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Thread: What's next for property?

  1. #1
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    Default What's next for property?

    http://newpaper.asia1.com.sg/news/st...54340,00.html?

    What's next for property?

    Is the property market going up or down? Here are some ways of spotting the trends yourself

    By Desmond Ng

    July 08, 2008


    ARE property prices still on the way up, or are they heading to a slippery slope already?

    If you are confused with so much talk on the property market these days, you are not alone.

    One property consultant in a news report may say property prices will go up, but another consultant in the same report will probably say that the high prices cannot be sustained in the current climate.

    So, who do you believe?

    With the help from well-known market commentators - Chesterton International's research head Colin Tan and Knight Frank's research director Nicholas Mak - The New Paper compiled a checklist of 10 factors for bewildered sellers and buyers to consider before they sign on the dotted line.

    Bear in mind that no one factor alone affects property prices because a cocktail of different elements are at play.

    But if you do notice more of the following, you'll know that something is brewing.

    # More homes in the market

    Plain Economics 101 - more supply vs same demand, or higher demand vs even higher supply, will eventually lead to lower prices.

    For example, if the Housing and Development Board decides to bump up construction of flats in a big way, be prepared for a ripple-down effect on the property market.

    # Rentals start dropping

    Rentals may dip due to a slowdown in demand or more supply in the market.

    When rentals start dropping in a weak market, more landlords may have problems meeting their monthly instalments and up to a point, the gap will be so big that they will have to sell the property.

    # Agents get aggressive

    You leave your name at a condo showroom and agents keep calling you, even for other projects that you didn't view.

    It means that agents are getting desperate and buyers are not biting.

    # More units put up for sale

    The Straits Times Classifieds on Saturdays come packed with numerous property advertisements, even more than during the 1996 property heydays.

    And developers start to launch their projects in double-quick time to beat the rest.

    # No one's home?

    You drive along the expressway at night and you see flanked on both sides newly completed swanky condos, but few lights are switched on, suggesting that the projects are not fully tenanted.

    # Asking prices have dropped. Again.

    If you've been house-hunting, you'll see the signals.

    A unit you've been looking at has dropped its selling price three times in the last six months, but no one is buying.

    # Property not moving

    A unit has been advertised for more than six months, but has seen no takers. This means that buying activity has slowed down.

    # More units put up for rent

    This means that the owners could be leveraging.

    If the seller can't sell their units in a bad market, they'll try to offset their monthly mortgages by renting out their units instead. This means that buying activity has slowed down.

    # Economic weakness and uncertainty

    If there's economic uncertainty, investors, both locals and foreigners, will be spooked and unwilling to invest in the real estate market for fear of falling prices.

    # Falling wages & rising unemployment

    If companies are freezing recruitment and employment numbers and wages fall, affordability is also affected.

    This leads to a drop in demand and similarly, prices.

  2. #2
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    Damn !$#^ I see all 10

  3. #3
    Lou
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    I have been hunting for a property for close to 10 months and I see 75% of the signs stated in the article, but that doesn't mean that property prices in Singapore is going to crash and burn.

    Don't flame me if you read something you don't like because you bought your property at a high during the 3rd and 4th quarter last year or say something that shows that you have been totally brain washed by our government like the F1 or IRs will help Singapore's economy in a spectacular way and in turn our property prices will shoot to the moon. If you wish to hear my p.o.v here's what I think:

    F1 in Sept

    Our gov primary focus is "international branding", if I may put it this way, an appetitizer to our 2 IRs. Secondly the economic "spillover effect" of which the results will not be immediate and may take years to realize.
    Do not forget the cost of hosting the F1, the hosting rights for 5-years will cost us US$150 million. Can we generate US$1 billion from F1 per year? Unlikely. US$1 billion in 10 years maybe.

    IRs

    IR again does not mean 'Immediate Results", why are we building the IRs now and not 15 years ago is quite simply because our tourism industry has already matured and there is little upside potential if Singapore do not rejuvenate it. The fact is that we are losing tourist dollars to competition and we are making an attempt to claw back some of it. In addition given the backdrop of a possible global US-led recession which will inevitably affect the amount tourist spent here. Give in 6-7 years from now before the positive effects of our IRs will be reflected on our economy.

    The creation of 30k-50k jobs from the IR, no problem but peanuts compared to our population increase over the years. It was something like 4.3 million in 2003, 4.6 mil in 2007. Positive impact on property prices, from these 30-50k, no way...substain rental..yes, the same way that it will substain our low unemployment rate. Postive impact on property prices from the additional 2 million tourists, definately but again not in a dramatic way like $1000 psf becoming $1500psf (usual agent sales pitch). The IR will work out good and in turn benefit our economy but it has to be given the time to achieve the result, it is one of the component in our government's plan not "THE" component.

    Recession

    It is an evil word to alot of us, but in fact is just a technical term. Can Singapore avoid recession this year? 100% there will be no recession here. Recession in 2009? 40% chance. 2010? 80>% chance. Skeptics may think I'm just plucking numbers from the sky, so don't listen to me, listen to the signs.

    26-year high inflation rate, US$50 increase per barrel of oil in 6-months,
    Historic high gold prices, Very weak USD, talks of a deep recession in US. Sounds like a normal day in the market to you? There is nothing very bullish about it if you ask me.

    I think in the end we often live in denial, our government has the tendency to underdeclare how we are really performing even in good times to keep things more evenly balance. I personally do not see a crash coming in our property market, neither do I see any further upside. Over extended investors will start offloading their properties from Q4 and into 2009. The occasional bargain can be picked up here and there but probably nothing widespread.

    My final view is a 10-15% decrease in property prices from current prices in the next 2 years. Whether you argee with me or not it is no issue just don't cut & paste some article you read about some good news lehmann brothers, Merrill lynch, Citi, UBS etc... anounced. if you are one of those investment banks fan, isn't it time to pick up some of their shares since it is very cheap and low now, sell if off in 12-18 months as their company get out of the shit they are in and double your money in that process instead of wasting your time getting angry when someone said that you are dumb paying 35% higher for your property, well make that 40% in 2 years time.

  4. #4
    kc
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    Lou,

    Thanks for yr frank comment. In my opinion, one cannot judge the market by just hearsay. You need to go to the ground and see for yourself, ie. go house hunting every weekend and I bet you will know whether prices are going north or south.

    It has been a 6 month frustration for me cos I was hoping that prices will drop as predicted by so many expert, giving sub-prime, recession, over-supply, bla bla bal. But the truth is that each time we view a potential unit, the asking price is either ridiculously high or maybe we were being naive to believe that prices should drop by say 20-30% from the current.

    It seems that most of the speculators have long been gone and we have left many deeply entrenched sellers who have lots of holding powers.

    We then realised that with the high construction cost, coupled with high inflation, it really make no sense for both developers and subsales to price themselves down.

    I am of the opinion that our decision whether to buy now or not will very much depend on our appetite, ie. we really need a roof to move in now.

  5. #5
    rpik
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    KC,
    I completely agree with you. been hunting for a property with genuine asking price but owners are still asking sky rocketing prices. Me too frustarted with this, everyday newspapers reports are saying property price have hit the floor , this and that. In reality when I go for viewing the picture is different.

  6. #6
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    Quote Originally Posted by kc
    Lou,

    Thanks for yr frank comment. In my opinion, one cannot judge the market by just hearsay. You need to go to the ground and see for yourself, ie. go house hunting every weekend and I bet you will know whether prices are going north or south.

    It has been a 6 month frustration for me cos I was hoping that prices will drop as predicted by so many expert, giving sub-prime, recession, over-supply, bla bla bal. But the truth is that each time we view a potential unit, the asking price is either ridiculously high or maybe we were being naive to believe that prices should drop by say 20-30% from the current.

    It seems that most of the speculators have long been gone and we have left many deeply entrenched sellers who have lots of holding powers.

    We then realised that with the high construction cost, coupled with high inflation, it really make no sense for both developers and subsales to price themselves down.

    I am of the opinion that our decision whether to buy now or not will very much depend on our appetite, ie. we really need a roof to move in now.
    I share your view that most of the speculators who bought on DPS and were expected to dump their properties and bringing down prices have already dissapeared. Just ask yourself if you cannot afford to hold on to a property and being bombarded with so much negative news for the past few months, would you have the guts to wait it out until just before TOP say in late 2008 or 2009 knowing very well that things will most probably get worst. I think majority of such borderline buyers would not be that foolish. They have already left the market. You may if you are lucky get one or two genuine "fire sales" per project but the word 'fire sale' used in classifieds seems to be just a gimmick
    Many analysts have factored in the dumping of DPS over the next 1-2 years as the a main contributing factor for the price collapse. My gut feel is that they are going to be proven VERY WRONG. In the first place the level of speculation during this bull run was no where near that seen in 96-97.

  7. #7
    kc
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    Quote Originally Posted by nav14
    I share your view that most of the speculators who bought on DPS and were expected to dump their properties and bringing down prices have already dissapeared. Just ask yourself if you cannot afford to hold on to a property and being bombarded with so much negative news for the past few months, would you have the guts to wait it out until just before TOP say in late 2008 or 2009 knowing very well that things will most probably get worst. I think majority of such borderline buyers would not be that foolish. They have already left the market. You may if you are lucky get one or two genuine "fire sales" per project but the word 'fire sale' used in classifieds seems to be just a gimmick
    Many analysts have factored in the dumping of DPS over the next 1-2 years as the a main contributing factor for the price collapse. My gut feel is that they are going to be proven VERY WRONG. In the first place the level of speculation during this bull run was no where near that seen in 96-97.
    Yes, thats why many buyers are getting frustrated weekend after weekend, be it subsale or new launch. For subsale, its really tiring to walk in and out of so many units to realized that the asking psf are way above buyer's realistic or unrealistic expectation. For new launches recently, even pigeon holes type (less than 500sf) are asking 1000psf at Little Inda, Dakota Cresent (D14) were priced at above 900psf. My god, even far away place at Pasir Ris are fetching 600psf above. All the experts have indicated market slowdown, subprime problem, bla bla bla but the ground activities are not in line with the negative sentiment.

    Yes, buying activities have slowed down due to the bad sentiment but looking at things on the surface, I would say developers and sellers are not desperate to sell now if their asking price are not met. In other words, they have got nothing to lose if they rather hold on to it rather than sell low and crack. Whereas for buyers, some of them really need a roof due to enbloc, marriage, upgrading etc etc. These are the people who will likely have to crack first as time is not on their side.

  8. #8
    rpik
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    I viewed some units at Blossoms @ woodleigh. Some of the units are empty with TOP being Jan/Feb 2008. The owners have not moved in , i think they have just invested init. 6 months have already gone, but they arent relenting to bring down the prices, even if they can bring down, they will still earn profit(atleast 100K). Same way, i viewed some units at Kerrisdale near Farre Prk MRT. The agent told me the owner owns "few" units. My god !!I just struggling to find one single home for me, When I saw the unit it was horrible the owner had rented it out to atleast 6 people, I could see mini hostel environment over there. cannot believe it was 2 years ole seems like a 10 year old. But the asking price was 880K. The owner also built a wall in the hall divided into two partitions.
    I saw another unit which was very well maintained by husband and wife, nokids.
    Can anyone of you tell if kerrisdale prices will drop if CSR (City square residences ) TOP?
    Is it advisable to buy a unit in Kerrisdale since CSR about to TOP?
    I like the place since near to amenities and MRT.

  9. #9
    kc
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    Default kc

    Quote Originally Posted by rpik
    I viewed some units at Blossoms @ woodleigh. Some of the units are empty with TOP being Jan/Feb 2008. The owners have not moved in , i think they have just invested init. 6 months have already gone, but they arent relenting to bring down the prices, even if they can bring down, they will still earn profit(atleast 100K). Same way, i viewed some units at Kerrisdale near Farre Prk MRT. The agent told me the owner owns "few" units. My god !!I just struggling to find one single home for me, When I saw the unit it was horrible the owner had rented it out to atleast 6 people, I could see mini hostel environment over there. cannot believe it was 2 years ole seems like a 10 year old. But the asking price was 880K. The owner also built a wall in the hall divided into two partitions.
    I saw another unit which was very well maintained by husband and wife, nokids.
    Can anyone of you tell if kerrisdale prices will drop if CSR (City square residences ) TOP?
    Is it advisable to buy a unit in Kerrisdale since CSR about to TOP?
    I like the place since near to amenities and MRT.
    Sorry no offence to owners of Kerrisdale but for 880k, I am sure you can get something better at West Coast. However, u will need alittle patients and luck. Cheers.

  10. #10
    Biogentic
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    Quote Originally Posted by kc
    Yes, thats why many buyers are getting frustrated weekend after weekend, be it subsale or new launch. For subsale, its really tiring to walk in and out of so many units to realized that the asking psf are way above buyer's realistic or unrealistic expectation. For new launches recently, even pigeon holes type (less than 500sf) are asking 1000psf at Little Inda, Dakota Cresent (D14) were priced at above 900psf. My god, even far away place at Pasir Ris are fetching 600psf above. All the experts have indicated market slowdown, subprime problem, bla bla bla but the ground activities are not in line with the negative sentiment.

    Yes, buying activities have slowed down due to the bad sentiment but looking at things on the surface, I would say developers and sellers are not desperate to sell now if their asking price are not met. In other words, they have got nothing to lose if they rather hold on to it rather than sell low and crack. Whereas for buyers, some of them really need a roof due to enbloc, marriage, upgrading etc etc. These are the people who will likely have to crack first as time is not on their side.
    i have to agree with you on this. i am going to upgrade to condo but the price level has never take a slightest dip... and it is defintely no way for me to buy it at the 2007 property boom price now. i will wait for it to fall to pre-boom price.

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