Property market sentiments?

[sabian]

i dont think rich indons keep rupiah as their main currency....

Whoops....

[sabian]

I think its more likely that we get a stampede now and maybe over next few months and then things cool off later this year and into 2010.

From now to end 2010 will be interesting...

[bargain hunter]

Indeed, not only do the rich Indos not keep their main currency as Rupiah, they love Singapore and feel safer with their money parked here (no matter in what other currency) than kept in Indonesia. They also love property, something which they can fly in and touch whenever they feel like it. As businessmen, they would still take up loans (at lower LTV) even if they have the ability to buy the whole units in cash so the combination you mentioned below is very conducive for them. They are also willing to accept 3 to 4% rental yield for their investments because it covers the interest (for now and because of their low LTV) and still has a remaining yield equivalent or more than fixed deposit.

i hear that indonesians are coming to buy with cash.
rupiah strengthened. they moving the funds here because prices are still lower than 2008. and property agents and bankers very busy. same for insurance agents. arrrgh..i didnt manage to ride the high wave.

and banks are more easy going now. aiyahhh..

[novel]

If the high end is going to be sluggish, whither the mid tier and mass mkt?

I have been checking prices of HDB 4-5 room, prices have come off about 3% on average for the outlying areas. It will not crash but the the HDB upgrader spigot will be closing soon.

The stock mkt effect only comes into the equation when there is a general air of speculative interest in the air.

I been checking hdb too, and noticed prices are coming down, with some selling under valuation.

but private condo seems to be bullish currently for May.

[novel]

Interesting to see developers trying all sorts to infuse the market with "upbeat" news...

Leasehold Botannia condominium project at West Coast fully sold
By Wong Siew Ying, Channel NewsAsia | Posted: 29 May 2009 2051 hrs
*report never say took them how long to achieve this*

they never put "FINALLY" since 2007? ahahaha.... I wonder the next HLG devt they are going to launch soon take how long? Another 2 years? And dun forget when they launch Botannia it was supposed to be blooming time for property...so maybe this round will take 3 years?

[vin002]

I been checking hdb too, and noticed prices are coming down, with some selling under valuation.

but private condo seems to be bullish currently for May.

That's because due to the quiet market in pte property. But now with the recent stir. Try again those units that are asking below valuation. I heard that nowadays, the cases of seller withdrawing and uping their asking prices are very frequent.

[wreckwrx]

I been checking hdb too, and noticed prices are coming down, with some selling under valuation.

but private condo seems to be bullish currently for May.

That's because HDB owners are rushing to sell their flats to cheong private properties...

And even if they are selling under valuation, they are still smiling (instead of laughing) to the bank especially for those 1st owners that bought direct from HDB... chances are they would have already fully paid up their loan so they can plonk their entire sales proceed to fund their new private property purchase (which will easily make up at least for 20% ~ 40% of the purchase price).

[novel]

Dun understand why some ppl can be so optimistic and bullish when every day we read bleak reports...

http://sg.news.yahoo.com/cna/2009060...s-231650b.html

http://sg.news.yahoo.com/rtrs/200906...s-7318940.html

http://sg.news.yahoo.com/afp/2009060...o-c1b2fc3.html

http://sg.news.yahoo.com/rtrs/200906...n-b8dd11d.html

[wreckwrx]

The only way to explain is that people were sitting on piles of cash and with bank's offering close to zero returns on deposits, rather than putting it in under their pillows at home, they plonk their money into the market little by little to test the market until it snowballed into the current "rally" in the past 4~6mths.

And these folks are feeling quite pleased with themselves because some of them managed to get pretty good returns indeed.... And optimism will easily breed into exuberence whenever there is money to be made.

On a separate note, HDB prices proved to be a lot more resilient despite the downturn. Given that majority of our population are living in HDB flats, that means quite a lot of people are sitting on capital appreciation which shows no sign of being eroded. Coupled with the odd pricing strategy by DBSS developers for new flats and the fall in private property prices, a lot of HDB upgraders just move en masse to private housing stimulating demand in the mass condo sector.

Of course the broad macroeconomic data is still telling us that the whole economy is far from recovery, but currently those that are riding the blue wave is enjoying the ride thus far. History tells us that w/o strong fundamentals, the blue wave will come crashing down in time to come drowning a lot of people in it (excatly like what happened with sub-prime) but then again, we humans tend to have very short-term memories isn't it? Plus there is always the old adage where speculators will always say, "I will get out the moment I make money"...

[novel]

I like the way you explained the whole situation, sounds logical. Thank you.

[wreckwrx]

u r welcome!

Frankly speaking, even if this current blue wave crashes, another one will quickly build up in it's wake because there are still a lot of people out there with money in the pockets waiting on the sidelines rushing to pick up "bargains" (just look at the "Rivergate 1kpsf" thread... )

[Regulators]

it is simple, hdb dwellers are cashing out on their hdb properties, make some profit from hdb and dump all into a pte pty and take advantage of falling pte pty pxs. if you ask these hdb people to hold on to their hdb flats and buy another pte pty, how many actually can afford....

[vin002]

it is simple, hdb dwellers are cashing out on their hdb properties, make some profit from hdb and dump all into a pte pty and take advantage of falling pte pty pxs. if you ask these hdb people to hold on to their hdb flats and buy another pte pty, how many actually can afford....

Hehe... Actually, my advise to most people is not to sell HDB and buy private. But to rent out HDB and buy private. The rental return for doing that is easily above 10% if you bought your HDB before 2005. The rental is good enough to help you sevice your pte pty.

[wreckwrx]

it is simple, hdb dwellers are cashing out on their hdb properties, make some profit from hdb and dump all into a pte pty and take advantage of falling pte pty pxs. if you ask these hdb people to hold on to their hdb flats and buy another pte pty, how many actually can afford....

There are probably a fraction that could still have the funds to place the 20% down for a sub 1mill condo w/o having the sell their HDB flats... but issue is whether are they willing to stretch themselves or keep the cash for "rainy days". These are the guys that are contributing to the showroom traffic to snap up those smaller units costing around 600k ~ 700k probably with the intent to rent it out to cover the monthly installment.

[cheerful]

Agree with both on the separate points mentioned: (i) rental yield is better for HDB - well qualified for those hdb bot before 05; (ii) showflat traffic from this bunch of pp who can afford holding on to hdb & eyeing pte properties of tt price range ........... since it's your entitlement as citizen to buy new hdb flats, why not take it, prolong it, then capitalize on it ..

[jitkiat]

I think this situation is going to last for a while with stable price as we have 270k 5-room HDBs, even just 5% decides to take the plunge, that translates to 13,500 units of mass market condos. This upgrading trend will only stop when the gap of HDB resale price and mass market condo widens again. I don't think HDB resale price will come down very quickly given limited supplies of reasonably priced new HDB flats in mature estates (DBSS flats = expensive, pushing more 1st timers to buy resale flats) and increased number of PR HDB buyers in recent years. Even if there is another crisis, buying activities will only be temporarily suspended but will continue as long as sentiment improves. On the other hand, property developers are unlikely to raise the price too much for mass market condo as HDB upgraders are not price elastic. What we are seeing now, is actually a continuation of 2007 upgrading activities.

[novel]

I think this situation is going to last for a while with stable price as we have 270k 5-room HDBs, even just 5% decides to take the plunge, that translates to 13,500 units of mass market condos. This upgrading trend will only stop when the gap of HDB resale price and mass market condo widens again. I don't think HDB resale price will come down very quickly given limited supplies of reasonably priced new HDB flats in mature estates (DBSS flats = expensive, pushing more 1st timers to buy resale flats) and increased number of PR HDB buyers in recent years. Even if there is another crisis, buying activities will only be temporarily suspended but will continue as long as sentiment improves. On the other hand, property developers are unlikely to raise the price too much for mass market condo as HDB upgraders are not price elastic. What we are seeing now, is actually a continuation of 2007 upgrading activities.

so the mass market pricing should be 2007 level?

[jitkiat]

so the mass market pricing should be 2007 level?

I think so ... about Q1/Q2 2007 level, or about Q2/Q3 2000 level. Mass market condo is more affordable (relatively speaking) for HDB upgraders now compared to in 2007/2000 because resale HDB price is relatively higher.

[kalumder]

3000-4000sf condo/penthouses going for under 13k rent a month in prime areas (D9) now. Bungalow rental also well down in prime areas (D10), asking also between 12-14k, for units that a few months ago asked 20k or more. People still think there is upside in property in Singapore or prices are fair...

[HP65]

3000-4000sf condo/penthouses going for under 13k rent a month in prime areas (D9) now. Bungalow rental also well down in prime areas (D10), asking also between 12-14k, for units that a few months ago asked 20k or more. People still think there is upside in property in Singapore or prices are fair...

Dun worry for them. In fact, this is good for the system. Flushing out the excess from the system. There will also be less competition later on when the marginal players have exhausted their bullets. The recent rally is not new, humans are greedy by nature. They never learn from mistakes and memeory is short. Always want short cut to profits.

[apple3]

I think this situation is going to last for a while with stable price as we have 270k 5-room HDBs, even just 5% decides to take the plunge, that translates to 13,500 units of mass market condos. This upgrading trend will only stop when the gap of HDB resale price and mass market condo widens again. I don't think HDB resale price will come down very quickly given limited supplies of reasonably priced new HDB flats in mature estates (DBSS flats = expensive, pushing more 1st timers to buy resale flats) and increased number of PR HDB buyers in recent years. Even if there is another crisis, buying activities will only be temporarily suspended but will continue as long as sentiment improves. On the other hand, property developers are unlikely to raise the price too much for mass market condo as HDB upgraders are not price elastic. What we are seeing now, is actually a continuation of 2007 upgrading activities.

I beg to differ. 5% taking the punge of selling their 5-rooms flat do not translate to 13,500 units of mass market condos. This is too surface and rely too much on your own assumption that the strong alignment between resale HDB & mass market condo is there.

My friend, I have handed out enough utility vouchers to tell you that most of the peoples selling their 5 rooms is due to some hard times going down there, and not upgrading to condo. And for the dollar and other reasons, it range from owning loan shark, over commit on their loan amount and could not service their loan after recieving the last letter from HDB, could not secure a private loan after HDB no longer want to give them the CPF low rate, could stay with kids to take care of their grandchild while taking some cash for retirement, need subsidies badly, kids pressuring their parent to sell, down grading to 3rms after kids married out or simply want to enjoy their retirement, etc, etc.

Kiat, I have been wanted to explain this to you for a while. Selling a 5-rooms HDB, unfortunately, do not equal to buying a mass condo on the other end. It the pink note that just drop into their letter box threatening to cut their meter their main concern now and not your mass-market condo upgrading.

Again, by all means I would love to see these coming along with a strong per capital for our fellow 85% Singaporean still staying in HDB and joining us in this wonderful forum talking about private condominum with you & me. How far are we from there?

[jitkiat]

Hi apple3, about the 5% of 270k 5-room HDB assumption, that is not my own opinion but quote from Goldman Sach report about SG property stocks:

http://forums.condosingapore.com/att...0&d=1242136813

Of course they may be right, may be wrong. At least the report is worth reading and sound logical to me.

Anyway, "property guru" just became Google Hot Trend number 1 search keyword ... now I am bit worried

[cheerful]

Well, they may be RIGHT (if their number crunching plus analysis allow them to forecast in the right direction) .... or they may be WRONG (if these analysts are the very people who do not know wat's happening on the ground, only whole day sit their butts in office forecasting forecasting ...).

[apple3]

Hi apple3, about the 5% of 270k 5-room HDB assumption, that is not my own opinion but quote from Goldman Sach report about SG property stocks:

http://forums.condosingapore.com/att...0&d=1242136813

Of course they may be right, may be wrong. At least the report is worth reading and sound logical to me.

Anyway, "property guru" just became Google Hot Trend number 1 search keyword ... now I am bit worried

On a vehicle analogy;

The report are talking about the brief spec of a car, capacity, coe, parf, etc.

I'm talking about the affordability, driving license, demerit points, etc.

[firec]

Hi apple3, about the 5% of 270k 5-room HDB assumption, that is not my own opinion but quote from Goldman Sach report about SG property stocks:

http://forums.condosingapore.com/att...0&d=1242136813

I'm surprised such analysis could come from GS:

On our estimates, the average home equity of households in owner-occupied HDB flats is S$190,000 or 2.3X annual household incomes. For 5-bedroom or bigger flats, the predominant upgrader pool, the average home equity is almost 20% higher than the average HDB home owner at S$230,000. To put this into perspective, this equity covers about 30%-35% of the purchase price of a mass-end apartment, and is more than sufficient as a down-payment plus surplus. If only a small portion of the 270,000 units of 5-bedroom or larger HDB home owners decides to upgrade, we expect that the potential unsold supply—some 42,387 unsold units to come onstream in (2009-2013E)—would be gradually absorbed. The number of 5-bedroom or larger flats is six times the total unsold supply in the private market.

If, and a big IF, there is such "home equity", why didn't this group of potential upgraders come in to prop up the property market during 2002-2006 or during the Asian Financial Crisis when prices are obviously much lower in relation to the then "home equity" at the time.

Obviously, in order to entice such upgraders (if they exist), prices must come down to a level that's attractive enough to them.

GS also failed to give an estimated breakdown by age groups of such potential upgraders (again if they exist).

I'm not GS, but I don't think many of these HDB dwellers are young.

The young HDB owners are too young to have accumulated the "home equity" and the old ones are too old...

How many of the old ones can find banks to lend them the other 65%-70% to pay for their condo?

[wreckwrx]

I'm surprised such analysis could come from GS:

If, and a big IF, there is such "home equity", why didn't this group of potential upgraders come in to prop up the property market during 2002-2006 or during the Asian Financial Crisis when prices are obviously much lower in relation to the then "home equity" at the time.

I am not GS so I need some help here...... plus i was only a freshie out of school in 1997 but as I looked at the folks around me, there were lots of unhappy faces where ever I go especially those uncle and aunties that paid $700k for HDB flats before the crash.... with so many HDB owners licking their wounds... where got mood to upgrade? Besides, people are really cautious in buying resale having learnt their lesson. And this have yet to account for those uncle and aunties that lost their fortunes in the stock market, clob shares etc....

Then we fast forward to 2002 - 2006.... We just had Sept 11 and the whole world was getting to know Osama and then come loads of mergers and consolidation especially in the Financial Sector and lots of jobs were shed and new grads could hardly find any jobs. Then when some stability kicked in, SARS came in to remind us that we are not in the clear. Plus HDB was bleeding cause they built too many flats and there was a supply glut.... HDB can't even pay their contractors on time and a lot of them just went bust. So with loads of new flats to choose from, the HDB resale market isn't all that rosy either. More bad news for those dudes that paid a premium for resale flats pre-1997. This was when HDB finally bit the bullet and introduced the BTO policy....

Now fast fast fast forward to present day..... the reality is that HDB's BTO policy is so darn successful that there aren't enough new flats to go around. And this pushing a lot of new startup families into the resale market. Anyone that bought a flat from 1997 onwards have seen their flats appreciate in value. And lot of these flats would have been fully paid up especially for middle income families with dual incomes earners servicing the loan.

Prices have corrected slightly with the sub-prime issue but still the capital gains aren't eroded. And there is no sign of it eroding away because demand is so darn strong that buyers even willing to swallow the exhorbitant DBSS prices. Coupled with the sharp fall in the private property prices, hence the impetus for HDB owners to realise their condo dreams.

Of course the above is purely my observation and not supported with any empirical data. But if I were answer why such upgrading activity wasn't present in 1997 or between 2002-2006, the above would have been my reply. I welcome any refinement or correction to my above observation. Cheers!

[gfoo]

I think many are looking at the wrong indicators, and thus have erroneous conclusions.

Baltic Dry, RCI, all rising fast. Yes, these are inflation indicators, and with TBond rates rising the way they are, inflation is a clear and present danger. It's not a matter of if, but rather when. Precious metals and commodities are inflation hedges, but NOT property.

Just as with everything, there are market makers and there are the me-toos. 05-07 boom was largely driven by the influx of foreign buyers - they drove up prices of Tier-1 properties, and only from 07 did it start trickling down to Tier-2 and mass market properties. Mass market values ran up not because the foreigners were buying them in droves, but because the locals saw what was happening in Tier-1, wanted to get into the game, and started bidding against one another upwards.

The current run up is driven by locals that have missed the boat previously, see a 'discount' off 2007 highs, and thus see it as an entry point to get into the game. This is largely supported by an artificial and apparent prop of HDB values by the powers that be - whether through the ridiculous DBSS scheme or arbitrarily setting the still high prices of new flats in SK/PNGL. And because the middle class here are still largely gainfully employed for now, they still think things are still status quo.

You see this nonsense in last week's SEC report on insider sales. More insiders are selling these past two months than ever before. If the economy is really turning around, why are CEOs and directors divesting their own companies like there's a plague? They are selling to the me-toos who 'seem' to have missed the recent run up, believing in central bank PR bullshit, manipulated numbers, and at times, a manipulated market.

The Tier-1 market is still lacklustre. Foreigners are still not buying, and they are definitely not renting as much. (even my part time maid is asking me for referral lobang as 2/3 of her ang moh bosses have left for home and her agency ain't assigning new ones as there's an oversupply of part time maids now).

Thus today's property market is distinctly cut into two paths. One driven by the me-toos who are afraid of missing the boat, driving prices up based on their activities and not externalities. And one driven by the Tier-1s who are buying on location and potential - but it's still far far fewer than the number the me-toos are buying up as if in a frenzy. Mass market is at most 10-15% down from 2007 highs. Tier-1s are still about 35-40% off highs.

Will the market fall end 09? i don't know - very possible, but i don't know. What i do know is that buy a mass market today and you are paying a 40% premium over 2005 prices at least. why people are willing to pay close to $1m for some suburban heartland area i really don't know.

So if you backside itchy and ngeh ngeh want to buy a property for whatever reason, please do some research, and look for properties that have huge potential and where the govt has announced massive development and infrastructure builds for the area. that way if shtf you lose less

my 2 cents.

[jitkiat]

I think many are looking at the wrong indicators, and thus have erroneous conclusions.

Baltic Dry, RCI, all rising fast. Yes, these are inflation indicators, and with TBond rates rising the way they are, inflation is a clear and present danger. It's not a matter of if, but rather when. Precious metals and commodities are inflation hedges, but NOT property.
my 2 cents.

Property is still a good hedge against inflation in Singapore. This is not my own conclusion but according to research from NUS. You can check what happen to property prices in Singapore during the 1st and 2nd oil shock back in 1973/74 and 1980/81. But I agree with you that metal & commodities are BETTER but not every Singaporean knows how to trade that.

Biz Times:

HDB upgraders have their say in muted market

They comprised more than half of those who bought private homes in Q1
By KALPANA RASHIWALA

(SINGAPORE) The first quarter of this year saw a major trend reversal. HDB upgraders bought more private homes than those already living in private properties.
Fifty-six per cent of caveats for private home purchases in Q1 were lodged by buyers with HDB addresses, up from a 43 per cent share in the previous quarter. The last time this figure breached 50 per cent was in Q3 2002, when it was 52 per cent.
Market watchers note that the pick-up in HDB upgraders’ share in Q1 came amidst the launch of mass-market projects like Caspian near Jurong Lake and Double Bay Residences in Simei as well as the relaunch of The Quartz in Buangkok. Such entry-level 99-year leasehold condos cater to HDB upgraders.
Property consultancy DTZ highlighted this trend in its analysis of caveats from URA Realis as at May 29. The reason behind this could be the pent-up demand from this segment of buyers who had been priced out of the private residential property market during the bull run in 2007.
Another important factor was the narrowing price gap between public and private homes, which resulted in private properties becoming increasingly within reach of HDB upgraders. ‘With cash proceeds from the sale of existing HDB flats, the upgrader needs to borrow only about 50-60 per cent of the value of the new private property,’ estimates DTZ’s head of SEA research Chua Chor Hoon.
Knight Frank executive director (residential) Peter Ow also credited the rise in proportion of HDB upgraders to developers offering a combination of attractive pricing and interest absorption schemes (IAS) for projects. ‘IAS helps tide these buyers until their new condo is completed and when they can sell their existing HDB flat,’ he explained.
‘At Double Bay, which we marketed, we saw many buyers in their 40s currently living in HDB flats nearby,’ Mr Ow added.
DTZ’s analysis showed that the highest proportion of buying (in URA Realis’s 14-year caveats database) by HDB upgraders was in Q2 2002, at 81 per cent.
Generally, HDB upgraders’ share of private home purchases tends to be higher when private residential prices are falling and come within their reach. And when property prices are shooting up, their share of purchases ebbs.
During the 1998 Asian Crisis, for instance, HDB upgraders’ share hovered between 51 and 65 per cent per quarter, against a much lower share of 33-40 per cent in 1995 when prices were spiralling up.
Again, during the recent property bull run in 2007, their share was pretty low at 21-23 per cent, before starting to rise again last year when the property slump began.
DTZ also compared some buying preferences of HDB dwellers and private property owners who bought private homes in Q1. Some 88 per cent of total purchases by those with HDB addresses were under $1 million. In contrast, 40 per cent of buyers with private addresses invested in homes that cost $1 million and above. HDB upgraders also bought mostly smaller apartments.
Some 92 per cent of private homes that HDB dwellers bought in Q1 were outside prime districts 9, 10 and 11. And for those HDB dwellers who did pick up private properties in prime districts, 68 per cent were for units below 1,000 sq ft. Based on caveats lodged in Q1, the most popular projects for those with HDB addresses include The Caspian, The Quartz, Alexis and Double Bay Residences.
HDB dwellers accounted for 57 per cent of the total 227 caveats lodged for Alexis and for 75 per cent of the total 458 caveats for Caspian.
DTZ’s Ms Chua reckons HDB dwellers’ share of private home purchases may ease in Q2, when sales activity permeated to the mid/upper-mid segments where more buyers have private addresses.
Knight Frank’s Mr Ow said the proportion of HDB upgrader buying will vary depending on the profile of property launches or relaunches in the months ahead.

[Alexis]

Yes, to all doubters here, please do not underestimate the amount of pent-up home equity coming from HDB dwellers.

Unlike in stocks, where you can take calculated risks and invest in tranches on the way down, in property most people only have 1 shot and they have to time their entry right.

These HDB upgraders have shrewdly avoided the market run-up in the previous years and are now carefully timing their entry to buy the mass market condos. I honestly think they got their timing right.

In other words, this time it's really different.

I am not GS so I need some help here...... plus i was only a freshie out of school in 1997 but as I looked at the folks around me, there were lots of unhappy faces where ever I go especially those uncle and aunties that paid $700k for HDB flats before the crash.... with so many HDB owners licking their wounds... where got mood to upgrade? Besides, people are really cautious in buying resale having learnt their lesson. And this have yet to account for those uncle and aunties that lost their fortunes in the stock market, clob shares etc....

Then we fast forward to 2002 - 2006.... We just had Sept 11 and the whole world was getting to know Osama and then come loads of mergers and consolidation especially in the Financial Sector and lots of jobs were shed and new grads could hardly find any jobs. Then when some stability kicked in, SARS came in to remind us that we are not in the clear. Plus HDB was bleeding cause they built too many flats and there was a supply glut.... HDB can't even pay their contractors on time and a lot of them just went bust. So with loads of new flats to choose from, the HDB resale market isn't all that rosy either. More bad news for those dudes that paid a premium for resale flats pre-1997. This was when HDB finally bit the bullet and introduced the BTO policy....

Now fast fast fast forward to present day..... the reality is that HDB's BTO policy is so darn successful that there aren't enough new flats to go around. And this pushing a lot of new startup families into the resale market. Anyone that bought a flat from 1997 onwards have seen their flats appreciate in value. And lot of these flats would have been fully paid up especially for middle income families with dual incomes earners servicing the loan.

Prices have corrected slightly with the sub-prime issue but still the capital gains aren't eroded. And there is no sign of it eroding away because demand is so darn strong that buyers even willing to swallow the exhorbitant DBSS prices. Coupled with the sharp fall in the private property prices, hence the impetus for HDB owners to realise their condo dreams.

Of course the above is purely my observation and not supported with any empirical data. But if I were answer why such upgrading activity wasn't present in 1997 or between 2002-2006, the above would have been my reply. I welcome any refinement or correction to my above observation. Cheers!

[jitkiat]

Property will perform well in inflationary environment. The spike in 1980/81 is due to 2nd oil shock.

"Official" CPI in Singapore:

Year 2000 97.2
Year 2008 110.3