Private home prices predicted to fall 10-20% by 2015

[mermaid]

According to Barclays, they believe new private home sales volumes will come off 30% in 2013 on the recent government measures, and private home prices could fall 10-20% by 2015E, due to these reasons.

1) A mortgage rate hike coinciding with peak housing completions, resulting in higher vacancies and required rental yield expansion; and

2) A weak secondary market due to the seven prior rounds of tightening measures.

Here's more from Barclays:


Our economist Joey Chew wrote on 12 Sep “Openness and household debt – the Achilles’ heel” that a macroeconomic shock could also trigger a market correction.

Historically, we estimate residential developers have traded at 25-40% discounts to RNAV when 6-month forward home prices fall 10-20%.

http://sbr.com.sg/residential-proper....38c1QuDd.dpuf

[mermaid]

10-20% crash is a lot!

[eng81157]

please, the experts had been predicting this since 2009/2010 repetitively but only differing in time period - it was first predicted that 2013 would be the crash, then 2014 and now 2015.

it's just like roubini the scammer - keep predicting a shocking drop (and conveniently excusing yourself when predictions don't come to pass) and you will hit jackpot once.

[Easy Goh]

Geomacer can do a lot better than these analysts !

[star]

When expert say buy u better sell. When expert sell u better buy.
Me too i believe i can fly. Lol.

[mermaid]

but Im quite confident of some bargain hunts in the next 1-2 yrs when supply is abundant while rate of increase in population slow down!

[DKSG]

but Im quite confident of some bargain hunts in the next 1-2 yrs when supply is abundant while rate of increase in population slow down!

I shall say this only to those who bother to read this thread - dedicated to Mermaid - haha!

The bargains are already in the market, dont miss out!
Go visit some showflats, look out for resale units in the market.

The 10-20% discount are already available.

But you must make sure you discount it from a reliable valuation.

Dont use the Jurong $1,6xx psf as your benchmark, else you will still overpay!

DKSG

[indomie]

On the assumption of zero inflation, zero population growth and china is not on the spending spree.

[mermaid]

I shall say this only to those who bother to read this thread - dedicated to Mermaid - haha!

The bargains are already in the market, dont miss out!
Go visit some showflats, look out for resale units in the market.

The 10-20% discount are already available.

But you must make sure you discount it from a reliable valuation.

Dont use the Jurong $1,6xx psf as your benchmark, else you will still overpay!

DKSG

be patient, these r juz the starters. 2013 prices is still not the best.
btw, Im referring to new launches.

[thomastansb]

Ya lor. From 1990, if every year I predict stocks will drop 30%, I would have got it correct in 1991, 1996, 2001, 2003, 2008.

Anyway, if it drops, let it drop. If it drop, I buy more while collecting rental. No big deal. Rental continue to come in. Just lower your expectation la. My 1+1 rent out 4.2k, crisis rent out 3k lor.

Prices can drop in 2013 or 2018. Who will know? Those who say drop in 2010 already lose out 3 years of rental worth 150k. If drop in 2015, I already collected > 200k rental than someone who decide not to buy in 2010.

please, the experts had been predicting this since 2009/2010 repetitively but only differing in time period - it was first predicted that 2013 would be the crash, then 2014 and now 2015.

it's just like roubini the scammer - keep predicting a shocking drop (and conveniently excusing yourself when predictions don't come to pass) and you will hit jackpot once.

[DKSG]

Ya lor. From 1990, if every year I predict stocks will drop 30%, I would have got it correct in 1991, 1996, 2001, 2003, 2008.

Anyway, if it drops, let it drop. If it drop, I buy more while collecting rental. No big deal. Rental continue to come in. Just lower your expectation la. My 1+1 rent out 4.2k, crisis rent out 3k lor.

Prices can drop in 2013 or 2018. Who will know? Those who say drop in 2010 already lose out 3 years of rental worth 150k. If drop in 2015, I already collected > 200k rental than someone who decide not to buy in 2010.

TTSB is indeed a big time investor.
One lesson learnt is to have spare cash at all times.

And also hold on to some properties at all times.

Like that cheong up sell, crash buy.
Buy Low, Sell High.

Certainly cannot buy at the peak of the peak.

DKSG

[eng81157]

Certainly cannot buy at the peak of the peak.

DKSG

how dare you say that!!!!!! later, no more made-in-jurong stapler and correction fluid for you!!!!

[DKSG]

how dare you say that!!!!!! later, no more made-in-jurong stapler and correction fluid for you!!!!

Oops, isnt these now Made In China ?

DKSG

[eng81157]

Oops, isnt these now Made In China ?

DKSG

how dare you say that!!!! how can China compare against the greatness of JLD or Jurong (Overpriced) Gateway!!!!!

[DKSG]

how dare you say that!!!! how can China compare against the greatness of JLD or Jurong (Overpriced) Gateway!!!!!

You are a clear winner !

DKSG

[teddybear]

Even the toxic gases produced in Jurong by those chimneys will also become non-toxic when initially produced in Jurong, but will become toxic after they got brewed away by more than 10km away!

how dare you say that!!!! how can China compare against the greatness of JLD or Jurong (Overpriced) Gateway!!!!!

[eng81157]

Even the toxic gases produced in Jurong by those chimneys will also become non-toxic when initially produced in Jurong, but will become toxic after they got brewed away by more than 10km away!

this is phd level chemistry.......trying very hard to read between the lines...

[relax88]

I predict one of the guys in this forum is going to die by 2015......

[indomie]

I predict one of the guys in this forum is going to die by 2015......

Relax.... He means die of happiness, because property price keep going up.

[mermaid]

5% decline in 2014, 5-15% in 2015.
According to Barclays, "we expect private home prices will correct 5% in 2014, and another 5-15% in 2015 on rising interest rates coinciding with higher vacancies from peak supply coming through in 2015-16, amidst a weak secondary market." Singapore developers as a whole are facing heavy headwinds, which led the research firm to advise investors to stick to REITs, specifically Office and Industrial REITs, than developers.

Here's the full analysis from Barclays:
Public housing and mid to high end private home prices finally started falling:

The URA Property Price Index rose 0.4% q/q, slowing down from +1.0% in 2Q13. The Core Central Region (CCR, proxy for high-to luxury end) fell 0.5% q/q (vs -0.2% in 2Q13), and Rest of Central Region (RCR, proxy for mid-end) fell 1.1%, vs +0.2% in 2Q13.

The Outside Central Region (OCR, proxy for mass market) rose 2.1%, vs +3.8% in 2Q13. Public housing resale prices fell for the first time in 18 quarters, by -0.7% q/q. In line with our views: We initiated coverage on 27 Sep “Developers fundamentals weakening”: on two of the largest Singapore developers – City Developments (CDL, PT S$9.12) and Keppel Land (KPLD, PT S$3.30) – with Underweight ratings, as we see headwinds emerging for Singapore developers.

We expect private home prices will correct 5% in 2014, and another 5-15% in 2015 on rising interest rates coinciding with higher vacancies from peak supply coming through in 2015-16, amidst a weak secondary market. We prefer the REITs relative to developers, with sector preference: Office, Industrial, Retail, Residential in that order, top picks: KREIT, CCT, AREIT, MINT.
CAPL is our only OW developer as it is more diversified and attractively priced. Update on recent launches.

After a dismal 482 and 742 units sold in July and August 2013 respectively, way below the 1,658 monthly average in 1H13, due to the June 28 Total Debt Servicing Ratio (TDSR) measures, September developer volumes could pick up on good demand on recent launches. CapitaLand’s Sky Vue in Bishan reportedly sold 430 of the total 694 units on 28-29 Sep, at ASP of S$1,500 psf.

UOL’s Thomson Three has sold 250 units (total 445) since launch in mid-Sep, at ASP of S$1,350 psf. We expect developer take-up to average 1,000 -1,100 units per month in Sep-Dec and for FY13 volumes to fall 30% y/y in 2013E to 15,500 units.

Developer stocks highly correlated to transaction values and expected price declines: 1) developer stock prices are highly correlated with total transaction volumes and values, and we expect volumes and prices to soften; 2) we estimate residential developers have traded at 25-40% discounts to RNAV when 6-month forward home prices fall 10-20%.

Currently CDL and KPLD are trading at 21 and 25% to their end-2014 NAVs respectively, while CAPL is trading at 37% discount.

http://sbr.com.sg/residential-proper....no7iKvsn.dpuf

[wind30]

Ya lor. From 1990, if every year I predict stocks will drop 30%, I would have got it correct in 1991, 1996, 2001, 2003, 2008.

Anyway, if it drops, let it drop. If it drop, I buy more while collecting rental. No big deal. Rental continue to come in. Just lower your expectation la. My 1+1 rent out 4.2k, crisis rent out 3k lor.

but you forget the interest payments... it does not work if interest rate goes back to normal of 4%.... If your measly rental cannot cover interest rates, why would anyone buy at inflated price?

your rental theory makes perfect sense in a close to zero interest rate environment which everyone seems to be taking for granted like you