Property market sentiments?

[gfoo]

Let's put another perspective on things.

Look at the lease-buyback scheme that HDB launched, and was very warmly welcomed by the sheeple. Many if not most are in n high value, mature estates, and close to town. Then think about the implications:

• An artificial cap to the ages-old thinking that even if HDB is 99yr, SERS will safeguard property values?
• A much easier way to clear hangers-on for area redevelopment?
• An end to a social contract to citizens (contrast this to the possible future FULL privatization of the HDB)
• Much of the proceeds is retained in CPF as an annuity - the HDB doesn't trust citizens to manage their own funds?

This scheme opens a pandora's box as to what can happen in the future.
Buying a HDB used to be retrograde as SERS sorta 'refreshes' the tenure of your flat without too much cost. This can now go, as the HDB has found a backdoor to enforce the shelf life of HDB flats through this scheme

In the condo world, 99LH can pay for LH topups. In the HDB world, this was done via SERS - a social contract. Is this no longer sacrosanct?

Food for thought

[august]

Let's put another perspective on things.

Look at the lease-buyback scheme that HDB launched, and was very warmly welcomed by the sheeple. Many if not most are in n high value, mature estates, and close to town. Then think about the implications:

• An artificial cap to the ages-old thinking that even if HDB is 99yr, SERS will safeguard property values?
• A much easier way to clear hangers-on for area redevelopment?
• An end to a social contract to citizens (contrast this to the possible future FULL privatization of the HDB)
• Much of the proceeds is retained in CPF as an annuity - the HDB doesn't trust citizens to manage their own funds?

This scheme opens a pandora's box as to what can happen in the future.
Buying a HDB used to be retrograde as SERS sorta 'refreshes' the tenure of your flat without too much cost. This can now go, as the HDB has found a backdoor to enforce the shelf life of HDB flats through this scheme

In the condo world, 99LH can pay for LH topups. In the HDB world, this was done via SERS - a social contract. Is this no longer sacrosanct?

Food for thought

social contracts in SG is a 1-way street... what contract? lol

[gfoo]

social contracts in SG is a 1-way street... what contract? lol

Lol. Can already guess who your vote goes to IF your side no walkover

[august]

Lol. Can already guess who your vote goes to IF your side no walkover

hard to say.. i am democrat on the inside republican on the outside ~ hehe

[Property_Owner]

http://news.yahoo.com/s/ap/us_obit_m...5nb2Zwb3BtaWM-


Sigh

[seeker]

ya so sad about mj.

I'm no expert so don't flame me here.

I'm currently staying at a friend's place since last July 08 until my condo is ready. They been trying to sell this 50+ year old landed property abt 3000++ something sq ft i don't know exactly how big. Since last year there have been constant viewings (like 2 viewings per weekend) during the weekends and everything came to a standstill end 08, early 09. Nobody is interested.

BUT, these 2 weekends are just crazy. One agent can arrange for 8 different groups of pple to view the house. And today there were 3 agents with their groups. I asked the agents and they said market very hot now. And already there have been offers to buy the place. i see these pple with their expensive cars and some offer on the same day and wanted immediate answer.

And it's not like exactly flat bottom price at 1.7million just for the land only, house is totally too old and falling apart so pple who came were not here to look at the building.

so hot ah the market? or just super kiasu?

[jitkiat]

There are a few camps in the market right now:

1. Economic recovery will be sluggish but don't short the market because excess liquidity alone will support the market ... central banks will do it right, no inflation, we just drag along happily

2. Inflation or hyperinflation is coming, quickly buy commodities/gold & anything physical like properties as hedge

3. No inflation, deflation is going to strike back. SG property already in a bubble that is going to burst real soon, rental will drop n drop, interest rate will shoot up through the roof, those who buy properties now will get burnt in hell

IMHO, diversify 30% of your cash into hard asset is necessary as I firmly believe central banks will tend to err on the inflationary side due to social & political pressure

[mightyleftfoot]

Whatever it is, unless u desperately need a place to stay, or unless u r a flipper, stay on the sidelines until u see a firm economic recovery..

[WolleyDragon]

I bought a large unit at Shelford Apartments in 1985 at S$325,000. I kept it and rented it and it went on en block in the 90's for 2.1M.

I bought a 2100 sq.ft. unit at Pandan Valley in 1986 for S$375,000 and sold for S$802,000. It's now worth over 2M.

I bought Watten Hill, 2600 sq.ft. in 1990 for S$730,000 and, luckily, sold for 1.53M in 1996 - just before the crash. A town house at Watten now goes for 2.2M.

My 5-room HDB was bought in 2005 for S$273,000 and it's now valued at S$385,000.

In 2005 it very clear that prices were about to take off. Now, in June 2009, the direction is very cloudy.

These units were bought privately, all older properties, all the maximum that I could mortgage, and all bought with years as a time frame.

In 1985 Singapore's population was 2.34M, now it's 4.8M.
In 1985 Singapore's land area was 680 sq.km, now it's 710 sq. km.

In 20 years time whatever you buy now will be worth more. Maybe a lot more, maybe an enormous amount more, but certainly more. Plus you can live in it, or rent it.

So what we're talking about is timing rather than appreciation, plus what are the alternative uses of your money. To me, it feels wrong at the moment. But I'm tracking several units.

And it's interesting to read the views here. For example, the comment by August :



I think that this is another grain of truth/insight to add to the total. Let's keep it coming.

Caveat emptor.

Hi Scott, not being rude..but with all the money made..why did you buy a 5 RM HDB in 2005?

[proud owner]

ya so sad about mj.

I'm no expert so don't flame me here.

I'm currently staying at a friend's place since last July 08 until my condo is ready. They been trying to sell this 50+ year old landed property abt 3000++ something sq ft i don't know exactly how big. Since last year there have been constant viewings (like 2 viewings per weekend) during the weekends and everything came to a standstill end 08, early 09. Nobody is interested.

BUT, these 2 weekends are just crazy. One agent can arrange for 8 different groups of pple to view the house. And today there were 3 agents with their groups. I asked the agents and they said market very hot now. And already there have been offers to buy the place. i see these pple with their expensive cars and some offer on the same day and wanted immediate answer.

And it's not like exactly flat bottom price at 1.7million just for the land only, house is totally too old and falling apart so pple who came were not here to look at the building.

so hot ah the market? or just super kiasu?

where about is this landed that you area staying now ?

[East Coast Boy]

Credit Suisse, which predicted in January that an astonishing 200,000 foreigners and permanent residents (PRs) might leave Singapore in 2009 and 2010 on the back of job losses, now thinks that the exodus may not be as bad as it had expected.

The evidence for this can be gleaned from the bank’s forecasts for the property market.

Based on its economists’ expectations of historically high job losses (up to 240,000) and an exodus of foreigners (up to 200,000) by the end of 2010, the firm’s property analyst Tricia Song had previously assumed that 15,000 homes could be vacated by 2011.

But in a report dated June 19, she says she now believes that just 3,000 private homes will be vacant from 2009 to 2011 as foreigners leave the country.

‘Anecdotally, we expect that the number of foreigners leaving Singapore will not be as high as we had expected,’ said Ms Song in the report.

This also means that private home prices will not be as badly hit as the firm predicted just six months ago. Credit Suisse had expected private home prices to fall by as much as 60 per cent from the peak to 2005 levels, partly because of the projected 200,000-foreigner exodus.

However, in part due to the smaller-than-expected job losses and foreigner exodus, Ms Song now says home prices could dip 25 per cent in 2009 before recovering 10-15 per cent in 2010.

The main cause for the change of view is a recent update by economist Cem Karacadag, who was part of the team that in January predicted that some 200,000 foreigners and PRs might leave Singapore in 2009 and 2010.

Credit Suisse said then that the potential drop in employment and population would have far-reaching implications for the economy.

But in a recent report, Mr Karacadag said job losses have not been as large as he had feared.

‘Singapore’s labour market has held up remarkably well in this recession and much better than we had anticipated,’ he said in a June 19 economics note.

Among various things, employers appear to have adjusted labour costs through salary cuts rather than cuts in headcount, he said.

Job losses so far this year have been surprisingly low against unprecedented job gains in 2007 and 2008, the note said. Net employment fell by only 6,200 in Q1 2009, although Singapore’s real GDP was 10 per cent lower in Q1 2009 compared to Q1 2008.

Mr Karacadag also upgraded his forecast for Singapore’s 2010 GDP growth to 4.4 per cent, from 3.9 per cent.

Source : Business Times – 29 Jun 2009

[sabian]

Some anal-yst...bo bo shooter
miss the mark by 80%...from 15000 revised to 3000?

[bargain hunter]

somemore blame the economist for the wrong figures and not herself hahaha

Some anal-yst...bo bo shooter
miss the mark by 80%...from 15000 revised to 3000?

[Localite]

I'm convinced Analysts are none wiser than you and me.

If only you watch the trends of what they say you'll be shocked at how it varies. There was once a study done that should that a random stock pick was better than aggregated average of analysts stock picks.

Very simple. You need to buy property then buy. In the long run you will always make. The more you wait the more you pay. Don't try to save a few dollars bargaining now. Now you are at the vicinity of the lowest point. Maybe +- 5% of the lowest point. 10 years down the line you will be laughing.

[scott7777]

Hi Scott, not being rude..but with all the money made..why did you buy a 5 RM HDB in 2005?

For my daughter. And because HDB is great value-for-money. Always try and keep an HDB apartment in your portfolio.

[scott7777]

Analysts are paid to make predictions. If you make several per day then the chances of being right will increase.

An analyst only needs 1 correct prediction that covers an important event to get fame and fortune.

The other thousands of incorrect, or marginally right, predictions are always forgotten. After all, tomorrow is another day, and another prediction.

Commonsense, that's what matters.

My earlier post giving details of some of my property purchases over the past 25 years was intended to illustrate the point just made by Localite.

Time matters, and the more time the less influence the ups and downs of the market.

If you're buying for investment (rental plus capital appreciation) buy somewhere that you wouldn't mind living in, because you may have to.

[seeker]

where about is this landed that you area staying now ?

central north but it's not thomson area. I'm just surprised by the intense interest suddenly. Almost like desperation!

[jitkiat]

By Sunday evening, it has sold 72 out of 106 units (68%)
launched at c.S$1,150/sqft. All the one-bedders (617-35 sq ft) and
most two-bedders (904sq ft) are sold out. Substantial three-bedders of
1153-1250 sq ft are also sold. Four-bedders from 1,313 sq ft are not
released yet.

[dragonred]

From The Atlantic

IDEAS: BUSINESS & ECONOMICS JULY/AUGUST 2009

Nouriel Roubini, the New York University economist who accurately forecast the bursting of the housing bubble and the resulting economic contraction, has become famous for his pessimism—he has been the gloomiest of the doomsayers. Which is what makes his current outlook surprising: Roubini believes that the Obama administration’s policy makers—and especially the much-maligned Tim Geithner—have gotten a lot right. Pitfalls may still abound, but he is now projecting an end to the recession, and he sees growth ahead.
by James Fallows

Dr. Doom Has Some Good News

ON MARCH 28, 2007, Federal Reserve Chairman Ben Bernanke appeared before the congressional Joint Economic Committee to discuss trends in the U.S. economy. Everyone was concerned about the “substantial correction in the housing market,” he noted in his prepared remarks. Fortunately, “the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained.” Better still, “the weakness in housing and in some parts of manufacturing does not appear to have spilled over to any significant extent to other sectors of the economy.” On that day, the Dow Jones industrial average was above 12,000, the S&P 500 was above 1,400, and the U.S. unemployment rate was 4.4 percent.

That assurance looks bad in retrospect, as do many of Bernanke’s claims through the rest of the year: that the real-estate crisis was working itself out and that its problems would likely remain “niche” issues. If experts can be this wrong—within two years, unemployment had nearly doubled, and financial markets had lost roughly half their value—what good is their expertise? And of course it wasn’t just Bernanke, though presumably he had the most authoritative data to draw on. Through the markets’ rise to their peak late in 2007 and for many months into their precipitous fall, the dominant voices from the government, financial journalism, and the business and financial establishment under- rather than overplayed the scope of the current disaster.

With the celebrated exception of Nouriel Roubini, an economist from the Stern School of Business of New York University. At just the time Bernanke was testifying about the “contained” real-estate problem, Roubini was publishing a paper arguing that the depressed housing market was nowhere near its bottom, that its contraction would be the worst in many decades, and that its effects would likely hurt every part of the economy. In September 2006, with markets everywhere still on the rise, he told a seminar at the International Monetary Fund’s headquarters that the U.S. consumer was just about to “burn out,” and that this would mean a U.S. recession followed by a global “hard landing.” An economist who delivered a response dismissed this as “forecasting by analogy.” The IMF’s in-house newsletter covered Roubini’s talk as a curiosity, under the headline “Meet Dr. Doom.”

Roubini is thus enjoying his moment as the Man Who Was Right, a position no one occupies forever but which he is entitled to for now. As markets have collapsed, the demand for his views and predictions has soared. He travels constantly, and late this spring I met him in Hong Kong to ask what he was worried about next.

Roubini, who is 50, has a tousled look, from his curly black hair to his rumpled clothing. The initial impression he gave was of total physical exhaustion. When he spoke, at mid-afternoon in Hong Kong, he would scrunch his eyes closed tight, as if forcing himself awake, and shove his suit jacket sleeves and shirt sleeves high up from his wrists to his forearms in the same effort.

You often see this paralyzing fatigue in people who’ve recently made the flight to Asia. What was unusual in Roubini’s case is that even with eyes closed he kept emitting high-speed and complex answers, which proved on transcription to consist of well-formed sentences and logical sequences. They were delivered in an accent that is what you might imagine from someone who spent his first 20-plus years in Turkey, Iran, Israel, and Italy before going to the United States as a graduate student at Harvard. In a few cases, I later realized, the polish of his responses was because he was reciting passages from papers he had written, as if from an invisible teleprompter. But mostly he seemed to be drawing on data points and implications that were so much on his mind they could be processed and expressed even when the rest of him was spent.

The conversation was surprising in three ways: for the relatively high grades Roubini gave Treasury Secretary Timothy Geithner, generally the least-praised member of the Obama economic team; for the overall support (with one significant exception) he expressed for the administration’s response to the economic crisis; and for his willingness to look far enough beyond today’s disaster to speculate about the problems a recovery might bring. He was also full of advice about China’s reaction to the world financial crisis, including the suggestion that its options are narrower than its leaders may grasp.

ROUBINI’S COMPLIMENTS for Geithner were in the context of the intellectual and policy history of how the crash had developed and why its effects have been so severe. The dot-com and larger tech-industry crash of 2000 eliminated a tremendous amount of stock-market wealth. During the panicky sell-off of 1987, nearly a quarter of the New York Stock Exchange’s total value was lost in one day. By comparison, defaults on subprime mortgages would seem more limited in their capacity to harm the economy. Why, then, had so much gone so deeply wrong?

Roubini said that the difference was partly “debt versus equity.” That is, a loss of stock-market value is damaging, but defaults on loans, which put banks themselves in trouble, had a “multiplier” effect: “When there’s a credit crunch, for every dollar of capital the financial institution loses, the contraction of credit has to be 10 times bigger.” This was the process at work last fall, when banks that were concerned about their own survival cut off working capital to everyone else.

The more important difference between this crash and others, Roubini said, was that the speculative bubble involved so much more of the economy than the term “subprime” could suggest. “It was subprime, it was near-prime, it was prime mortgages,” he said, warming up to rattle off a long list. “It was home-equity-loan lines. It was commercial real estate, it was credit cards, it was auto loans.” The list was just getting started, and he used it to emphasize that almost every form of borrowing had been taken beyond reasonable limits, and that most forms of asset had been bid unreasonably high. And not just in the United States: “People talk about the American subprime problem, but there were housing bubbles in the U.K., in Spain, in Ireland, in Iceland, in a large part of emerging Europe, like the Baltics all the way to Hungary and the Balkans,” and most parts of the world. “That’s why the transmission and the effects have been so severe. It was not just the U.S., and not just ‘subprime.’ It was excesses that led to the risk of a tipping point in many different economies.”

Roubini’s case against Ben Bernanke and his predecessor Alan Greenspan is that they kept interest rates too low for too long—and downplayed the significance of the bubble they helped create. “They kept on arguing that this was a minor housing slump, and this housing slump was going to bottom out,” he said. “They kept repeating this mantra that the subprime problem was a ‘niche’ and ‘contained’ problem.” These were serious analytic errors, he said, of a sort that is common near the end of a bubble. “Bernanke should have known better, but it’s not really about him. It’s in everybody’s interest to let the bubble go on. Instead of the wisdom of the crowd, we got the madness of the crowd.

“So when the proverbial stuff hit the fan in the summer of 2007, [the Fed and the Bush administration] were initially taken by surprise,” he concluded. “Their analysis had been wrong. And they didn’t understand the severity of what was to come. And all along, their policy was two steps behind the curve.” He was much more respectful of the judgment that Timothy Geithner showed.

“You know, when Geithner became president of the New York Fed [late in 2003], the first eight speeches he gave were about systemic risk,” he said. (Most were about the way the growing complexity and interconnectedness of financial systems made it harder to know the real degree of risk the entire financial network was exposed to, and how far regulation was lagging behind the quickly changing realities. Most read well in retrospect.) Behind this difference in tone, according to Roubini, was a deeper contrast in belief about what the government could or should do when it saw a financial bubble beginning to form.

About the response once a bubble collapses, most economists are in agreement. Central banks around the world have been lowering interest rates to near zero and pumping new money into their economies. But could they have done anything to forestall the need to? According to Roubini:

“Bernanke, like Greenspan, had this wrong attitude toward asset bubbles. The official philosophy of the Fed was: on the way up with a bubble, you do nothing. You don’t try to prick it or contain it. Their argument was, How do I really know it’s a bubble? And even if I tried to ‘prick’ a bubble delicately, it would be like performing neurosurgery with a sledgehammer.”

The damage done in these boom-and-bust cycles, Roubini says, is greater than politicians and the media usually acknowledge. Stock-market averages eventually recover, as all buy-and-hold investors now keep telling themselves. (Except in Japan, where the main stock index stood near 39,000 in the late 1980s and is around 9,000 today.) But that doesn’t take into account the damage done to the real economy by the swings up and down. “These asset bubbles are increasingly frequent, increasingly dangerous, increasingly virulent, and increasingly costly,” he said. After the housing bubble of the 1980s came the S&L crisis and the recession of 1991. After the tech bubble of the 1990s came the recession of 2001. “Most likely $10 trillion in household wealth [not just housing value but investments and other assets] has been destroyed in this latest crash. Millions of people have lost their jobs. We will probably add $7 trillion to our public debt. Eventually that debt must be serviced, and that may hamper growth.”

Was there any alternative? Yes, if central bankers had taken a “more symmetric approach” to bubbles, trying to control them as they emerged and not just coping with the consequences after they burst. Geithner, he says, was one of those who saw the danger: “While Ben Bernanke was talking about a ‘global savings glut’ as the source of imbalances, Geithner was talking about America’s excesses and deficits. Like the Bank of England and the Bank for International Settlements, he was warning at the New York Fed that we had to be more nuanced in the approach of how you deal with asset bubbles.”

THE DISAGREEMENTS ABOUT proper bubble management are of more than historical interest, Roubini argues, because he sees the beginnings of another bubble already in view. He was more supportive on the whole than I would have expected about the Obama administration’s financial plans. “I have to give them credit that, less than a month after they came to power, they had achieved three major policy successes,” he said. These were passing the $800 billion stimulus plan, the mortgage-relief plan to reduce foreclosures, and the “toxic asset” plan to help banks clear bad loans from their books. He said that the initial version of the bank-rescue plan was “botched, because it was rushed,” but that the later version was better. “On each of these things, you can criticize specific elements,” he said. “But they did the big things, and those are the main parameters of what is a constructive policy response. For now, you have to deal with the problem you are facing. All in all I think the policy is going in the right direction.”

But someday, the emergency will be over. Then the side effects of today’s deficits-be-damned efforts to spend money and loosen credit will become “the problem you are facing.” Roubini has been tart about the things public officials should have known and the dangers they should have foreseen three or four years ago. What, I asked him, are the decisions of 2009 that we will be regretting in 2012?

For the only time in our conversation, he sat without responding for a measurable interval. “The regrets could be many,” he began. Uh-oh , I thought. “Even the best policies sometimes have unintended consequences.” He then itemized three.

The first involved banks. Like Paul Krugman and others, Roubini had been warning that many banks were weaker than they seemed. Rather than trying to nurse them along, he said, the government should move straightaway to nationalization: “I’m concerned that we’re not going to deal with the bank problem as we should,” he said. “Some banks are insolvent. To prevent them becoming zombie banks, the government should take the problem by the horns and, on a temporary basis, nationalize them. Take over these banks, clean them up, and then sell them back to the private sector. Not doing that is one mistake we may make and regret.”

Next, “monetizing the debt.” This sounds similar to the complaint that the government is spending too much now and will regret it later on, which was the main Republican argument against the stimulus plans. Roubini’s concern is different, and mainly involves the delicate process of turning off the extraordinary stimulus measures now being turned on full force.

“The Fed is now embarked on a policy in which they are in effect directly monetizing about half of the budget deficit,” he said. The public debt is going up, and the federal government is covering about half of that total by printing new money and sending it to banks. “In the short run,” he said, “that monetization is not inflationary.” Banks are holding much of the money themselves; “they’re not relending it, so that money is not going anywhere and becoming inflationary.”

But at some point—Roubini’s guess is 2011—the recession will end. Banks will want to lend the money; people and businesses will want to borrow and spend it. Then it will be time for what Roubini calls “the exit strategy, of mopping up that liquidity”—pulling some of the money back out of circulation, so it doesn’t just bid up house prices and stock values in a new bubble. And that will be “very, very tricky indeed.”

He mentioned cautionary recent examples. The last time the Fed tried to manage this “mopping up” process was after the recovery from the 2001 recession. To minimize the economic impact of the 9/11 attacks, following immediately on the dot-com crash, Alan Greenspan quickly lowered the benchmark interest rate from 3.5 percent, reaching 1 percent in 2003. By 2004 a full recovery was under way, and Greenspan began raising rates at what he called a “measured pace”—25 basis points, or one-fourth of 1 percent, every six weeks. “That implied it would take two and a half years until they normalized the rate,” Roubini said. “And that was one of the important sources of trouble, because at that point money was too cheap for a long time, and it really fed the bubble in the housing base.” So the lesson would be, when a recovery begins, get rates back to normal, faster.

“But that is very tricky,” he continued, “because if you do it too fast, when the economy is not recovered in a robust way, you might end up like Japan and slump back into a recession. But, of course, if you do it too slowly, then you risk creating either inflation or another asset bubble.” The great difficulty of making these fine distinctions is part of the “brain surgery with a sledgehammer” argument against attempting to intervene at all.

In Roubini’s view, there is no choice but to intervene. “We have to do what’s necessary to avoid a real depression,” he said. But he added that it is not too soon to lay plans for avoiding the consequences of too much money flowing rather than too little.

Roubini had recently been in China and met officials there. We talked about the bind that the world economic slowdown had created for China’s leadership—not despite but because of its huge trade surpluses and foreign-currency holdings. Many Chinese commentators have blamed American overborrowing and excess for dragging them into a recession. But even they realize that the very excess of American demand has created a market for Chinese exports. Chinese leaders would love to be less dependent on American customers; they hate having so many of their nation’s foreign assets tied up in U.S. dollars and subject to the volatility of American stock exchanges. But for the moment, they’re more worried about keeping Chinese exporters in business. To do that, they want to prevent their currency from rising. And for reasons laid out in detail in a previous article (“The $1.4 Trillion Question,” January/February 2008 Atlantic), the mechanics of finance require them to keep buying U.S. dollars and entrusting their savings to the United States. “I don’t think even the Chinese authorities have fully internalized the contradictions of their position,” Roubini said.

I agree. But I can report that for these past six months, virtually every economic conference I’ve heard of in China and every special supplement in a Chinese business publication has been devoted to the changes the country would have to make in order to reduce its vulnerabilities.

I asked Roubini whether, similarly, American authorities and the U.S. public appreciated the contradictions in their own position. He answered by returning to the damage caused by boom-and-bust cycles and the need to find a different path.

“We’ve been growing through a period of time of repeated big bubbles,” he said. “We’ve had a model of ‘growth’ based on overconsumption and lack of savings. And now that model has broken down, because we borrowed too much. We’ve had a model of growth in which over the last 15 or 20 years, too much human capital went into finance rather than more-productive activities. It was a growth model where we overinvested in the most unproductive form of capital, meaning housing. And we have also been in a growth model that has been based on bubbles. The only time we are growing fast enough is when there’s a big bubble.

“The question is, can the U.S. grow in a non-bubble way?” He asked the question rhetorically, so I turned it back on him. Can it?

“I think we have to …” He paused. “You know, the potential for our future growth is going to be lower, because of the excesses we’ve had. Sustainable growth may mean investing slowly in infrastructures for the future, and rebuilding our human capital. Renewable resources. Maybe nanotechnology? We don’t know what it’s going to be. There are parts of the economy we can expect to lead to a more sustainable and less bubble-like growth. But it’s going to be a challenge to find a new growth model. It’s not going to be simple.” I took this not as pessimism but as realism.

The URL for this page is http://www.theatlantic.com/doc/200907/roubini

[Alan Tam]

Whatever it is, unless u desperately need a place to stay, or unless u r a flipper, stay on the sidelines until u see a firm economic recovery..

Fully agreed with what you said, I read and understand that they are about 29,000 units ready for TOP from now till 2012. Adding to the recent launched units of another 6000 to 7000 units, total of 36,000 units altogether, how to digest in today market at these price? Are we too optimistic????

[jitkiat]

We must likely have seen a major low on March 6th when the S&P hit 666 and here in Asia most markets really bottomed out in October and November of last year.

Lets say that for one reason or another the S&P which went to 956 and is now at around 920, drops to 800. I am sure that there will be another stimulus package and another massive monetary injection. And if it does not help then we will have another round when the S&P drops to 700. So I don`t think we will see new lows.


Couldn't agree more with this wise old manmassive monetary injection will find its away into asset prices ... it is really a complex world

[apple3]

We must likely have seen a major low on March 6th when the S&P hit 666 and here in Asia most markets really bottomed out in October and November of last year.

Lets say that for one reason or another the S&P which went to 956 and is now at around 920, drops to 800. I am sure that there will be another stimulus package and another massive monetary injection. And if it does not help then we will have another round when the S&P drops to 700. So I don`t think we will see new lows.


Couldn't agree more with this wise old manmassive monetary injection will find its away into asset prices ... it is really a complex world

Yup. How true and how complex. And how strange that with the monetary injection during the great depression, it was still the 2nd World War, that through industrialisation, US came out of recession. And how funny that with massive policy in place, the Jap still lost a good decade from the bubble game.

[sabian]

Yup. How true and how complex. And how strange that with the monetary injection during the great depression, it was still the 2nd World War, that through industrialisation, US came out of recession. And how funny that with massive policy in place, the Jap still lost a good decade from the bubble game.

in house resident perma-bull

[blackswan]

We must likely have seen a major low on March 6th when the S&P hit 666 and here in Asia most markets really bottomed out in October and November of last year.

Lets say that for one reason or another the S&P which went to 956 and is now at around 920, drops to 800. I am sure that there will be another stimulus package and another massive monetary injection. And if it does not help then we will have another round when the S&P drops to 700. So I don`t think we will see new lows.


Couldn't agree more with this wise old manmassive monetary injection will find its away into asset prices ... it is really a complex world

How great it will be if things works just as expected

[Begbie]

Reposting it here for open discussion:


The recent run up, just as with other run ups, is all down to the herd mentality and kiasuism. Just like in our stock market, the property market in Singapore doesn't price in fundamentals - it prices in mass psychology and the unique 'i'm better than you' aspiration Singaporeans hold so dear.

HDB upgraders and most Singaporeans make their property buying decisions not on fundamentals, but on just one thing - CPF. As long as the absolute price of the loan does not exceed the monthly contri of 2 working spouses - ie $2200 pm - they won't think so much. At current interest rates, $2200 services a loan of $800k for 33-35 years, or a $1m property. stretch this to 40 years, and that becomes $1.2m. Banks give up to 45 years, making it $1.3m. DBSS buyers have it better - HDB's moral security, and easy to obtain loans.

Local buyers today thus do not seriously factor in location, potential, etc as long as certain key words like 'CCR, RCR, minutes to IR/Orchard/etc, MRT' appear on marketing brochures. Heck they dun really even factor in LH/FH anymore. As long as the quantum meets CPF contri, 'we're practically getting this property for free since we can't draw out our CPF anyways'.

Others add to this list with other justifications like 'must be close to good schools'. People, proximity is no longer a determinant of entry. OBA and service affiliation rank higher today for the really good ones.

This CPF crutch even applies to the little more well off crowd that buy the One Devonshires and 'close to Orchard' properties. Heck, and additional $300-500 per spouse per month 'ain't gonna bust the bank.' and 'I'm essentially paying just $600-$1000 pm for Orchard property!! (not counting CPF contri of course)'

Thus:

I see a tripolarisation of the the property market in Singapore. One segment catered to the fundamentals, another for the price inelastic, and another for all the rest.

Fundamentals
Those that buy on fundamentals look at areas that have definite and quantifiable infrastructural/living/growth investments planned and executed. This market is truly price elastic. If prices outstrip fundamentals, prices will drop - if undervalued, prices will rise. These areas are growth areas hinged on expectations for the future based on existing, confirmed and executed planning investments. Such areas include the Biopolis belt, Marina Bay only. All the other areas - Paya Lebar, Lakeside, Punggol - when I see the money and the start of construction, then i'll call it.

Thus before you buy that 'close to orchard' property, ask yourself - is there growth potential in orchard road? how likely is it for lucky plaza/ paragon/ NAC to be torn down and rebuilt higher and denser? Is is cheaper to enbloc, tear down and build, or just to build in new growth areas on bare land?

Price Inelastic
The rich are not idiots. They buy properties that either will give them much much more returns in the future, or those that protect the sanctity, privacy and prestige of their family. differences in valuation by a million or two will not make much of a dent in purchasing decision more than how well the economy at large will serve them; or even tax laws. You have to really visit a private enclave in Singapore to understand how out of this world old money (and even new money like Jet Lee), and out ministars live. This market segment is intertwined with the fundamentals segment. Case in point - Sentosa. No doubt an exclusive enclave, but as the infrastructural and commercial investments supporting this enclave are in doubt - prices are still underwater. The rich really hate it when there's nothing around to pamper themselves with, and sailing every day is boring. Heck you can't even open the door and swim in the choppy waters or even the lagoon.

The govt is obviously creating a playground for the rich in Singapore - whether the Gardens, entertainment, resorts, tax laws, private banking, HQs, private marinas etc. Now this really hinges not on the success of the IR, but on how Singapore is successful in:
1) positioning itself for high net worth, and tax exempt monies.
2) building a playground for these individuals and thus upping the quality of life

Point 1) has me worried. US tax law changes and the OECD blacklist might be a game changer, and will work only if Singapore and beneficiaries find a way to skirt around this. Otherwise, it'll affect everything to FDI to expats to just about everything non-local around here. This is a huge issue that scares me. IT will affect the 'Fundamentals' segment, less so the private enclaves.

I know that this posting have been for a while, but i've been away for so long that this was the last i managed to read before my travels...

I couldn't agree more with ur statement in red, as I've heard of buyers who're rushing for the wrong reasons.."Not wanting to lose out"...

However dude, could u help out to explain a bit further with ur point 1 that I highlighted in blue.. bear in mind that i am not a money man.. Just really find this point pretty interesting to dwell further into...

oh yeah.. i've stopped smokin for 12 mths now.. was smokin for 10 yrs prior to that.. sure u can do it too dude.. haha...take it easy.. and it is nice to be back..

[jitkiat]

2nd US stimulus may b required soon ...

Oil is crashing back to 63USD, baltic dry index down to 3,200

All technical indicators point to weakness ... good luck to property flippers

[bargain hunter]

what level was the recent peak in the baltic dry index?

2nd US stimulus may b required soon ...

Oil is crashing back to 63USD, baltic dry index down to 3,200

All technical indicators point to weakness ... good luck to property flippers

[cheerful]

If the UG govt changes the tax rules in a way which resulting in less incentive for US firms to have their businesses overseas (tax in US, tax in the countries they operate in) ... wouldn't that already cause outflow of FDI fr S'pore?? Think something along that line ... ...

However dude, could u help out to explain a bit further with ur point 1 that I highlighted in blue.. bear in mind that i am not a money man.. Just really find this point pretty interesting to dwell further into...

[jitkiat]

what level was the recent peak in the baltic dry index?

10,000 ... reached a low below 2,000, rebounded to 4,000 ... now at 3,200

http://www.bloomberg.com/apps/quote?...=IND&x=15&y=11

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[bargain hunter]

thanks jitkiat. i was following from 2k to 3k rebound then lost track so wondering where the recent peak went. now i know it is 4k.

10,000 ... reached a low below 2,000, rebounded to 4,000 ... now at 3,200

http://www.bloomberg.com/apps/quote?...=IND&x=15&y=11

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