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Old 29-11-2011, 01:40 PM
Posts: n/a

Originally Posted by Unregistered View Post
Hi Anonymous Coward,

I'm a fellow anonymous coward who also betted against the mini Nostradamuses.

Was your forehead dripping with sweat and your hand trembling while signing the cheque at the showroom in early 2009?

If you did, then you're also a coward like me, unlike the bravos here.


12 December, 2008

Tony Darwell
Min Chow Sai
Daniel Raats

Still critical

We retain our Bearish stance on Singaporeís residential market. Deteriorating economic conditions have impacted both end-user demand and rental housing budgets, driving down rents at a time of rising risk premiums. This deterioration in the marketís condition is adding further downward pressure to asset prices at a time when marginal speculators are looking to de-leverage before TOP and/or developers are committed to launching into a market with few, if any, opportunistic buyers. Whereas in our 20 March note we posited an expectation of a cyclical correction in asset prices with supply outstripping demand, it is evident that even our pessimistic prognosis has been further undermined by a weaker economy. We believe lower rents and softening yields will result in home prices falling further and faster than previously expected: luxury values down 43.8% over 2008-10F (from 32.3% previously), and mass values not being immune, falling 32.1% over 2008-10F (from 19.4% previously).
I would summarise the following after reading all the counter arguments:

(1) Liquidity is poised to dry up in many parts of the world, starting in Europe and then extending to Asia. EU Central Bank would not print more money, as it would be disastrous to devalue the Euro and flame inflation in a period of downward spirally economic conditions
Asian investors would start pulling back funds to their home countries to cover domestic funding needs. This would also entail foreign house buyers in Singapore starting to dispose of their properties here, triggering a downward pressure on prices.

(2) The government would not rein in foreign demand for private properties, as they are too far down the wrong road of no return. Imposing restrictions on foreign ownership of private properties at a time when many foreigners are trying to monetise their properties here would certainly cause the property market to crash, pushing local home buyers to negative equity, considering all the huge loans undertaken to meet high purchase prices. This is potentially destabilising to the country.

(3) Prices would therefore reach a stalmate, or at the very best decline insignificantly

Implications to potential home buyers - Bite the bullet and buy now if you have sufficient cash reserves to cover for at least 1 year of mortage instalments should you be retrenched

Implications for current home owners - Huge price appreciations are a thing of the past, treat your house as a roof over your head, not some speculative investments. And make sure you squirrel as much cash as possible starting from now in case you are retrenched and out of the job for a year or longer. No one - including the government, would be helping you to pay your huge mortgage

Lastly, for those who believe this bull run would continue, well, this is a free world, you are entitled to your own your own risks of course.............
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