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Thread: S'pore home prices likely to fall further

  1. #1
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    Default S'pore home prices likely to fall further

    http://www.straitstimes.com/Money/St...ry_336320.html

    February 10, 2009 Tuesday

    S'pore home prices likely to fall further

    By Joyce Teo


    PROPERTY investment firm IP Global has said Singapore's residential market is not worth a look until at least six months from now.

    The Hong Kong-based company, which helps property investors buy in emerging and recovering markets, expects prices in Singapore to fall further and recommends waiting until these return to pre-rally levels.

    Until then, it says, the market will remain unattractive to foreign investors.

    Strong demand sent property prices surging through the roof in 2007. Intense speculation then created a lot of froth, resulting in a mini-crash, said IP Global managing director Tim Murphy.

    The fall in Singapore's residential property market, hence, started a year before the onset of the recession. 'I don't think anything the Government will do will revive the market now,' said Mr Murphy.

    Private home prices will only flatten out by the third or fourth quarter, he said.

    Property players have been hoping the Government will do something to stimulate demand, such as deferring payment of the stamp duty.

    Mr Murphy's advice to investors: 'Look at yields, look at supply, look at cost of funds and spend five times longer than you normally do finding something to buy. There will be lots of deals in the next six to 12 months,' he said.

    If he were to enter the Singapore market later, his interest would not be in luxury homes - where prices have fallen furthest and are expected to continue falling faster than in the other sectors - but in reasonably-priced homes in prime districts.

    IP Global, which also invests in commercial properties, believes that the short-term office oversupply in Singapore is worrying. Office rents plunged by nearly 20 per cent in the fourth quarter of last year, while supply continues to grow.

    On the upside, Mr Murphy believes that the property market has a number of factors working in its favour, such as strong population growth and its strategic position as a commercial hub in the region.

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    Sound so smart! Ask him to show his portfolio in UK.

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    Quote Originally Posted by mr funny
    http://www.straitstimes.com/Money/St...ry_336320.html

    February 10, 2009 Tuesday

    S'pore home prices likely to fall further

    By Joyce Teo


    PROPERTY investment firm IP Global has said Singapore's residential market is not worth a look until at least six months from now.

    The Hong Kong-based company, which helps property investors buy in emerging and recovering markets, expects prices in Singapore to fall further and recommends waiting until these return to pre-rally levels.

    Until then, it says, the market will remain unattractive to foreign investors.

    Strong demand sent property prices surging through the roof in 2007. Intense speculation then created a lot of froth, resulting in a mini-crash, said IP Global managing director Tim Murphy.

    The fall in Singapore's residential property market, hence, started a year before the onset of the recession. 'I don't think anything the Government will do will revive the market now,' said Mr Murphy.

    Private home prices will only flatten out by the third or fourth quarter, he said.

    Property players have been hoping the Government will do something to stimulate demand, such as deferring payment of the stamp duty.

    Mr Murphy's advice to investors: 'Look at yields, look at supply, look at cost of funds and spend five times longer than you normally do finding something to buy. There will be lots of deals in the next six to 12 months,' he said.

    If he were to enter the Singapore market later, his interest would not be in luxury homes - where prices have fallen furthest and are expected to continue falling faster than in the other sectors - but in reasonably-priced homes in prime districts.

    IP Global, which also invests in commercial properties, believes that the short-term office oversupply in Singapore is worrying. Office rents plunged by nearly 20 per cent in the fourth quarter of last year, while supply continues to grow.

    On the upside, Mr Murphy believes that the property market has a number of factors working in its favour, such as strong population growth and its strategic position as a commercial hub in the region.

    A property investment firm talking down the market simply means they want to buy many many units at low prices lah.

    He tells you wait 6 months. Maybe he will buy in 3 months time and sell to you in the 6th month.

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    Quote Originally Posted by ahlahdin
    A property investment firm talking down the market simply means they want to buy many many units at low prices lah.

    He tells you wait 6 months. Maybe he will buy in 3 months time and sell to you in the 6th month.
    I agree totally. Let's see the result in 6 months time.

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    Look at realistically. The STI has dropped to 2003 levels. Has the property prices moved down to that level? I think there is still some room to move. I am vested myself, but realistically it will go down to 2003 levels - and that means different % drop for different properties.

    Now the biggest question in my mind is what happens after a year. Will it stagnate or rebound. Again it ties back to the economic sentiment which is closely tied to the Stock market. The US and UK is getting into heavy debt. We may be in for a protracted downturn. You see how much GIC has lost. This is not a temporary downturn.

    If you have a >10 year long term view, then sure to make money if you buy anything now. All these are cycles. Everyone will forget the bubble that burst and we will all get back into debt and euphoria.

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    there is not enough fear in the market yet ...

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    Most people are still in the denial stage (that the property market / prices are in deep shit).. once this is over and done with, we can proceed towards the acceptance stage.. Then and only then, the property market can move on again.

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    Issue is also that there is a divide between short term view and long term view. If the mkt feels short term ppty prices will drop but long term it will inevitably rise....then we get into this standoff between buyers and sellers. It's not the same as a company that is in trouble that could go bankrupt. Ppty prices will eventually rise above the 2007 peak levels.

    Also bear in mind that there is a fairly high transaction cost for ppty. As high as 7% if you include all the costs. So if you sell in desperation at 10% discount to mkt levels then you need to buy it back at min 20% discount if you want to re-enter the mkt, and again you went thru so much hassle. So many sellers are thinking - yeah it will drop but I'll hold this out. Ofcourse among these there are those who have miscalculated their stability and will regret down the line.

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    Fear? What Fear?..
    The only fear is from the govt..
    most of the singaporeans seems to be happily living their lives like nothing happened..

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    Quote Originally Posted by focus
    Fear? What Fear?..
    The only fear is from the govt..
    most of the singaporeans seems to be happily living their lives like nothing happened..
    Actually, if you go to the major shopping malls nowadays, you would have noticed that it there are fewer people out there and everything's generally quieter.

    Singaporeans are holding back in their spendings.. firstly, don't know whether still got job to pay for it.. secondly, got no feel-good factor to spend hard earned cash (or credit)..

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    Quote Originally Posted by Localite
    Issue is also that there is a divide between short term view and long term view. If the mkt feels short term ppty prices will drop but long term it will inevitably rise....then we get into this standoff between buyers and sellers. It's not the same as a company that is in trouble that could go bankrupt. Ppty prices will eventually rise above the 2007 peak levels.

    Also bear in mind that there is a fairly high transaction cost for ppty. As high as 7% if you include all the costs. So if you sell in desperation at 10% discount to mkt levels then you need to buy it back at min 20% discount if you want to re-enter the mkt, and again you went thru so much hassle. So many sellers are thinking - yeah it will drop but I'll hold this out. Ofcourse among these there are those who have miscalculated their stability and will regret down the line.
    Quite true in your above statements.

    I believe those who have holding power, they have no problems tiding over this period. Even those buyers who bought their apartments at a high price but for own use and can afford the monthly loan, they are in no need to liquidate (in their own due diligence before obtaining their bank loan, would have factored in the interest and own spend requirements).

    However, it is interesting for buyers during the 2007/2008 peak who have committed buys but do not have the capacity to service or even obtain a bank loan (DPS scheme flipper).. our very own "sub-prime" scenario.. These people bo bian now.. must sell as soon as possible before project TOP, every night have nightmares thinking what to do, what to do..

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    Quote Originally Posted by WolleyDragon
    Actually, if you go to the major shopping malls nowadays, you would have noticed that it there are fewer people out there and everything's generally quieter.

    Singaporeans are holding back in their spendings.. firstly, don't know whether still got job to pay for it.. secondly, got no feel-good factor to spend hard earned cash (or credit)..
    Did you try Jurong point? Did you visit Caspian and Alexis launching?

    We are in recession??? They will try you, are you joking!!!

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    Quote Originally Posted by isaaclim
    Did you try Jurong point? Did you visit Caspian and Alexis launching?

    We are in recession??? They will try you, are you joking!!!
    Ya .. i was house looking last week at East Coast and I can see a lot of people visiting the developments. Serangoon and Kembangan area was quieter though.

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