Before you go out to buy that property NOW

[Leeds]

The Euro crisis is a serious one and the fall of any economy there will have a domino effect with the weaker economies falling one after another. The best and worst case scenarios had already been discussed but the market is still not really to face the reality that it is coming its way. With Europe in recession, China's exports will be badly hurt on top of their own domestic slowdown. The exposure of US, China and Asia with Europe cannot be under-estimated.

With cheap money now available in the global market, the Dec 7 cooling measure was to prevent foreigners from parking their excess funds onto our shore and safe guard our property market from over heating. The challenge for the government now is how to prevent the locals from over investment in property.

Just like foreigners with excess cash, the locals with some cash and cheap loans are taking advantage of the market now to buy into properties probably also because there isn't many investment options open to them.

Fortunately, with only 60% LTV allowed for second loan, many locals will not be ask to top up by banks when the crisis comes our way. However, the crisis will bring with us many related problems.

Even though our loans may be safe, finding tenant may be very difficult with rent so low that cannot even cover the interest payments. The crisis could bring with it a credit crunch and result in interest hike and many will not be able to service even the cheap loans.

It is a very real problem just waiting to happen. For those who have little buffer should stay away from property for now. Even if you think you may "miss out" ( possibly 15% gain as someone suggested in this forum) in the near term, you are still better off when the crisis hits. Of course to those who have the buffer, any crisis will not affect you much; you only feel less rich.

Before you go and buy that property NOW, ask yourself which category you belong to; with or without buffer?

Please do not take offense those who think otherwise. I am merely stating what seem to me quite obvious.

[Poloclub]

The Euro crisis is a serious one and the fall of any economy there will have a domino effect with the weaker economies falling one after another. The best and worst case scenarios had already been discussed but the market is still not really to face the reality that it is coming its way. With Europe in recession, China's exports will be badly hurt on top of their own domestic slowdown. The exposure of US, China and Asia with Europe cannot be under-estimated.

With cheap money now available in the global market, the Dec 7 cooling measure was to prevent foreigners from parking their excess funds onto our shore and safe guard our property market from over heating. The challenge for the government now is how to prevent the locals from over investment in property.

Just like foreigners with excess cash, the locals with some cash and cheap loans are taking advantage of the market now to buy into properties probably also because there isn't many investment options open to them.

Fortunately, with only 60% LTV allowed for second loan, many locals will not be ask to top up by banks when the crisis comes our way. However, the crisis will bring with us problems.

Even though our loans may be safe, finding tenant may be very difficult with rent so low that cannot even cover the interest payments. The crisis could bring with it a credit crunch and result in interest hike and many will not be able to service even the cheap loans.

It is a very real problem just waiting to happen. For those who have little buffer should stay away from property for now. Even if you think you may "miss out" ( possibly 15% gain as someone suggested in this forum) in the near term, you are still better off when the crisis hits. Of course to those who have the buffer, any crisis will not affect you much; you only feel less rich.

Before you go and buy that property NOW, ask yourself which category you belong to; with or without buffer?

Please do not take offense those who think otherwise. I am merely stating what seem to me quite obvious.

I actually think the Asia countries will be able to weather the storm quite well because of the very prudent government policies we have in place since the last financial crisis. SE Asia economy seems to be doing pretty well, so it China, and to a certain extend Japan

Actually the trouble in Europe will actually push more Europeans to some Singapore to look for job, so rental might not be that bad.

[Leeds]

I actually think the Asia countries will be able to weather the storm quite well because of the very prudent government policies we have in place since the last financial crisis. SE Asia economy seems to be doing pretty well, so it China, and to a certain extend Japan

Actually the trouble in Europe will actually push more Europeans to some Singapore to look for job, so rental might not be that bad.

China cannot do well with less exports to Europe and US. Singapore is more vulnerable than any SE Asia countries when crisis hits. More job loss is likely in Singapore than any SE Asia countries when crisis hits. When Europe is in recession, only the very rich can part their funds here or in the US (their preferred location)); the rest could not even travel. There will be no job for these foreigners in Singapore when crisis hits. In fact, more expats will be asked to go home instead.

Just curious to know if you have the mean now will you go out and buy that property now?

[roly8]

buy within your mean..


and

greed have no boundary..
just buy la and learn the hard lesson !

[jwong71]

I actually think the Asia countries will be able to weather the storm quite well because of the very prudent government policies we have in place since the last financial crisis. SE Asia economy seems to be doing pretty well, so it China, and to a certain extend Japan

Actually the trouble in Europe will actually push more Europeans to some Singapore to look for job, so rental might not be that bad.

be it a crisis in europe or globally, SE asia will not be spared too..

everywhere will do their best, cost cutting..

[Allthepies]

And with unstable political situation in Singapore, Singapore's future prospect is not as bright as it can be...

[eng81157]

And with unstable political situation in Singapore, Singapore's future prospect is not as bright as it can be...

huh?!
a win for WP in hougang constituency does not equate to political instability

[hyenergix]

True. Market is really slowing down in recent months. But inflation is catching up. Even developers were not so aggressive in the Jurong East land bid. Something is looming. Just be careful with your money.

[Arcachon]

Still remember QE1, QE2.......

http://en.wikipedia.org/wiki/Quantitative_easing

The property will chong again. Remember what LKY say, it due to excess money. Try removing CM1, CM2, CM3, CM4, CM5 see what happen to the property.

For those who don't know what is CM1 to CM5 please do a search.

Haut Ah.........

[phantom_opera]

True. Market is really slowing down in recent months. But inflation is catching up. Even developers were not so aggressive in the Jurong East land bid. Something is looming. Just be careful with your money.

Wah, 700+psf for top 3 bids with 12 bids submitted u call that NOT AGGRESSIVE Jervois Road tender only 8XXpsf leh

No need QE, as long as Us Fed come out and say zero interest rate till 2020, ho say liao ... all properties will be sold out overnight

[TheOnlyGayInTheVillage]

True. Market is really slowing down in recent months. But inflation is catching up. Even developers were not so aggressive in the Jurong East land bid. Something is looming. Just be careful with your money.

Not aggressive? Overshot analyst prediction of 700psf and expected launch price 1300-1500psf leh.

[Leeds]

No need QE, as long as Us Fed come out and say zero interest rate till 2020, ho say liao ... all properties will be sold out overnight

Given the unlikely case, Singapore will have no choice but to move away from using exchange rate to interest rate to curb inflation. In fact, there has been numerous calls from think tanks asking MAS to do that.

[paulho77]

Given the unlikely case, Singapore will have no choice but to move away from using exchange rate to interest rate to curb inflation. In fact, there has been numerous calls from think tanks asking MAS to do that.

if MAS switch to raising interest rates den our local banks will suffer frm over leverage in property loan when housing prices plunge...will MAS allow tat to happen ?

[Poloclub]

If Singapore raise interest rate, then they will have to raise CPF rate as well isnt it? Can government afford it?

[phantom_opera]

If Singapore raise interest rate, then they will have to raise CPF rate as well isnt it? Can government afford it?

Not really, last time FD 3% CPF OA still 2.5% ... but hoh, SGS bond rate must go up if they raise interest rate, that also means MND/URA/HDB cannot issue low interest rate bond anymore

Also value of corp bond (5-10y) will plunge ... those holding Genting perpetual bond @ 5% will cry until no tears ...

LTA used to pay almost 5% for 10y bond:

The Land Transport Authority (LTA) is pleased to announce the launch of its debut S$300 million, 10-year Bond issue. The LTA Bonds will be listed on the Stock Exchange of Singapore Limited (SES). This maiden issue will be LTA’s only issue for 1999. Denominated in units of S$10,000, the Bonds yield a coupon rate of 4.92% p.a., payable semi-annually in arrears.

[phantom_opera]

Date issued : 17 Feb 2012

The Housing and Development Board ("HDB") has issued S$385 million, 5-year Fixed Rate Notes (the “Notes”) under its S$12 billion Multicurrency Medium Term Note Programme ("MTN Programme").


2The Notes have a coupon of 1.105% per annum payable semi-annually in arrears. The Notes were issued on 16 February 2012 and will mature on 16 February 2017.

=> now it is almost free money for HDB/LTA etc ... low interest rate is good for them

[amk]

Given the unlikely case, Singapore will have no choice but to move away from using exchange rate to interest rate to curb inflation. In fact, there has been numerous calls from think tanks asking MAS to do that.

"numerous calls" ?? do you have any source to support your claim ?

separately, if investment is that easy, every one is rich already. You are very risk adverse, that's obvious. What investment returns on property have you achieved so far ? In 2003 SARS time, if you had worried about a collapse of SG economy, you would have missed out a great opportunity.

things are not so simple today. what you are stating are the superficial observations that any one can make. Hard numbers are actual land/sale prices, M2/3 figures, gov finances, population numbers, inflation numbers, long term gov bond rates, etc. all these point to a very strange environment.

[Leeds]

if MAS switch to raising interest rates den our local banks will suffer frm over leverage in property loan when housing prices plunge...will MAS allow tat to happen ?

That is part of business risks that banks need to consider when lending to its customers. I think MAS is more concern about people taking multiple loans than bank's exposure. You may recall during the 97' crisis, banks asked their clients to top up their undervalued properties and there were a lot of force sales. With 60% LTV for 2nd loan onward, not many people will get hurt this time. Banks are much more prudent than before with the various crisis they experienced.

[Leeds]

"numerous calls" ?? do you have any source to support your claim ?

separately, if investment is that easy, every one is rich already. You are very risk adverse, that's obvious. What investment returns on property have you achieved so far ? In 2003 SARS time, if you had worried about a collapse of SG economy, you would have missed out a great opportunity.

things are not so simple today. what you are stating are the superficial observations that any one can make. Hard numbers are actual land/sale prices, M2/3 figures, gov finances, population numbers, inflation numbers, long term gov bond rates, etc. all these point to a very strange environment.

Strange questions from you which are not relevant to my response on the possibility of MAS using exchange rate to curb inflation.

For sources, you might want to read recent ST on the discussions by think tanks on curbing inflation including MAS spoke person on the limitations of using exchange rate to curb inflation.

You may also want to read my main posting this thread on my concerns which are again not consistent with your questions or assumptions.

[stl67]

"numerous calls" ?? do you have any source to support your claim ?

separately, if investment is that easy, every one is rich already. You are very risk adverse, that's obvious. What investment returns on property have you achieved so far ? In 2003 SARS time, if you had worried about a collapse of SG economy, you would have missed out a great opportunity.

things are not so simple today. what you are stating are the superficial observations that any one can make. Hard numbers are actual land/sale prices, M2/3 figures, gov finances, population numbers, inflation numbers, long term gov bond rates, etc. all these point to a very strange environment.

yah agree.. sometime in life we need to take a bit of risk but not too much lah.
like someone said in the forum, it is good to analyse but don't over analyse. like some of my colleagues and close friends, most of them are at least master in banking related, they all have in common, analyse too much..

[lajia]

Strange questions from you which are not relevant to my response on the possibility of MAS using exchange rate to curb inflation.

For sources, you might want to read recent ST on the discussions by think tanks on curbing inflation including MAS spoke person on the limitations of using exchange rate to curb inflation.

You may also want to read my main posting this thread on my concerns which are again not consistent with your questions or assumptions.

there are many ways to curb inflation. maybe just get rid of COE and the inflation will drop...
just invest with our means and shall not dwell into this topic. If not, B will be watching and laughing as this thread intention sound like..."property will drop >50% by 2015???"

[Leeds]

there are many ways to curb inflation. maybe just get rid of COE and the inflation will drop...
just invest with our means and shall not dwell into this topic. If not, B will be watching and laughing as this thread intention sound like..."property will drop >50% by 2015???"

Exactly! That is why we must avoid entering into any discussions that create reactions that are emotional in nature. We should never ask or question any forumer here anything that are provoking.

[Leeds]

yah agree.. sometime in life we need to take a bit of risk but not too much lah.
like someone said in the forum, it is good to analyse but don't over analyse. like some of my colleagues and close friends, most of them are at least master in banking related, they all have in common, analyse too much..

Exactly! What is important is to have a good feel of the market and the environments and the gut to make the decision. The decision of not buying now is also a big decision just as to somebody who made the decision to buy now.

For those people who regretted not buying the last time, there were equally number of people who never regretted not buying the last time. We normally hear more people telling others they missed the first price in 4D because they did not buy but seldom hear people telling others they had won.

[hopeful]

Exactly! That is why we must avoid entering into any discussions that create reactions that are emotional in nature. We should never ask or question any forumer here anything that are provoking.

so thought provoking questions also cannot?

[Arcachon]

This is how they reduce inflation. not increase interest rate.

[Blue]

The US financial crisis back in late 2008/2009 did not bring much negative impact on the local property prices. As a matter of fact, property prices were slowly creeping up. And more foreigners came to Asia to work as they cannot find jobs back home. Foreign investment funds oso flown into asia as there is nothing worth investing back in their countries.

[felicia_sg]

Sure buy if anybody can sell me say Newton Suites at $1600 PSF! It is all about price isn't it? obviously I won't pay >$1400 PSF for Bishan Say Sky Habitat but that doesn't means it is not worth buying at that price.

China cannot do well with less exports to Europe and US. Singapore is more vulnerable than any SE Asia countries when crisis hits. More job loss is likely in Singapore than any SE Asia countries when crisis hits. When Europe is in recession, only the very rich can part their funds here or in the US (their preferred location)); the rest could not even travel. There will be no job for these foreigners in Singapore when crisis hits. In fact, more expats will be asked to go home instead.

Just curious to know if you have the mean now will you go out and buy that property now?

[hyenergix]

Wah, 700+psf for top 3 bids with 12 bids submitted u call that NOT AGGRESSIVE Jervois Road tender only 8XXpsf leh

No need QE, as long as Us Fed come out and say zero interest rate till 2020, ho say liao ... all properties will be sold out overnight

It will be the 2nd CBD. If FEO can sell $1700 psf at west coast (damn ulu place with no good view - I know because I stay near there), I expect the selling price to be on the high side at this plot. The developer probably got the land "cheap".

[amk]

For the jurong bid, there were 3 players willing to pay 700+ psf for the land, unlike Bishan, only CAPL one guy overbid, so I think jurong bid is indeed very aggressive. The players clearly buy into the jurong story. Rightfully so I would say.

And to leeds, MAS stand on interest rate is very relevant. MAS said it several times already, that current exchange rate way of control cannot bring down inflation. But MAS has NEVER even hinted that they will abandon the policy. I may dare to say my conclusion is , MAS is going to tolerate inflation and low interest rate for a long period, as long as US is doing the same. If some one believe low interest rate is going to be the norm for another 3yrs, doing nothing for 3yrs is not the best way of managing his position.

[pmet]

Our exchange rate policy is so 20th century and risks getting listed as a currency manipulator by the US. Now that SG is fast becoming a developed economy, and with extremely high inflation for a long time, it's time to abandon what is outdated and move on with more effective policies. Most developed economies (especially the western nations) use interest rates as a control against inflation. Even the swiss were using interest rates until they recently intervened in their currency (currency manipulating, yes).

De-pegging from the USD could be very near. Effective interest rates at current should be around 5%.