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Thread: Gradual rise in home prices seen

  1. #1
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    Default Gradual rise in home prices seen

    http://www.straitstimes.com/Money/St...ry_381684.html

    May 26, 2009 Tuesday

    Gradual rise in home prices seen

    Hong Leong boss says many buyers out there, but luxury sector still listless

    By Joyce Teo, Property Correspondent


    PRIVATE home prices in most sectors could start to rise gradually this year but high-end property will stay in the doldrums until later next year, according to tycoon Kwek Leng Beng.

    Mr Kwek - executive chairman of the Hong Leong Group - said there are many cash-rich buyers waiting for the right time to buy.

    'Every time the market turns, some people would get caught out,' he added.

    The key question that many buyers are asking is: Has the market turned?

    Urban Redevelopment Authority data shows that 1,207 new private homes were sold in April, making it the third consecutive month that sales have crossed the 1,000-unit mark.

    It is a level reminiscent of the boom period and one that some analysts believe is unlikely to be sustained for long.

    But Mr Kwek, who was speaking to The Straits Times on the sidelines of a recent hotel investment conference, feels that these levels of sales can be maintained 'if the world economy stabilises'.

    'Confidence is the quick key to recovery. When you have confidence, you will invest,' he said.

    Mr Kwek said developers are sometimes wrong but the key is to be more often right than wrong.

    He also reiterated that property is an investment over the medium to long term, anywhere from three to 10 years.

    Developers got the market message this year and have cut prices to meet buyers' expectations, following a stand-off that saw just 100-plus units sold in January.

    'If you're listed, you'll have to sell something. Otherwise, every quarter, you have no sales,' said Mr Kwek.

    Some developers have actually started to raise their asking prices slightly from their adjusted lows.

    The strong sales so far this year have largely prompted two foreign investment houses to turn more positive on the residential market.

    A recent UBS report points out that the sales momentum has been stronger than expected, with the possibility of higher prices in the second half of this year and next year.

    It had already in a late April report called a 'buy' on the property sector, saying that demand from domestic upgraders - not foreign buying - will jump-start the recovery, as with previous recoveries in the 1990s.

    Goldman Sachs has also projected a 5 per cent gain in Singapore private home prices next year, reversing its earlier tip of a 10 per cent fall.

    'We think the alignment of developers' asking prices and buyer expectations would be key for generating sustainable demand,' said the UBS report.

    Nevertheless, not all are optimistic about the market.

    'This wave of purchases, once it's over, won't come back until the economy has recovered and embarked on its way up,' said a property fund manager who declined to be named.

    The pent-up demand is coming mostly from owner-occupiers or small investors and these people usually cannot afford to buy more than one unit, he said.

    'Foreigners are still leaving Singapore. When there are not enough real users for all the supply, prices will continue to fall.'

    What is happening now in the real estate sector could be similar to the bear rally some analysts foresee for the stock market, he said, adding that the only good news is that mass-market prices are likely to hold at current levels.

    Unlike high-end prices, which have fallen at least 35 per cent to 40 per cent from their all-time peak, the mass and mid-market sectors have had falls that are much less steep.

    The price fall in high-end homes - which shot to more than $5,000 per sq ft during the boom from around $1,800 psf - is thus steeper, he said.

    Average high-end prices may dip to around $2,300 psf, which is still higher than pre-boom levels.

    Mr Kwek said the Hong Leong Group - which includes listed Hong Leong Finance, developer City Developments, Hong Leong Asia and London-listed Millennium & Copthorne Hotels - will hold off high-end home launches for now, preferring to start building first.

    City Developments, the developer behind projects such as The Sail @ Marina Bay, has in its pipeline The Quayside Isle Collection in Sentosa Cove, a 99-year leasehold enclave where values have more or less collapsed.

    High-end home prices were to a large extent boosted by foreign buying. 'Foreigners will slowly come back but not so soon,' said Mr Kwek.

    The Indonesians, he said, are very slowly returning. Although the trend is barely discernible, it is a change from the previous downturn where they had all but disappeared.

    Still, he cautioned against comparing prices with levels done a decade ago: 'Ten years ago and now, Singapore has changed. Fundamentals are good.'

    The country will soon benefit from two integrated resorts, for instance.

    'Worldwide, it is the worst downturn ever. But you see the amount of stimulus around. You can't see the effects immediately. It will take some time,' he said.

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    Default That sinking feeling

    Damn, I am wondering if I missed the boat by waiting, waiting, waiting...

  3. #3
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    Quote Originally Posted by dragonred
    Damn, I am wondering if I missed the boat by waiting, waiting, waiting...
    Act now, otherwise underdogs like The Mezzo and Mi Casa will be sold out soon

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    Don't buy just because everyone is doing so, or just because a particular property is cheap. Buy because the value and potential of the place hits you in the face. Buy on 'pull factors', not 'push factors'. Market hype is a push factor.


    Why the Cheap Will Never Get Rich

    by Robert Kiyosaki


    Posted on Tuesday, April 7, 2009, 12:00AM
    The other day a friend of mine approached me excitedly, saying, "I found the house of my dreams. It's in foreclosure and the bank will sell it to me for a great price."
    "How good is the price?" I asked.
    "Just before the real estate market crashed, the seller was asking $780,000 for the property. Today, I can buy it from the bank for $215,000. What do you think?" she asked.
    "How would I know?" I replied. "All you've given me is the price."
    "Yes!" she squealed. "Now my husband and I can afford it."
    "Only cheap people buy on price," I replied. "Just because something is cheap doesn't mean it's worth the cost."


    I then explained to her one of my most basic money principles: I buy value. I will pay more for value. If I don't like the price, I simply pass. If the seller wants to sell, he will come back with a better price. I let him tell me what he will accept. I know some people love to haggle; personally, I don't. If a person wants to sell, they will sell. If I feel what I am buying is of value, I'll pay the price. Value rather than price has made me rich.



    Against my advice, my friend sought financing for her "dream" home.


    Fortunately, the bank turned her down. The house was on a busy street in a deteriorating neighborhood. The high school four blocks away was one of the most dangerous schools in the city. Her son and daughter would either have to go to private school or take karate lessons. She is now looking for a cheaper house to buy and has asked her father, who is retired, for help with the down payment. If her past is a crystal ball to her future, she will likely always be cheap and poor, even though she is a good, kind, educated, hard-working person.


    My Point of View
    What follows are some thoughts on why my friend will probably never get ahead financially -- especially in this market.


    1. She and her husband have college degrees but zero financial education. Even worse, neither plans to attend any investment classes. Choosing to remain financially uneducated has caused them to miss out on the greatest bull and bear markets in history. As my rich dad often said, "What you don't know keeps you poor."


    2. She is too emotional. In the world of money and investing, you must learn to control your emotions. When you think about it, three of our biggest financial decisions in life are made at times of peak emotional excitement: deciding to get married, buying a home, and having kids.
    My dad often said, "High emotions, low intelligence." To be rich, you need to see the good and the bad, the short- and long-term consequences of your decisions. Obviously, this is easier said than done, but it's key to building wealth.


    3. She doesn't know the difference between advice from rich people and advice from sales people. Most people get their financial advice from the latter -- people who profit even if you lose. One reason why financial education is so important is because it helps you know the difference between good and bad advice.

  5. #5
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    Quote Originally Posted by jitkiat
    Act now, otherwise underdogs like The Mezzo and Mi Casa will be sold out soon
    underdogs.... should underdogs be sold out or will be ever be sold out? I do not think it will... If it can, it will be super dog then. DOG eat DOG world.

    un·der·dog
    1. One that is expected to lose a contest or struggle, as in sports or politics.
    2. One that is at a disadvantage.
    The American Heritage® Dictionary of the English Language, Fourth Edition
    Copyright © 2009 by Houghton Mifflin Company.
    Published by Houghton Mifflin Company. All rights reserved.

  6. #6
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    Default

    Quote Originally Posted by gfoo
    Don't buy just because everyone is doing so, or just because a particular property is cheap. Buy because the value and potential of the place hits you in the face. Buy on 'pull factors', not 'push factors'. Market hype is a push factor.
    Can't agree more.... value means higher utility and it is not the same as cheap. Cheap is simply low cost while value is akin to paying peanuts for gold.

    Have you struck gold?

    Potential, value etc... kinda like taking a bet on pedigree horses... not all will be winners, the same goes for underdogs... but better returns if they win.

    Maybe I will dream and buy a large piece of land in Batam the size of Singapore that is now a swamp, 30 years from now, it will be a metropolis. Now that's potential for you...

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