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Old 04-02-2009, 10:19 AM
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I think extreme views are not the way to go here. Yes, property prices are likely to go down but the use of the word "crash" is too extreme. It's probably more pertinent to talk about the extent (or "how much") that prices would fall. And even then, we need to be able to clearly analyze private property prices for condo and landed houses differently. Generally, all the talk about falling private property prices are with reference to private condos - those in prime areas (the so-called luxury condos) are likely to be the hardest hit as they are more prone to speculation and investment (and as such, their prices are quite highly inflated) while those in the non-prime areas (suburban condos) are affected to a lesser extent as they are mostly purchased for personal stay (assuming that they were not bought at exhorbitant prices in the first place). At the end of the day, everything - from property to stocks to cars - is subjected to the logic of economics...demand and supply...willing buyer and willing seller... If a seller has holding power, the seller will not sell if the price is not right - all things being equal, home owners are likely to have holding power more than speculators...this is the reason why the luxury condos are hardest hit...the speculators who cannot hold will sell their units at a much lower price... On the other hand, home owners of suburban condos do not have to lower their asking price (if they are in no hurry to sell). With the above in mind, we still have to factor in the age of the property, whether it is leasehold or freehold, the condition, etc. If you are buying a brand new condo from a developer, again the question is whether they are able to hold onto their units if their asking price is not met...big developers with holding power are less likely to lower their asking price beyond a certain psf limit...they would rather then try to lease out the units instead or delay launch/construction. Also, the government is now trying to help them out by looking at things like property tax relief etc. IMHO, it'd be those smaller developers with lower holding power that would be more vulnerable.

With regards to private landed homes, the prices are less volatile as most have been purchased for personal stay. To be sure, their prices would also be affected by falling private condo prices as well but because of the element of land, landed private homes would not fall as drastically (especially given the scarcity of land in Sg). Again, with the above in mind, we still have to consider if the landed property is leasehold or freehold - just like leasehold condo, leasehold landed is likely to lose value over time although the rate of depreciation might not be as high as that of leasehold condo.
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