Originally Posted by Unregistered

I note your point on liquidity, and agree that the low interest rate environment is probably going to be around for a time.

However excess liquidity only serves to muddy the waters in the short and at best medium term. Sustainable prices still need to be tied into local salaries.

If you are relying on external investor liquidity to prop up prices, then history has shown us that such capital is too flighty ie if the Sgd is expected to weaken against their home currency, they may decide to sell; if their home stock market crashes, and they get a margin call, they may sell; if the positive carry of buying and renting out you mentioned above reverses (eg if interest rates increase and/or rental decrease), they may sell etc.

If you are looking to invest, you are looking at two things : potential for positive carry and capital appreciation. Tough to imagine much capital appreciation when prices are at all time highs, over 100% above 2007 levels, with 53k private and ec units coming on stream next three years (where average private sales per year is about 7k in a normal year), and where prices are already out of whack by all fundamental measures. Positive carry? Well, in all likelihood, we will see this disappear as interest rates go up in time, and rental rates come down as the 53k units come TOP.

Wha does the smart money think? Well CDL, the largest developer in Singapore, warned investors during their results announcement yesterday that they expect a slowdown in the residential market going toward due to global uncertainty and to measures by the government to moderate housing prices.

What about banks? Well, Citi has said that they expect a large correction in 2013 due to supply overhang. BOAML issued a report predicting 10% fall in prices in 2012 and 15% in 2013.