How much will the price drop?

[richwang]

Is there anyone having a pricing model to calculate how much the price will drop? My guess is 10% - 20%. Here is my crude calculation:

Imgine someone with S$300K cash in hand. In the old rule (20% down paymen), together with the 80% money borrowed from bank, he could afford S$1.5M property.
Now with the new rule (30% down payment), he can only afford S$1M property. So the property price will need to drop from S$1.5M to S$1M. That is $0.5M / $1.5M = 33%.
Of course, the developer will will drop that much, the buyer will have to save more. Let's take the mid point, the price will drop about 15%. And give it a range, so the price will drop 10% - 20%.

Any professional has better model? Taking into the population change, overall economy inputs, interest rate, piple line suply, etc, etc.

I am wondering how the developers come up with the price they bid for a land ... or how the govenment decide how much land to release.

Thanks,
Richard

[Squall8888]

I don't see it this way. Not everyone is limited by the 70% rule. Coupled with the strong (and growing rental), worst scenario is prices remain the same. If you are seller, will you sell? I assume most sellers are investors. Not many sellers are home owners - sell already move where? Of course, there are some who need to sell urgently like those who buy HDB and need to dispose off their private but then again, how many people will buy HDB taking the new rules into consideration?

And lastly, sell already do what with the money? Buy another property, you will need to come up with 30% DP. Might as well hold and collect the high rental. No difference anyway. 3 years already collect how much rental? And low interest + strong economy, the worst is 5% IMO.

I can see your point. Your point is that people got not enough money to buy private but yet, die die want to buy. In other words, sellers and developers lower their price to allow "unworthy" buyers to buy. Don't think it works this way. Those without enough money will get filtered off. Another market segment will fit them. Very small MM units. Also, based on the current situation, it is not as if there are no buyers. Although it is slower, units are still getting sold. Unless 6 months without a single transaction, I don't think prices will drop 20%. As I mentioned, maybe a few weak owners selling below market price but won't have that much transactions to make an impact. Don't forget, the last few downturns are caused by economic meltdown (absent for now) and rental dropped 50% during 2008/2009. Based on these 2 factors, I seriously doubt of any major price correction.

Is there anyone having a pricing model to calculate how much the price will drop? My guess is 10% - 20%. Here is my crude calculation:

Imgine someone with S$300K cash in hand. In the old rule (20% down paymen), together with the 80% money borrowed from bank, he could afford S$1.5M property.
Now with the new rule (30% down payment), he can only afford S$1M property. So the property price will need to drop from S$1.5M to S$1M. That is $0.5M / $1.5M = 33%.
Of course, the developer will will drop that much, the buyer will have to save more. Let's take the mid point, the price will drop about 15%. And give it a range, so the price will drop 10% - 20%.

Any professional has better model? Taking into the population change, overall economy inputs, interest rate, piple line suply, etc, etc.

I am wondering how the developers come up with the price they bid for a land ... or how the govenment decide how much land to release.

Thanks,
Richard

[jasonyap]

At the first place, your calculation is wrong, so as your mindset.

300k cash can't afford 1.5m, probably you've forgotten bout the stamp duty and so...

The down payment increased from 20 to 30 does not means the price will drop by 33%. Don't be naive!

With the current strong growth, it would be shame if the price drop by single %. I presume property price will increase steadily in next few years.

[nobrainer32007]

Squall8888, can tell that you are a seasoned investor / observer, unlike those who tok c*k sing song with no fundamentals.

Mark my word, based on the fundamentals of demand (open immigration policy unlike that of Japan for example; IR effects attracting investors from China, Indonesia and Malaysia who come gamble, shopping and seek medical treatment and at the same time send kids to school in Singapore) and supply (land scarce country - forget about short term imbalance as it will correct in mid-to-long term - the only way is up - both in price and plot ratio), prices of mid-tier and high end properties will rise at least by 30% in 5 years' time.

2003 got SARs. Any major impact when we have H1N1 in recent years.
2008 got Lehman collapse. Any major impact when government in Middle East and Europe almost went bankrupt recently?

Message : People learned and adapt to adversities.

We need a major new event (like World War III) to property prices in Singapore to collapse by 30 - 50%. What is the probability??


For those interested and with vested interest, ignore all those noises and focus on the fundamentals

I don't see it this way. Not everyone is limited by the 70% rule. Coupled with the strong (and growing rental), worst scenario is prices remain the same. If you are seller, will you sell? I assume most sellers are investors. Not many sellers are home owners - sell already move where? Of course, there are some who need to sell urgently like those who buy HDB and need to dispose off their private but then again, how many people will buy HDB taking the new rules into consideration?

And lastly, sell already do what with the money? Buy another property, you will need to come up with 30% DP. Might as well hold and collect the high rental. No difference anyway. 3 years already collect how much rental? And low interest + strong economy, the worst is 5% IMO.

I can see your point. Your point is that people got not enough money to buy private but yet, die die want to buy. In other words, sellers and developers lower their price to allow "unworthy" buyers to buy. Don't think it works this way. Those without enough money will get filtered off. Another market segment will fit them. Very small MM units. Also, based on the current situation, it is not as if there are no buyers. Although it is slower, units are still getting sold. Unless 6 months without a single transaction, I don't think prices will drop 20%. As I mentioned, maybe a few weak owners selling below market price but won't have that much transactions to make an impact. Don't forget, the last few downturns are caused by economic meltdown (absent for now) and rental dropped 50% during 2008/2009. Based on these 2 factors, I seriously doubt of any major price correction.

[devilplate]

some say STI and ppty price r correlated....

STI broke 3100pts!

[richwang]

some say STI and ppty price r correlated....

STI broke 3100pts!

Amazing! I have just bought some Genting Put Warrenty. In other words, I am betting Genting price to drop below S$1.8 in 127 days. Otherwise I will loss ALL my bets on this counter.

Will need to find some Put Warrenty for property stocks - simply because it seems everyone else is unbelievablely bullish.

Thanks,
Richard

[devilplate]

Amazing! I have just bought some Genting Put Warrenty. In other words, I am betting Genting price to drop below S$1.8 in 127 days. Otherwise I will loss ALL my bets on this counter.

Will need to find some Put Warrenty for property stocks - simply because it seems everyone else is unbelievablely bullish.

Thanks,
Richard

oo...u like to fight against the trend

y nid to drop so much until 1.8?? nvr keen on warrant

might as well short sell?

[bargain hunter]

but ppty stocks have not run up that much and they are so far away from 2007 peak prices. the "unbelievablely bullish" sentiment reflected in this forum and on the ground is not reflected in the stock price. maybe not so profitable to be bearish on ppty stocks.

i am happy u started this topic. the number of pple who slam u will give us an indicator of how many pple are bullish or get agitated by any talk of prices falling.

Amazing! I have just bought some Genting Put Warrenty. In other words, I am betting Genting price to drop below S$1.8 in 127 days. Otherwise I will loss ALL my bets on this counter.

Will need to find some Put Warrenty for property stocks - simply because it seems everyone else is unbelievablely bullish.

Thanks,
Richard

[bargain hunter]

remember i was saying hot money now flowing to stocks? apparently so leh and ppty had outperformed stocks for so long liao, now is stocks turn to outperform LOL.

some say STI and ppty price r correlated....

STI broke 3100pts!

[richwang]

but ppty stocks have not run up that much and they are so far away from 2007 peak prices. the "unbelievablely bullish" sentiment reflected in this forum and on the ground is not reflected in the stock price. maybe not so profitable to be bearish on ppty stocks.

i am happy u started this topic. the number of pple who slam u will give us an indicator of how many pple are bullish or get agitated by any talk of prices falling.

I also use other indicators on this forum: the number of people logged in. It used to be 600+ and sometimes 1000+. But now it can be as low as 200+. You can also see the replies are getting slower.

Funny enough, I also use the indicator of how many people coming up with dirty words:
If they are happy and truely believe the market will go up, they will smilling words.
If they are unsecure and fear the market will indeed go down, they tend to use dirty words.

So feel free to slam my views: I will just count how many dirty words as an indicator.

Thanks,
Richard

[richwang]

oo...u like to fight against the trend

y nid to drop so much until 1.8?? nvr keen on warrant

might as well short sell?

Well, I am indeed a trend follower: MACD of Genting has just turned negative. Price to Book Value is 6. In other words, the market believes the company can grow money at F1 speed. Early this month, it was still traded at S$1.8. That was less than 30 days ago.

Indeed, I've also bought the warrent with stike price of S$1.4. That's too aggresive. But the price on Aug 12 was below S$1.4. Even at that price, the Price to Book Value is still 4. So the market believes Casino can easily turn S$1 to S$4. Maybe they are right - I will then need to pay my tuition fees in 100 days time (when the warrent expires).

Thanks,
Richard

[devilplate]

remember i was saying hot money now flowing to stocks? apparently so leh and ppty had outperformed stocks for so long liao, now is stocks turn to outperform LOL.

gd la huat ar!!

[devilplate]

I also use other indicators on this forum: the number of people logged in. It used to be 600+ and sometimes 1000+. But now it can be as low as 200+. You can also see the replies are getting slower.

Funny enough, I also use the indicator of how many people coming up with dirty words:
If they are happy and truely believe the market will go up, they will smilling words.
If they are unsecure and fear the market will indeed go down, they tend to use dirty words.

So feel free to slam my views: I will just count how many dirty words as an indicator.

Thanks,
Richard

actually i am surprised tat there r still some ppl very bullish over here...

on the ground, all the buyers r hoping to get a bargain deal now....

[devilplate]

Well, I am indeed a trend follower: MACD of Genting has just turned negative. Price to Book Value is 6. In other words, the market believes the company can grow money at F1 speed. Early this month, it was still traded at S$1.8. That was less than 30 days ago.

Indeed, I've also bought the warrent with stike price of S$1.4. That's too aggresive. But the price on Aug 12 was below S$1.4. Even at that price, the Price to Book Value is still 4. So the market believes Casino can easily turn S$1 to S$4. Maybe they are right - I will then need to pay my tuition fees in 100 days time (when the warrent expires).

Thanks,
Richard

my question is: y u dunwan to short sell instead?

btw, reminds me of a fren who ask me to short genting at 1.8....u r in a better position definitely

[bargain hunter]

i agree with u for your indicators. but how u keep track of the dirty words? count every post?!

i also noticed that other than the bickering on "how to get from newton to anson in 5mins" last week, the forum is actually very quiet.

I also use other indicators on this forum: the number of people logged in. It used to be 600+ and sometimes 1000+. But now it can be as low as 200+. You can also see the replies are getting slower.

Funny enough, I also use the indicator of how many people coming up with dirty words:
If they are happy and truely believe the market will go up, they will smilling words.
If they are unsecure and fear the market will indeed go down, they tend to use dirty words.

So feel free to slam my views: I will just count how many dirty words as an indicator.

Thanks,
Richard

[bargain hunter]

this is a forum mah. talk is free, last chance to talk up market here.

but more seriously, this is good. Then Richard can get more data to analyse based on the number of pple who slam him.

actually i am surprised tat there r still some ppl very bullish over here...

on the ground, all the buyers r hoping to get a bargain deal now....

[devilplate]

i agree with u for your indicators. but how u keep track of the dirty words? count every post?!

i also noticed that other than the bickering on "how to get from newton to anson in 5mins" last week, the forum is actually very quiet.

earlier on, bicker about the number of MRT stops to orchard

all busy viewing and bargaining now....no time to come here

[proud owner]

this is a forum mah. talk is free, last chance to talk up market here.

but more seriously, this is good. Then Richard can get more data to analyse based on the number of pple who slam him.

the 2 most bullish people : Jlrx and Reporter ..both disappeared ...


or have they reincarnated to be someone else now ? using other names ?

[devilplate]

the 2 most bullish people : Jlrx and Reporter ..both disappeared ...


or have they reincarnated to be someone else now ? using other names ?

u r so emotional attached wor?

busying hunting for gd deals la....now all the buyers say 'cooling measures' sure drop!!! den offer 5-10% lower market value

[august]

Mark my word, based on the fundamentals of demand (open immigration policy unlike that of Japan for example; IR effects attracting investors from China, Indonesia and Malaysia who come gamble, shopping and seek medical treatment and at the same time send kids to school in Singapore) and supply (land scarce country - forget about short term imbalance as it will correct in mid-to-long term - the only way is up - both in price and plot ratio), prices of mid-tier and high end properties will rise at least by 30% in 5 years' time.

need to also look at regional or other asian property mkts lah, high end are influenced by influx of foreign funds & investors, and these wont come in if Sg is relatively overpriced compared to others.

[bargain hunter]

maybe all chiong into stock market liao. may find them in some stock forum hahaha. maybe if u see posts like genting hits new high of $3.00. u will know who it is.

earlier on, bicker about the number of MRT stops to orchard

all busy viewing and bargaining now....no time to come here

[proud owner]

u r so emotional attached wor?

busying hunting for gd deals la....now all the buyers say 'cooling measures' sure drop!!! den offer 5-10% lower market value

the 2 of them are like God to me

suddenly they disappeared .. i am so lost

should i still practise "Properties are to be bought only, and not sold ... unless its enbloc " ??/

should i still be looking out for NEW HIGH ??

[proud owner]

need to also look at regional or other asian property mkts lah, high end are influenced by influx of foreign funds & investors, and these wont come in if Sg is relatively overpriced compared to others.

true


what puzzled me was : why GS fund sold Chevron House at a loss ?

although they took profit on DBS tower 1 n 2 ...


why take profit ? and cut loss ?
did GS fund think property price in spore "there" already ? cant go higher ?

or theres internal problem that they need to liquidate them ?

[bargain hunter]

if i m not wrong, he advised to start chanting if prices do indeed start to go down so nothing's changed. just chant loyally whether market goes up or down.

the 2 of them are like God to me

suddenly they disappeared .. i am so lost

should i still practise "Properties are to be bought only, and not sold ... unless its enbloc " ??/

should i still be looking out for NEW HIGH ??

[devilplate]

need to also look at regional or other asian property mkts lah, high end are influenced by influx of foreign funds & investors, and these wont come in if Sg is relatively overpriced compared to others.

how to justify whether the market price is overpriced?

i been hearing poor china ppl complaining...NO JOBS! they actually scared of graduation....'pi yeh'=='shi yeh'....i even heard stories tat fresh graduates over there offering themselves to work first 1-2yrs FOC just to get the job experience

[bargain hunter]

From BT last week

"The property is being sold by Goldman Sachs funds, which are walking away with a loss, having paid $730 million or about $2,780 psf for the property in 2007. That acquisition was funded mostly by a consortium of lenders headed by Standard Chartered. The latest transaction is slated for completion by late October, ahead of the expiry of the financing facility, sources say."

it appears that either they don't want or can't refinance.

true


what puzzled me was : why GS fund sold Chevron House at a loss ?

although they took profit on DBS tower 1 n 2 ...


why take profit ? and cut loss ?
did GS fund think property price in spore "there" already ? cant go higher ?

or theres internal problem that they need to liquidate them ?

[bargain hunter]

later in the article, it also said

"The US bank's funds also bought Hitachi Tower, behind Chevron House, in early 2008 for $811 million or about $2,900 psf of NLA. The 999-year leasehold office tower, fronting Collyer Quay, is expected to be put up for sale within the next few months given that the financing facility on the asset - also extended by a Stanchart-led consortium - is said to end early next year."

they are selling somemore!

[proud owner]

Is there anyone having a pricing model to calculate how much the price will drop? My guess is 10% - 20%. Here is my crude calculation:

Imgine someone with S$300K cash in hand. In the old rule (20% down paymen), together with the 80% money borrowed from bank, he could afford S$1.5M property.
Now with the new rule (30% down payment), he can only afford S$1M property. So the property price will need to drop from S$1.5M to S$1M. That is $0.5M / $1.5M = 33%.
Of course, the developer will will drop that much, the buyer will have to save more. Let's take the mid point, the price will drop about 15%. And give it a range, so the price will drop 10% - 20%.

Any professional has better model? Taking into the population change, overall economy inputs, interest rate, piple line suply, etc, etc.

I am wondering how the developers come up with the price they bid for a land ... or how the govenment decide how much land to release.

Thanks,
Richard

actually i did think of this as well ..

in your example .. its the group of buyers who has 300k


in my own thoughts ..theres the group with 600k who could afford 3 mio property ... but now can only afford 2-2.2 mio property

mind you these people are not poor ... to have $500-700 cash ...

so should they wait and safe more ?

or should seller be 'realistic' ?

Spore GDP how many % ? 10 % ?

property price from jan 2010 to sep 2010 went up how many % ?

some cases ..prices are up almost 10 % every quarter ...

sustainable ?

[devilplate]

the 2 of them are like God to me

suddenly they disappeared .. i am so lost

should i still practise "Properties are to be bought only, and not sold ... unless its enbloc " ??/

should i still be looking out for NEW HIGH ??

starting to see more opportunistic water ghosts appearing in the forum lately....

[august]

how to justify whether the market price is overpriced?

i been hearing poor china ppl complaining...NO JOBS! they actually scared of graduation....'pi yeh'=='shi yeh'....i even heard stories tat fresh graduates over there offering themselves to work first 1-2yrs FOC just to get the job experience

that has been the case for yearsssssssss ...
so wat? SG property is not going to tank or chiong bcos of such ppl in china lol