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carbuncle
10-08-12, 13:47
Is this the tipping point?

by Tan Chin Keong
04:45 AM Aug 10, 2012

For the last three years, the trend in Singapore's residential
property market has been virtually one-directional: Up.
Despite the Government's repeated efforts to cool the market,
home prices have remained resilient and recently hit new highs.
It is not hard to see why.
Population growth has been on an uptrend, there has been a
housing shortage for years, and borrowing rates are currently
low.
I have mentioned these three forces separately in previous
editions of this column, but they bear repeating because two of
them are forming a confluence that is about to change the
market's status quo.
In my view, the days of steadily increasing residential property
prices are numbered, and I expect the private housing market to
correct moderately over the next 12 months.
The first and perhaps most fundamental change is the decline in
Singapore's population growth due to tighter immigration policy.
The Government has scrapped its scheme that allows foreign
investors to fast-track their permanent residency applications,
raised foreign-worker levies and lowered the maximum ratio of
foreign workers in companies' total workforce.
These policies are unlikely to be reversed in the near term. On
top of these, the Government may introduce further cooling
measures as it deems necessary.
National Development Minister Khaw Boon Wan has said he is
especially monitoring the market for shoebox residential units,
or those with gross floor area of less than 600 square feet. These
shoeboxes are popular because bigger units have become less
affordable for ordinary Singaporeans.
The second change is in the works. The market's decade-old
shortage of 90,000 units, based on my estimates, is now being
addressed, thanks to active project launches by the Housing
Development Board and record Government land sales over the
last one to two years.
From 2012 to 2015, my estimate is that a total of 140,000 to
150,000 residential units will be completed, enough to fully
compensate, by 2014 or 2015, for my estimated shortfall.
The third price force - low interest rates - is unlikely to change
soon. Given that the United States is likely to raise its policy
interest rate in the third quarter of next year at the earliest, low
mortgage rates are likely to persist for at least the next 12
months.
In addition, the Monetary Authority of Singapore's current policy
in favour of a strong Singapore dollar could continue to attract
fund inflows into the country and help keep local interest rates
subdued.
Low rates, tight housing supply even as new homes are being
built in the next few years and developers' pricing power given
their good balance sheets lead me to believe that the upcoming
residential price decline in the next 12 months will be moderate.
You may ask: Can we really call this a tipping point for the
market? Admittedly, that will depend on how long the change I
predict in the market would last. But considering that the change
in the two price forces I discussed above is fundamental in
nature, I believe that, at least, the one-directional price
movement we have seen so far will not be sustainable.
Furthermore, some sociologists may agree that it is in the best
interest of the Government to continue to try to keep a lid on
property prices.
The popularity of shoebox units is probably likely to lead to
households making decisions to have fewer or no children,
which would run counter to the Government's programme to
encourage larger families.
This is one demographic tipping point worth watching.

Tan Chin Keong is an analyst at UBS CIO Wealth Management
Research

radha08
10-08-12, 14:20
writer sold his house now waiting to buy:D

phantom_opera
10-08-12, 14:23
moderate = 1%, 0.5%, 3%, 10%??

The author obviously did not know the previous GLS top bidding price, 676psf for TM, 700psf for JLD, 720psf for Thomson

Moderating? CCR & Flora Road yes, near MRT OCR still got steam

phantom_opera
10-08-12, 16:48
香港中文大學經濟學系副教授莊太量解釋,雖然香港商舖租金不納入計算範圍,「但尖沙嘴舖租貴了,名店多了,附近住宅租金點都有影響,」同時租金人工上揚,令商販經營成本上升,令減價幾無可能,結果進一步拉高本港通脹率。此外,如港鐵加價推高交通開支、薪金上調等等「本土因素」,都令香港通脹率跑贏內地

Very similar to Singapore, rental of HDB + REITs + COE the main driver for high inflation

indomie
10-08-12, 17:35
This UBS guy doesn't want you to buy property. He want you to invest in junk bond, funds, and all sort of derivative products. He could not possibly giving you free advise out of his kind heart.

phantom_opera
10-08-12, 17:44
This UBS guy doesn't want you to buy property. He want you to invest in junk bond, funds, and all sort of derivative products. He could not possibly giving you free advise out of his kind heart.

you are too brutal :p

carbuncle
10-08-12, 18:02
brutal but i think he is right on this one....

solsys
10-08-12, 18:38
brutal but i think he is right on this one....

I got a bank trader friend who thinks property investors are people who feel property is the only way to make money using leverage......whereas all the financial people play with derivatives with leverage.....

We don't understand him and he doesn't understand us.... so why bother with the anal report.

phantom_opera
10-08-12, 19:40
the days of financial derivatives making huge pile of money is officially over ... the whole world is deleveraging and trust on bankers are now near zero degree and could go negative anytime

carbuncle
10-08-12, 20:53
i have only ever heard of children saying i wanna be a doctor, lawyer, engineer or scientist or even teacher when they grow up.

never have i heard any that mention BANKER.

children with all their pureness must be right.

Laguna
10-08-12, 21:08
i have only ever heard of children saying i wanna be a doctor, lawyer, engineer or scientist or even teacher when they grow up.

never have i heard any that mention BANKER.

children with all their pureness must be right.

Yes, becos banker is nvr taught in the school as a great professional..

but once they are in college and know what is going on, all of them want to be bankers.

U check, who want to be engineers now?

phantom_opera
10-08-12, 21:08
i have only ever heard of children saying i wanna be a doctor, lawyer, engineer or scientist or even teacher when they grow up.

never have i heard any that mention BANKER.

children with all their pureness must be right.

but b4 Lehman crisis, reckless investment bankers betting big big with client money were paid handsomely, if you were in investment banking 6-12m bonus was THE NORM, just read how much JP Morgan CEO and CIO (the highest paid Wall Street woman but resigned after London Whale) got paid last year

of course after Lehman, the sin of banks were exposed, one by one falling from grace .... but many still managed to resign with big payout to them :mad:

it is an extremely unfair world ... u can only pray that they will pay back in HELL :simmering:

indomie
10-08-12, 21:10
I have a cousin graduates with a financial degree. He is now working in a big bank as an analyst. One day my old grand uncle asked him what he really doing as a job. Knowing that my grand uncle would be confused with the financial jargons, he replied " I make up product to cheat other people's money". My great uncle said "okay I understand..!".

Eastboy
11-08-12, 02:39
im a banker but personally i know the mindset of bankers. property is simply too illiquid for our liking so we are kinda biased. but then again, i am a banker with very diverse portfolio, and i believe in accumulating assets as that's the most 'stable' way to generate passive income. more importantly, assets are safer 'bets' in the long term so to speak.

i am tired of the markets. i, the banker, am tired of banks too. there's so much rubbish going on i don't wanna criticize my own profession. :(

hyenergix
11-08-12, 08:01
Yes, becos banker is nvr taught in the school as a great professional..

but once they are in college and know what is going on, all of them want to be bankers.

U check, who want to be engineers now?

Sad to say that if you want to do well as an engineer, Singapore can be a tough place. For the same amount of effort in studies and at work, other careers can give much higher mileage.

phantom_opera
11-08-12, 08:03
The tipping point ... both Dow and gold had a minor reversal last night ... tipping point to the upside instead??

:D

hyenergix
11-08-12, 08:08
moderate = 1%, 0.5%, 3%, 10%??

The author obviously did not know the previous GLS top bidding price, 676psf for TM, 700psf for JLD, 720psf for Thomson

Moderating? CCR & Flora Road yes, near MRT OCR still got steam

The trend is to cut back on domestic helpers and cars. Hence OCR properties near MRT will continue to grow gradually.

hyenergix
11-08-12, 08:19
I believe developers are holding back their launches in Q2-Q3 2012. I'm expecting plum sites to be launched around Q4 2012 onwards to coincide with year end bonus and performance bonus. Buyers should hold back for a while for these sites, but be prepared for high psf.

Komo
11-08-12, 08:38
watching psf n apartment size will tell when is the tipping point for the mass market.... think it has yet to breach the affordability level if the economy stay as it is:D

Clim1688
11-08-12, 09:34
Wage inflation is going up and outpacing increase in housing prices.. So how to tip

ESP. Lots of people have cash waiting and waiting to enter

buttercarp
11-08-12, 09:52
ESP. Lots of people have cash waiting and waiting to enter

It is true.
Got a couple of friends who are waiting to chiong and buy property.
Few days ago, a close friend just told me she bought spottiswoode residences in 2010. Now then tell me probably slip of the tongue, and she told me not to tell anyone...... mabbe lots of people buy but never tell their friends.

phantom_opera
11-08-12, 09:56
It is true.
Got a couple of friends who are waiting to chiong and buy property.
Few days ago, a close friend just told me she bought spottiswoode residences in 2010. Now then tell me probably slip of the tongue, and she told me not to tell anyone...... mabbe lots of people buy but never tell their friends.

Tell only if got paper profit ... kiasu Singaporeans

If loss on paper, will never tell :p

Not to worry, food inflation is coming, MAS unlikely to achieve 4.5% inflation target due to high COE, rental and food prices in 2H2012

I told my friend about Archipelago 2br 850k... he said why so cheap :scared-4: ... I asked further he said he went to Watertown, 2br selling at much higher prices :o

samuelk
11-08-12, 10:26
Tell only if got paper profit ... kiasu Singaporeans

If loss on paper, will never tell :p

Not to worry, food inflation is coming, MAS unlikely to achieve 4.5% inflation target due to high COE, rental and food prices in 2H2012

I told my friend about Archipelago 2br 850k... he said why so cheap :scared-4: ... I asked further he said he went to Watertown, 2br selling at much higher prices :o
that's the problem. If its too good to be true, its probably is. When I went to view flamingo v in the initial launch, I was bow over by the design. I ask gor further discount. The agent say no. Then when I walk away he say wait, I got some units that is further from the pool. Tail end of the block, within the price you are asking for. I ask is it ?. Why. He hesitate and say not good facing ...blah blah blah.. Then finally say the G word. Graveyard. :scared-1:

some other buyer near by also heard and started to ask about this. Sad to say it went down hill from there. But its still a almost sold out proje t. :beats-me-man:

ekl2ekl2
11-08-12, 16:33
It is true.
Got a couple of friends who are waiting to chiong and buy property.
Few days ago, a close friend just told me she bought spottiswoode residences in 2010. Now then tell me probably slip of the tongue, and she told me not to tell anyone...... mabbe lots of people buy but never tell their friends.

Why are there still so many people with cash on hand? Locals or foreigners?
Since 2009, prices have been going up and up with no real correction insight.
Those who sold in 2010 and 2011 are surely regretting right now.
Many of you think that with inflation and low interest rate. this bull run will continue. There is still no end in sight for the number of people who are still cheonging, not even Euro crisis and CMs can hold them back.

In reality, prices are running away from affordibility for first time buyers though this is partly compensated by the shrinking of the unit size.

Will this party ever going to end?

phantom_opera
11-08-12, 16:40
Why are there still so many people with cash on hand? Locals or foreigners?
Since 2009, prices have been going up and up with no real correction insight.
Those who sold in 2010 and 2011 are surely regretting right now.
Many of you think that with inflation and low interest rate. this bull run will continue. There is still no end in sight for the number of people who are still cheonging, not even Euro crisis and CMs can hold them back.

In reality, prices are running away from affordibility for first time buyers though this is partly compensated by the shrinking of the unit size.

Will this party ever going to end?

Name an relatively safe, alternative investment in Singapore that can hedge 5-6% inflation? Corporate bond / bank preference shares needs private placement of 250k ... u have the guts and know-how??

Stocks nowadays are range bound, many people were burnt during Lehman e.g. COSCO, the volatility is only for the strong hearts, REITS are risky (read about recently closure of Banquet foodcourts and check out whether CapitalMall can continue to squeeze more tenants and increase rent or not)

radha08
11-08-12, 23:07
It is true.
Got a couple of friends who are waiting to chiong and buy property.
Few days ago, a close friend just told me she bought spottiswoode residences in 2010. Now then tell me probably slip of the tongue, and she told me not to tell anyone...... mabbe lots of people buy but never tell their friends.

but u just told the whole world....:D

phantom_opera
11-08-12, 23:32
IS this the tipping point?

http://www.whocrashedtheeconomy.com/realhouseprices1880to2012.png

kane
11-08-12, 23:42
but u just told the whole world....:D

They were afraid to be the laughing stock if they bought at the peak mah. Better play safe. Wait till got some unrealised gains then say.

Komo
12-08-12, 00:58
...ok I admit recently I started losing from the stock market after a long winning run:p in the past when this happened it was my tipping point :o

Alan Tam
12-08-12, 01:33
Wage inflation is going up and outpacing increase in housing prices.. So how to tip

ESP. Lots of people have cash waiting and waiting to enter

Ya, I agreed with you, inflation rate are so high now, building and labour cost also went up so much how to tip.

Also people/Singaporean are rich and do not have much place to invest and put their money.

A piece of paper only for 10 years of use already cost almost $100,000 what is $1,000,000 for a condo, which you can sell it with profit after 10 years, if you believe in inflation and the next high in property.

focus
12-08-12, 12:55
I thought I was dreaming...
But... today an email from Savills read...

"RiverSails - VVIP Preview, 20th September 2012, 920 units
starting from $4XXpsf"

$4XX? Even if it's $500psf... it's uh... unbelievable rite?

ekl2ekl2
12-08-12, 13:24
I thought I was dreaming...
But... today an email from Savills read...

"RiverSails - VVIP Preview, 20th September 2012, 920 units
starting from $4XXpsf"

$4XX? Even if it's $500psf... it's uh... unbelievable rite?

Its $4XX k not $4XX pfs!

ekl2ekl2
12-08-12, 13:27
Name an relatively safe, alternative investment in Singapore that can hedge 5-6% inflation? Corporate bond / bank preference shares needs private placement of 250k ... u have the guts and know-how??

Stocks nowadays are range bound, many people were burnt during Lehman e.g. COSCO, the volatility is only for the strong hearts, REITS are risky (read about recently closure of Banquet foodcourts and check out whether CapitalMall can continue to squeeze more tenants and increase rent or not)

You are right.
But for those who are still cheonging right now, are they following the Dragon head or the Dragon tail?

phantom_opera
12-08-12, 14:28
You are right.
But for those who are still cheonging right now, are they following the Dragon head or the Dragon tail?

it is all about risk management ... the gearing ratio, the cash flow etc ... of course u always have policy risk, PAP tomorrow may decide to encourage procreation by crashing the property market e.g. banning owning 2nd property ... property down 40% overnight, people will then feel secure about having babies :p

phantom_opera
12-08-12, 14:29
Its $4XX k not $4XX pfs!

Must :gun3: the agent

carbuncle
12-08-12, 15:05
it is all about risk management ... the gearing ratio, the cash flow etc ... of course u always have policy risk, PAP tomorrow may decide to encourage procreation by crashing the property market e.g. banning owning 2nd property ... property down 40% overnight, people will then feel secure about having babies :p

More like sunday stay home make babies instead of visit showflats

focus
12-08-12, 16:31
Its $4XX k not $4XX pfs!

Lol.. ok.
So I'm not dreaming.. the knight frank guy who sent me this must be dreaming.

Those are his exact words.. I only cut and paste.

regency321
13-08-12, 12:01
Wage inflation is going up and outpacing increase in housing prices.. So how to tip

ESP. Lots of people have cash waiting and waiting to enter

Agree with you on this. I have a number of colleagues and friends, as well as my wife's friends who are waiting on the sidelines anticipating a crash before they go in. Judging from the 'support', I am not sure whether prices will really crash or just suffer a minor correction should the global economy tank. We are also assuming sellers do not have the means to hold on to the property.