

    The collective sales in 2016/17 YTD is comparable to 2011/12, but only 21% of the cumulative sales transacted in 2006/07, suggesting further room for more en bloc sales, says UOB.

    The 2006/07 en bloc sales cycle took out around 10,000 units and correspondingly minted a similar number of millionaires seeking replacement properties.

    In the current cycle, about 2,000 units have been taken out, with another 1,000 units in advanced stages. As the cycle progresses further, collective sales could be fuelled by more replacement demand. The wealth effect would likely see millionaire en bloc buyers upgrading to the mid/high-end segment, and further feeding the cycle.

    While the 2006/07 enbloc sales cycle took out around 10,000 units, it put back twice as many units into the market. According to JLL estimates, the 3,000 units -- including the ones launched for tender -- could yield 12,000 units in new developments.

    This story, written by PC Lee, first appeared on The Edge Singapore.

  2. #2
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    High end already moved up. Especially those D1 and D9 1/2 bedders. The only worry is will rental move up? Else, it is a bubble forming.

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    Quote Originally Posted by thomastansb View Post
    High end already moved up. Especially those D1 and D9 1/2 bedders. The only worry is will rental move up? Else, it is a bubble forming.
    How to bubble with all the CMs

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    For me is simple. If the rental can't even pay your installment in this low interest environment and people say prices is cheap now and is going to go up, then bubble is forming.

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    Quote Originally Posted by thomastansb View Post
    For me is simple. If the rental can't even pay your installment in this low-interest environment and people say prices is cheap now and is going to go up, then bubble is forming.
    So long your installment can cover your interest, you are still positive.

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    Quote Originally Posted by thomastansb View Post
    For me is simple. If the rental can't even pay your installment in this low interest environment and people say prices is cheap now and is going to go up, then bubble is forming.
    well, that is not a definition of bubble. a bubble is exactly that - inflated ballooning prices caused mainly by excessive "blowing" ie speculative activity. market has been down for 13 quarters. what goes down must come up.

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    Quote Originally Posted by thomastansb View Post
    For me is simple. If the rental can't even pay your installment in this low interest environment and people say prices is cheap now and is going to go up, then bubble is forming.
    http://www.zerohedge.com/news/2017-0...except-housing

    Share is a bubble, bond is a bubble, gold is a bubble, crypto currency is a bubble.....since we are living in the world full of bubble, the best we can do to be safe is to choose the bubble that will pop up the last. In this sense even if housing is a bubble, as long it is the last to pop up... we are doing just fine.

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    Quote Originally Posted by thomastansb View Post
    For me is simple. If the rental can't even pay your installment in this low interest environment and people say prices is cheap now and is going to go up, then bubble is forming.
    Well, another way to look at it is to increase your downpayment. For example, if you have placed a 40% downpayment, there is no way the rental can't pay the installment (based on 60% loan).

    If you understood the 40% downpayment principle, the next thing to ask is if one has the money, should one pay 20% (and not cover the installment and say lousy market) or pay 40% (and more than cover the installment and say still comfortable)? In that case, much will depend on how you use the 20% of funds.

    But in either case, there is no bubble.

    Right?
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

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