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Thread: Home buyers should not be swayed by the fear of missing out

  1. #1
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    Default Home buyers should not be swayed by the fear of missing out

    EDITORIAL

    Home buyers should not be swayed by the fear of missing out

    Wed, Jan 17, 2018 - 5:50 AM


    What a difference a year makes.

    This time last year, many property investors and industry players were still hopeful that the authorities would roll back some of the cooling measures that had kept a lid on the recovery in the Singapore residential market.

    At the start of 2017, private home prices had fallen for the 13th consecutive quarter, slipping by 3.1 per cent in 2016. This followed a 3.7 per cent fall in 2015.

    When the government unexpectedly shortened the holding period for the Sellers Stamp Duty as well as lowered the rates in March 2017, some saw this as a prelude to easing the curbs.

    These hopes were quickly dashed by Monetary Authority of Singapore (MAS) managing director Ravi Menon when he presented the central bank's annual report in June. He said the remaining cooling measures were still necessary as underlying demand for private residential properties continues to be firm amid an environment of persistently low interest rates.

    Easing the measures would send a wrong signal, he noted.

    As it turned out, the decision to stand firm was correct.

    It was an easy spot to stay the course, given the front row seat that Singapore policymakers had in witnessing their counterparts in other countries struggling to douse an overheated property market in their big cities.

    But even the most attuned policymaker here would have trouble spotting the willingness of developers to bid aggressively for private residential land, which has contributed to the current en bloc fever.

    The intense spate of collective sales has indirectly lifted demand for and prices of properties as displaced owners seek alternative accommodation.

    While the government does not take a view on what home prices ought to be, it is duty bound to ensure a healthy, orderly and stable property market.

    It remains to be seen if recent record prices paid by land-hungry developers - both in the private and government land tenders - affect this balance.

    In its Financial Stability Review published in November, the MAS said that recent developments in the property market pose potential risks to stability, and that market players should take a medium-term view of demand-supply dynamics and act with caution.

    There is as yet no cause for concern. Home prices are only beginning to recover, underpinned by rising home purchases as well as falling rates of unsold and unoccupied homes.

    But the residential property market is largely driven by investor sentiment, and a nascent recovery can quickly turn into a runaway train fuelled by sheer momentum.

    Now that the pendulum appears to be starting to swing towards optimism, it would be prudent to send out regular reminders to buyers waiting on the sidelines not to rush into a purchase.

    As National Development Minister Lawrence Wong pointed out at the Real Estate Developers' Association of Singapore anniversary dinner in November, the number of private residential units available for sale is expected to double or more in the next one to two years.

    As at the third quarter of 2017, the latest quarter for which data is available, the vacancy rate remains at an elevated 8.4 per cent.

    This translates to more than 30,000 completed private homes that remain unoccupied.

    Meanwhile, developers sold 10,682 new private homes, excluding executive condominiums, in 2017.

    Home buyers would do well to look at the numbers and not be swayed by the fear of missing out.

  2. #2
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    Default

    Can only say Durian drop already still waiting for what.

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