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Thread: Property frenzy a big worry

  1. #1
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    Default Property frenzy a big worry

    http://www.straitstimes.com/business...zy-a-big-worry

    Property frenzy a big worry

    Dennis Chan
    Deputy Money Editor

    Mar 13, 2018


    That home prices are firmly on the uptrend on the back of improving sentiment and economic growth is no longer in doubt. The more pertinent question is: Are we witnessing a gentle recovery, which is seen as the preferred outcome for policymakers?

    The signs are not promising. The recent tender for an executive condominium site in Sumang Walk in Punggol drew 17 bids, with each of them higher than the previous record in 2013 for a site near Jurong Lake.

    This is worrisome as the hunger by developers for residential sites has filtered down to the hybrid housing market and raises questions about whether the cooling measures introduced by the Government between 2009 and 2013 remain effective today.

    To recap, private home prices fell by about 11 per cent by the second quarter of last year from its peak in the third quarter of 2013. But two consecutive quarters of gains in the second half of the year meant that private home prices posted a 1 per cent rise for the whole of 2017.

    The property industry has downplayed this, with key players taking great care to describe the recovery as nascent - a subtle message, perhaps, to the authorities to let market forces run their course, and not interfere prematurely.

    Unlike the last rally, which was initially driven by end users riding on ultra-low interest rates amid a supply crunch, the optimism now is led by overeager developers seeking to replenish their land bank.

    Meanwhile, collective sales efforts are growing as home owners try to make hay while the sun shines.

    Even if a small fraction of the 120 collective sales in the works comes to fruition, the effect on property prices is to make them sticky-down, a situation in which prices move up easily but are resistant to falling. Successful sellers, flush with cash, may further drive up prices in their search of a replacement home, while those whose homes have not yet come under the collective-sale hammer will hold firm in their asking price, hoping that their day in the sun will also come.

  2. #2
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    Default

    Inflation is 3% a year. Property should also go up by similar %. And people are earning more and more. Median salary going up like 5-6%. Naturally, people have more money to buy. We cannot expect a studio to cost 500k in 2010 and also cost 500k in 2020. If my property stay the same price in 1990 and 2018, then my property has actually dropped 70% because I am better off buying something else. Cannot be chicken rice 50 cents and HDB 10k and chicken rice $10 and HDB still 10k.

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