QE has officially ended. No more easy and hot money.
Interests are expected to stay low for a while more.
Ultimate Underdog
QE has officially ended. No more easy and hot money.
Interests are expected to stay low for a while more.
The three laws of Kelonguni:
Where there is kelong, there is guni.
No kelong no guni.
More kelong = more guni.
Newbie
Does that translate to increase in property prices?
Ultimate Underdog
Do you think it will cause increase in property prices?Originally Posted by Reuben
My opinion is the reverse, though China banks are a huge threat still because of some of the ways they deal with credit as seen in articles sent by Archachon.
QE ended means lesser excuse for hot money flowing worldwide.
Interest rate doesn't affect SG much because the TDSR supersedes it.
The three laws of Kelonguni:
Where there is kelong, there is guni.
No kelong no guni.
More kelong = more guni.
Newbie
Can u kindly enlighten me how will the property price increase? As far as I know, QE ends is not a good thing right? If QE ends means property price increases then I think another round of CM will be introduced which I don't think the GOV wants as they are gearing up for the GE2016. Am I right?
Newbie
QE ending may affect long-term borrowing rates.
For the typical Singapore mortgages with Sibor/SOR fixing, no effect.
The event ro look out for the Singapore mortgage payers is when Fed starts hiking fed fund rate next year Sep (which market is pricing it).
Newbie
Sorry i thought Mr Kelonguni state interest rate will go low. I guess he means interest in buying prooperty will go low
Newbie
May I know why it does not affect our singapore mortages rates?
Newbie
The intended effect of QE is to create a ready buyer of US t bills, and that in turn drives yield very low (because Fed will buy at whatever yield). As a result, interest rates which have a direct relation with bond yield (and inverse relation with bond price) can stay low. conversely, removing QE will move bond yield upwards and will actually start moving US interest rates up.
the interest rate that Fed promise to keep low is the rate that Fed charges to banks when they borrow from Fed. That interest rate actually have a lesser corelation to commercial interest rate charged for housing loans etc than the bond yield.
ipropertyguru
The motivation behind removing this QE is because FED feels economy is picking already. With US economy picking up, what does it translate to their global business, how does it has implication on our economy then? How will a good US economy result in their staff movement overseas? Especially to Singapore?
Will property price goes up or down in an improving economy?
Junior
The easiest indication to determine property price direction is to ask yourself if u have more cash stashed up in your bank account now than ever before and u ask others the same question. If more people can say they have more cash now, probably property will remain steady or trending upward.
Ultimate Underdog
What I am unsure of is whether these few years of good cash has anything to do with QE over the last 6 years. If so, the road forward will be very interesting.
The three laws of Kelonguni:
Where there is kelong, there is guni.
No kelong no guni.
More kelong = more guni.
ipropertyguru
I have more cash stashed up as the TDSR and ABSD has prevented me from going in to shop 1 more unit.
Newbie
The world is moving towards fragmented monetary policy actions. EU and Japan prob keeping its zero rate running, while UK and US moving towards rate hike in next year end.
China is prob keeping accomodative monetary policy to boast weak economy.
Singapore interest rate will move in tandem with US rate hike, but Singapore economy is not going to improve as well as US due to ongoing restructuring not bearing fruits.
ipropertyguru
The best outcome for this QE Ending is to prompt the gov to remove TDSR and ABSD. Over the 2 years cash has been piling up, coupled with the possible dip in price by guniang sellers (borrowed phrase from Bro BJ), I hope to go shopping for more property.
Newbie
That is interesting qns
If i say that by 2016 end, you can earn risk-free in US bond yields at 4% or more, why risk your capital to invest in property yielding at a lower rate?
ipropertyguru
Make senese. How will the formation of Asian Infrastructure Investment Bank (AIIB) have implication on the interest rate? Singapore is a founding member too.
Junior
The greatest trick the Devil (inflation) ever pulled was convincing the world he (inflation) didn't exist.
ipropertyguru
SGX reacted neutral to the QE ending.
Senior
Leverage.
For the Taiwan rich, they need only 1 % down payment.
In the US before the crisis, they have cash back when buying property.
Newbie
I think no impact as AIIB is to provide financing, not to conduct monetary policy operations like QE
Newbie
Point taken - property is a good hedge against inflation
Newbie
Provided it's bought at the right time? Holding onto a home with falling prices and rising interest rates causing a loss in interest earnings and having to pay more interest can be a triple whammy.
Junior
At least half of my friends are waiting to purchase the next property, u can guess how much cash are currently rotting in the banks : )
Senior
Wow, got lots of rich friends, mine lots of them asking for OT on weekend.
Junior
People who invest in properties tend to plan for their finances well ahead, they also tend to be conservative. Property investors using the power of leverage actually able to accumulate cash faster because of the rental income. To prove my point, u can ask your property investor friends who owns multiple properties if they have less cash or more cash now.
Senior
More cash due to need to have at least 6 month of rental income per property.
Asset Rich Cash Poor are normally those who own one property.
There are expectation, where Asset Poor Cash Rich who own one property.
Ultimate Underdog
To balance the view a little, it is usually a combination of several years of servicing plus rental income plus property price appreciation that makes these multiple property owners cash rich.
My friend's brother in law has held to sell away properties to keep up with mortgages sometime in early 2000s.
Another of my friend who has started servicing his mortgage as his newly added unit TOP. Cash flow position is actually rather negative due to maintenance charges as well, but he has a huge salary so no problem.
The main question: does property always (note: always) make one rich, or people with high incomes tend to buy property? Food for thought.
Last edited by Kelonguni; 30-10-14 at 21:31.
The three laws of Kelonguni:
Where there is kelong, there is guni.
No kelong no guni.
More kelong = more guni.
Junior
Do a spreadsheet and you will find the answer..... I found mine when I was 27.
Many just imagine.... They don't even do a do fact sheet.... Do it and you will find your answer....
Indomie has the answer.... Arcachon also has the answer... And so has many who shared....
Others are still searching....
Junior
Property investor has more cash because:
1. More stingy with money
2. Has less desire to buy expensive clothes and cars
3. Not required to spend expensive gifts to impress woman, all u need to do just mention all the properties u own
4. Work harder in the office because we are more motivated to get promoted
5. We receive 2 months security deposit from tenant.
Ultimate Underdog
Bro, I have already done the calculations in spreadsheet and also collecting rent currently.
Property investment makes long term sense for people of certain income level. But we cannot assume it to be so and the only way for all. The huge run up in the least few years has made a fortune for many including myself, and provided a sense of unbeatable euphoria, but we really should be a little more cautious threading forward in current climate at least over the next couple of years.
The three laws of Kelonguni:
Where there is kelong, there is guni.
No kelong no guni.
More kelong = more guni.
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