Property Prices Have Crashed (see graph)

Why are people assuming that property prices can only go up?

If you look at the URA PPI chart, it's clear that prices can also go down.

Property prices are not like taxi fares. It's more like stock prices.

Originally Posted by Unregistered

Foreigners won't mind the extra 10% if they are serious long term investors. The long term gain of properties is in the region of hundreds to thousands of percent, so what is 10%? It only deters the short term speculators, which we don't welcome anyway.

It's also not difficult for developers to absorb this additional buyer's stamp duty and neutralise its effect completely. Just offer 3% discount to Singaporeans buying 3rd property, 3% to PRs buying 2nd property and 10% to foreigners.

Anyway foreigners make up less than 20% of total buyers while Singaporeans and PRs make up more than 80%. Assuming half of local buyers are first or second timers who don't have to pay the ABSD anyway, the effective discount is only 0.20x10% + 0.40x3% which is only a miserable 3.2%.

This 3.2% can be treated as the government's tax on developers, who have been making fat profits from government land sales. I see this as the government trying to get a 3% cut of developers' profits after tendering out the land too cheaply.

You make a good point in that it is not difficult for developers to counter this particular measure.

However, if I were a serious investor, what I would be worried about is not just the effect of this measure, but more so the fact that the govt has come out repeatedly, and strongly, with property softening measures.

Hence, it is very clear that they are keen to bring down property prices. If this measure is mitigated by developer actions and does not bring down prices, the govt can come out with another round of measures, and another, then another, ad naseum, until prices do come down.

In this climate, why would any intelligent investor want to invest NOW? Might as well keep the cash now, and wait for prices to fall, then jump in.

Originally Posted by Unregistered

You make a good point in that it is not difficult for developers to counter this particular measure.

However, if I were a serious investor, what I would be worried about is not just the effect of this measure, but more so the fact that the govt has come out repeatedly, and strongly, with property softening measures.

Hence, it is very clear that they are keen to bring down property prices. If this measure is mitigated by developer actions and does not bring down prices, the govt can come out with another round of measures, and another, then another, ad naseum, until prices do come down.

In this climate, why would any intelligent investor want to invest NOW? Might as well keep the cash now, and wait for prices to fall, then jump in.

What is a good price point to jump in? -20%?

Originally Posted by Unregistered

You make a good point in that it is not difficult for developers to counter this particular measure.

However, if I were a serious investor, what I would be worried about is not just the effect of this measure, but more so the fact that the govt has come out repeatedly, and strongly, with property softening measures.

Hence, it is very clear that they are keen to bring down property prices. If this measure is mitigated by developer actions and does not bring down prices, the govt can come out with another round of measures, and another, then another, ad naseum, until prices do come down.

In this climate, why would any intelligent investor want to invest NOW? Might as well keep the cash now, and wait for prices to fall, then jump in.

The government had never said that it wanted to bring down property prices. In fact, each time a cooling measure was implemented, the government took great pains to explain that it was to slow down the rise of property prices, rather than to bring down property prices.

In January 2011, National Development Minister Mah Bow Tan said "they are meant to stabilise home prices and not necessarily intended to cause them to crash". After that, the property market went up by another 10%.

In December 2011, Finance Minister Tharman Shanmugaratnam "the reality is that investment flows into our property market are now larger than before, and unlikely to recede as long as interest rates remain low".

Anyway, how could a stamp duty of 3% cause property to go down by 20 to 30%? At most it cause prices to go down by 3%, or alternatively the sellers can just absorb the 3% stamp duty.

Unless the analysts are factoring in the Euro crisis, which is a separate issue still in progress and nobody knows the final outcome. In fact, the quantitative easing and liquidity injection after the Lehman crisis caused investment flows into our property market here to be larger than before (to use Mr. Tharman's words) and forced up property prices to where it is today, contrary to predictions by many analysts that prices would come down in 2009.

Click the link below for the property forecasts for 2009 (one of the most spectacular bull runs) by the so-called "experts".

Private Property Price in 2009: Analysts forecast further decline of 15%-20%: Singapore Property Market Outlook

I wonder if any of these "experts" had bought any property in 2009? If they had, then they could have retired today.

Originally Posted by Unregistered

The government had never said that it wanted to bring down property prices. In fact, each time a cooling measure was implemented, the government took great pains to explain that it was to slow down the rise of property prices, rather than to bring down property prices.

In January 2011, National Development Minister Mah Bow Tan said "they are meant to stabilise home prices and not necessarily intended to cause them to crash". After that, the property market went up by another 10%.

In December 2011, Finance Minister Tharman Shanmugaratnam "the reality is that investment flows into our property market are now larger than before, and unlikely to recede as long as interest rates remain low".

Anyway, how could a stamp duty of 3% cause property to go down by 20 to 30%? At most it cause prices to go down by 3%, or alternatively the sellers can just absorb the 3% stamp duty.

Unless the analysts are factoring in the Euro crisis, which is a separate issue still in progress and nobody knows the final outcome. In fact, the quantitative easing and liquidity injection after the Lehman crisis caused investment flows into our property market here to be larger than before (to use Mr. Tharman's words) and forced up property prices to where it is today, contrary to predictions by many analysts that prices would come down in 2009.

Click the link below for the property forecasts for 2009 (one of the most spectacular bull runs) by the so-called "experts".

Private Property Price in 2009: Analysts forecast further decline of 15%-20%: Singapore Property Market Outlook

I wonder if any of these "experts" had bought any property in 2009? If they had, then they could have retired today.

I think its quite clear the govt intentions - Singapore, as with China and HK, have been trying to engineer a soft landing for their respective property market bubbles (although no govt will admit that their particular situation is a bubble).

Another issue that the govt has is that the strong property market is interferring with its ability to implement a looser monetary policy to counter the slowing economy (mostly to boost exports), which in Singapore means allowing for a weakening of the currency. If they weaken the currency now, without addressing the property bubble issue, they risk a further exacerbaration of the issue by indirectly encouraging more foreign investment. Hence, they try to nip the foreign investment issue via these stamp duty measures first. If these do not work, I strongly suspect they have further measures in the back pocket down the road.

When to go in is of course the million dollar question. I predicted in another post a few months back that property prices should fall at least 30% within 5 years. After these measures, I believe that this drop may come within a shorter timeframe.

Personally, I would only enter once the fundamental levels return to sane levels, so I would only start exploring the market again after a 20-25% drop.

In that case, I think you do not need to go it . I don't foresee a drastic drop, maximum would be 5% for mass market. ha ha.

Agents 'talking up' the market with these statements:
-"Developers had committed to fix costs: Land & constructions"
-"Developers have strong financial holding power"
-"Developers cannot be unfair to those who had bought earlier at much higher price"
[If you got more 'compelling' statements from agents, will be interesting to post here. For laughters...]

Nonsense:
-Construction costs: Since when are construction costs fixed or can only go 1 way (up)? Have you noticed that Full Condo facilities can also mean without Tennis court, and lesser parking lots then actual units? What's next? Make do without swimming pool....or security guards? (Pay for 'Chicken rice' meal but it does not come with chicken meat?). Cost savings or reduce cost for the developer more like it (without pass the savings back to buyers).
-Land: They had bidded with their eyes open. [Based based on projections/assumptions. Past performance does not guarantee or imply future success. Weak correlation.]
-Holding power: Sure. The developer(s) can certainly hold on and let the building/condos rot. [Same analogy as stock market punters holding on to share/stock that had breeched the 'safety'/sell line, and still dropping.] Bravo talk only.
-Fairness: This is business (Not charity). Since when did fairness become a financial indicator in the Annual Report? What matters most is that the project had achieve/exceeded the set hurdle rate at the onset/commercement.


Reality:
There are several branded condos that is reaching TOP within the next 1-2 years. [The developers had held on to many 'reserved' units earlier, hoping to make a killing by timing the market. These 'reserved' units are generally high floors, sensible liveable sized.]

=> Do you still remember a certain brand that was selling demo/test car with delivery mileage upon collection? [Face saving moves. Cannot 'dilute' the brand right??? ;P]

Learn to ask the right questions, and the choice units will be yours for the picking (at the 'right'/reasonable price. Note: I did not say 'cheap' price. Also reasonable is subjective verb).

Originally Posted by Unregistered

In that case, I think you do not need to go it . I don't foresee a drastic drop, maximum would be 5% for mass market. ha ha.

this thread is biased

when the stock market index fell, the thread started said property price will drop

but now the stock market is up, why never say the property price will rise?

thi is the simply the case of many who are all wishing to buy cheap

i hope this forum has more credibility

Originally Posted by Unregistered

this thread is biased

when the stock market index fell, the thread started said property price will drop

but now the stock market is up, why never say the property price will rise?

thi is the simply the case of many who are all wishing to buy cheap

i hope this forum has more credibility

Because stock market is only 1 of a host of indicators.

And the other indicators are mostly pointing downwards.

Originally Posted by Unregistered

Because stock market is only 1 of a host of indicators.

And the other indicators are mostly pointing downwards.

Price to median income was one of the fundamental measures I have been talking about in an earlier post.

Here's an article applying this measure to properties in Singapore.

PropertyGuru:"HDBs more unaffordable than private homes!" They contradict Tharman? - AsiaOne Forum

HDBs more unaffordable than private homes

Housing and Development Board (HDB) resale homes in Singapore are more unaffordable than private homes, PropertyGuru can exclusively reveal. They are also classed as being ‘severely unaffordable’.

Using a globally-recognised formula where the Median Multiple (median house price divided by the annual median household income) is used to calculate housing affordability, HDB resale flats are also classed as being severely unaffordable using a scale which was most recently published in the 8th Annual Demographia International Housing Affordability Survey.

Housing affordability is evaluated based on the quotient deduced from the given formula, where a result of 3.0 and below would imply that houses are affordable, 3.1 to 4.0 (moderately unaffordable), 4.1 to 5.0 (seriously unaffordable), and 5.1 and over (severely unaffordable).

Given that the international report centred on the mid-end market, PropertyGuru focused its attention on private apartments and condominiums within the Outside Central Region (OCR) and Rest of Central Region (RCR), as these areas are home to most of the mid- to high-end properties.

The median multiple is based on calculations using the median household income from Singstat’s Key Household Characteristics and Household Income Trends, 2011, and the median price for all types of resale HDBs, ranging from one- to five-room and executive flats, according to data from the HDB and PropertyGuru.

The median multiple for private properties is 6.03 which means they are ‘severely unaffordable’ but for HDB resale flats, the result is arguably shocking. The median multiple was found to be at a high of around 6.7, which lies within the ‘severely unaffordable’ bracket – and even more unaffordable than private properties.

While private properties and HDB resale flats hit the ‘severely unaffordable’ mark, it has to be noted that the monthly household income for HDB dwellers is considerably lower than that of private homeowners.

Tejaswi Chunduri, Regional Analyst at PropertyGuru, offered her insights on the findings. She said: “The data is reflective of the housing affordability issues the country has been facing the past few years. In the last five years the median household income in Singapore has increased by 42 percent whereas HDB resale prices have shot up by 84 percent according to the HDB price index. Private property has risen 58 percent when we look at the private property price index.”

She added: “This is a great contradiction to HDB's role which is to offer affordable housing to the masses,” however she was quick to add that homes in Singapore are more affordable than Hong Kong which earned a rating of 12.6.

Despite the high prices, private home sales in Singapore continue to skyrocket, rising 29 percent in February from the previous month. “It is yet to be seen if the multiple rounds of cooling measures and other policies introduced by the government will prove effective in making home prices more affordable,” added Chunduri.

The HDB was contacted for an official statement but were unable to issue any comment prior to publication.