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-   -   Expect the Worst Recession in Singapore History and Property Will Crash ( 14-01-2009 03:33 PM

Expect the Worst Recession in Singapore History and Property Will Crash
So says a shocking Citi report on Singapore property.

Citi expects our GDP to contract by 2.8% this year, "making it the most severe recession in Singapore history."

As for property prices, the report also says that a crash is imminent (see related article: Property Must Crash).

Condominiums in the mid-tier segment is expected to have a price decline of a further "35% from current levels, or ... 45% from their peaks", with luxury condos faring worse.

But mass market prices are "likely to hover around the 1998 lows rather than the (lower) 2003 levels." [Editor's note: mass market prices are generally lower in 2003 than in 1998 even though URA price index for the overall market shows otherwise.]

On condos sold on Deferred Payment Scheme (DPS), which was suddenly withdrawn in late 2007, Citi has this to say:

"We are increasingly concerned about projects launched close to the peak of the market and sold on deferred payments. ... With valuers and banks taking a more cautious stance on the market, buyers who have purchased these units as investments are likely to face (1) lower loan-to-valuation (LTV) ratio of 70% or less for investors; and (2) significantly lower valuation from purchase on the back of falling prices."
The report goes on to list selected condo projects that will obtain TOP in 2009.

Of the 25 projects listed, 1 has a price change of 0% (Casa Merah) and 5 have a price change of -5% to -11% (Tierra Vue, Ardmore II, RiverGate, Grand Duchess at St Patrick's, and One-North Residences).

This means that 6 out of the 25 condo developments are now selling at launch price or lower!

Fortunately for some investors and owners, the following projects are still sitting on double-digit profits: One Jervois, Carabelle, ClementiWoods Condominium, The Inspira, Imperial Heights, The Centris, Newton One, The Esta, The Beacon, and Tribeca.

But for how long?

Will we hear of more stories like the couple who got stuck with property?

veerapan-- 14-01-2009 08:07 PM

I really cant wait for property prices to crash. :) That makes the two of us..

Want-See-Report-- 15-01-2009 02:08 PM

Do you have a link to this Citi report?

Volunteer-- 15-01-2009 02:33 PM

I'll volunteer one link to the said report:

for how long-- 15-01-2009 04:39 PM

>But for how long?
The Centris is already in trouble, going by the aggressive help they're giving to the DPS buyers- mortgage roadshows and all. See yesterday's Straits Times back page.

Justwanttostayinajob-- 02-02-2009 01:58 PM

I have been praying hard for property market to crash. Hopefully price can crash another 40% or more. I sincerely hope so.

solarius-- 02-02-2009 02:18 PM

my friend...there's a difference between being greedy and being realistic...being greedy doesn't only mean wanting more $$$

dontmakemelaugh-- 02-02-2009 05:00 PM

I have been hunting for a decent condo, but what you say of an impending price crash is simply not there...its a tug of war out there

Observer-- 04-02-2009 10:19 AM

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.

flaw-- 04-02-2009 11:36 AM

Dear Observer, Your holding power argument can be applied to stocks and shares too, but the fact that the stock market has already crashed more than 50% shows there's a flaw in such arguments. Besides holding power, many many other factors come into play such as demand, supply, jobs, income, bankruptcies, failed investments, foreign investments, sentiments, etc etc. It is well known that the property market lags behind the stock market. And we ARE already in the beginning of a property crash.

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