Property Prices Have Crashed (see graph)

Originally Posted by Unregistered

Crystal ball gazers are usually wrong. I would go contrarian against their views, just as I did against those run-of-the-mill stock analysts and benefited lots.

Long property!

Was it because you read the pessimistic report below by Citigroup in 2009?

Citi predicted in 2009 that "residential property prices in Singapore could fall another 35% bringing “prices back to 1998 levels”".

More pain to come for Singapore’s property market

Written by The Edge
Tuesday, 13 January 2009 14:08

IF YOU thought the local property market was fairly close to bottom and it was time to start looking at bargains, think again. That’s what US banking giant Citigroup says in a new report on Singapore property titled Bear Trap: Sell into Strength. The way Citi’s property analysts Wendy Koh and Tan Chun Keong see it, there is likely to be a lot more pain in Singapore property in year ahead before we will even see the glimmer of any gain.

Citi bases its pessimistic Singapore property outlook on deteriorating economic fundamentals. The US bank now expects Singapore economy to contract 2.8% this year following a mere 1.5% GDP growth last year and 7.7% growth in 2007. Citigroup strategists are forecasting the benchmark STI will fall to 1,500 again over the next few months before rebounding later in the year to current levels.

As the economy continues to contract, job losses mount and bank lending slows, Citi forecasts mid–tier to high-end residential property prices in Singapore could fall another 35% bringing “prices back to 1998 levels” or down nearly 45% from their peaks.

For the mid-tier segment, where prices have already fallen some 20% from their peaks a year ago, Citigroup forecasts prices are likely to fall further in the absence of an overall housing oversupply. “For luxury properties such as Ardmore Park that have (already) seen price correction of approximately 35% from a year ago, we think prices could potentially fall by another 30-40% to reach the 2003 and 1998 levels,” the Citi report said. This implies a 55–60% decline from their peaks in 2007.

Over-priced mid-tier and high-end property won’t be the only segment impacted. Commercial property is likely to be as severely impacted as the residential. Average office rentals in Singapore fell over 18% quarter-on-quarter in October-December 2008 — the steepest quarterly decline since 2001.

Citi forecast average office rental rates to hit $6 psf later this year. “The rapid downsizing across industries and emergence of shadow space, coupled with limited access to capital, is expected to drive both rentals and capital value down by 60% and 50% from current levels to $6 psf and $1,200 psf respectively,” Citi report said.

Citi is advising clients to take the opportunity in the current stock market rally to sell property stocks that have recovered 30% from their 2008 lows even as economic fundamentals have continued to deteriorate. “We believe the current (market) rally is not sustainable and recommend investors sell into it, with the exception of Allgreen.”

Citigroup last week downgraded major property stocks like CityDev, Keppel Land and Wing Tai to “sell”, while retaining its previous “sell” rating on the property giant CapitaLand.

Originally Posted by Unregistered

Was it because you read the pessimistic report below by Citigroup in 2009?

Citi predicted in 2009 that "residential property prices in Singapore could fall another 35% bringing “prices back to 1998 levels”".

They got it wrong then, and they will get it wrong again.

Originally Posted by Unregistered

They got it wrong then, and they will get it wrong again.

You never use one point of reference. That's why I look at fundamentals first and foremost, then supplement that analysis with opinions of bank analysts and developers.

Cdl's comment is illuminating. If you follow mr kwek's public comments, he is always bullish about the property market, sometimes irrationally so. That they have sounded a warning as well is interesting.

The case to be long property is basically anchored on excess global liquidity, and for the reasons alluded to earlier, is hard for me to buy into wholeheartedly.

Originally Posted by Unregistered

You never use one point of reference. That's why I look at fundamentals first and foremost, then supplement that analysis with opinions of bank analysts and developers.

Cdl's comment is illuminating. If you follow mr kwek's public comments, he is always bullish about the property market, sometimes irrationally so. That they have sounded a warning as well is interesting.

The case to be long property is basically anchored on excess global liquidity, and for the reasons alluded to earlier, is hard for me to buy into wholeheartedly.

you sound like you believe property crash or recession is nearing. then again, so were the agents back in 2009. then again, they didn't come true.

when USA comes through with yet another QE3, the hot money will yet again flow into Asia countries, and exactly where do they go to?
a) property
b) gold

as such, as long as we have this 'QE' again and again, the prices will continue to shoot up again, fundamentals or not.

Of course, they cannot sustain... but when will it happen? 2 yrs? 5 yrs? who knows another 10 years before the crash? by then, yes, the crash will come, but gosh, you would be wasting another 10 yrs waiting for the prices to correct itself and ... how miserable these 10 years are.

Originally Posted by Unregistered

you sound like you believe property crash or recession is nearing. then again, so were the agents back in 2009. then again, they didn't come true.

when USA comes through with yet another QE3, the hot money will yet again flow into Asia countries, and exactly where do they go to?
a) property
b) gold

as such, as long as we have this 'QE' again and again, the prices will continue to shoot up again, fundamentals or not.

Of course, they cannot sustain... but when will it happen? 2 yrs? 5 yrs? who knows another 10 years before the crash? by then, yes, the crash will come, but gosh, you would be wasting another 10 yrs waiting for the prices to correct itself and ... how miserable these 10 years are.

Fair enough. I grant you that I have no idea when the crash is going to come, and I have admitted as much.

In life, you never know anything for certain, but you play the odds as best you can, and then you hope for the best. Today, you have most indicators pointing to an overpriced market, and one (continued excess liquidity) pointing to further potential upside.

So with such odds I rather sit on the sidelines and wait for the downturn in peace, as opposed to jump into the mkt hoping for a small uptick in pricing, and exposing myself to a large downside risk and many sleepless nights.

On the off chance that prices jump another 30%, I'm at peace with myself cos I made a carefully and rationally considered decision not to go in. On the other hand, if I jump in and prices fall 30%, I will kick myself for following the crowd even when I as aware of all the obvious red flags.

Singapore property prices will continue to rise albeit at a slower rate

Low interest rates will be here for a long time. The Fed already said so.

Anyway, with Singapore's limited land supply and high demand for properties (not only from locals but foeign investors that see the strong SGD a plus as opposed to the weaknening USD), prices will likely rise over the long run. Thos who bought with a long time horizon for their own stay should not be concerned even if price corrects. Any correction in Singapore property prices is an opprtunity to buy more properties.

Many of Singapore's rich and famous millionaires and billionaires make their fortune from property.

I sold off my property recently, and the reasons were simple. 8 out of 10 people i speak to think property will stay or increase.

So its great because people are going ahead with their property purchases, taking on more debt, leveraging up, some to the effect of straining themselves quite abit. So the liquidity is being drained out. For every property crash to happen you must have the debt building process to take place.

So when the property markets make a turn back, well there re not many people with much ammo left around. hallelujah...

Originally Posted by Unregistered

Singapore property prices will continue to rise albeit at a slower rate

Low interest rates will be here for a long time. The Fed already said so.

Anyway, with Singapore's limited land supply and high demand for properties (not only from locals but foeign investors that see the strong SGD a plus as opposed to the weaknening USD), prices will likely rise over the long run. Thos who bought with a long time horizon for their own stay should not be concerned even if price corrects. Any correction in Singapore property prices is an opprtunity to buy more properties.

Many of Singapore's rich and famous millionaires and billionaires make their fortune from property.

fully agree. as someone calculated above, prices are very much affordable now. the young people who are complaining aren't willing to go to outskirts to live. they should learn from the hong kongers, who are already crowding out once unpopular locations such as sha tin. we still have the northwest, a big part of north east, tekong and ubin.

Originally Posted by Unregistered

Singapore property prices will continue to rise albeit at a slower rate

Low interest rates will be here for a long time. The Fed already said so.

Anyway, with Singapore's limited land supply and high demand for properties (not only from locals but foeign investors that see the strong SGD a plus as opposed to the weaknening USD), prices will likely rise over the long run. Thos who bought with a long time horizon for their own stay should not be concerned even if price corrects. Any correction in Singapore property prices is an opprtunity to buy more properties.

Many of Singapore's rich and famous millionaires and billionaires make their fortune from property.

I used to believe that property prices will continue to increase given the limited land area in Singapore. But after reading this forum, I am quite convinced we are at a high. I think the negative dude is quite convincing and the positive dudes sound like property agents.

Originally Posted by Unregistered

fully agree. as someone calculated above, prices are very much affordable now. the young people who are complaining aren't willing to go to outskirts to live. they should learn from the hong kongers, who are already crowding out once unpopular locations such as sha tin. we still have the northwest, a big part of north east, tekong and ubin.

that's what the Amercians are dreaming then as well. They always and have always thought that property will continue to rise. What now for Fannie Mae and Freddy?

Having real examples just at the other end of the globe is not preventing us to think likewise. Perhaps we should be more prudent in managing our sums again.

There are some truth in Tony Tan and Khaw Boon Wan's words where they commented that things won't be moving well half a year to 3 yrs from now. Even whilst looking at the global markets, the corporate profits are not moving back to pre-2008 levels. But property prices have soared way past previous records. Shouldn't that be shuddering?