Thanks! this is a informative blog.
Originally Posted by jitkiat
Senior
Thanks! this is a informative blog.
Junior
Is property becoming king again?
Posted on May 29th, 2009 by Mindy Yong.
Categories: Singapore News.
EVERYBODY wants to believe that the light at the end of the tunnel of the current economic crisis is now discernible. And why not? After almost two years of persistently gloomy news, it is certainly time for a change, even if most economic indicators say otherwise.
One of the places in which this optimism is reflected is the property market. Earlier this month, the Urban Redevelopment Authority released data revealing that developer sales in April hit over 1,200 transactions, following two consecutive months of exuberant sales. Indeed, the developer sales for the January-April period with 3,867 units sold now represents almost 90 per cent of all developer sales in 2008 (4,382 units). And unlike earlier months, the transactions in April were done across various market segments, which could suggest a broad base recovery.
Yet, the last time we checked, the Singapore government had revised its GDP forecast downward, unemployment had risen, and exports had fallen. And while there is persistent talk of ‘green shoots’ of recovery, even if one buys into the rhetoric, what is curious is that the property market appears to have jumped the gun. Yes, the stock market has recovered somewhat of late, but at least for the last week, property stocks have outperformed the overall market.
So is it blind optimism that is driving the property market? Some believe that these buyers are just following the herd. Property prices of new homes have begun to moderate downwards and while new homes are still by no means cheap, some argue that buyers are afraid of ‘missing the boat’. But can this really be a concern? After all, as has been well reported, there is expected to be a glut of new housing supply next year.
One reason could be that investors are buying into forecasts, now coming in thick and fast, of an economic recovery next year. Therefore they don’t want to lose out on the discounts being offered now, even at the risk of having to hold on to their new properties for a longer time in the future before the recovery really gets underway and the market turns decisively.
Another plausible reason for the surge in sales could be that fixed deposit rates have fallen to near five-year lows, inducing many to move their savings into property instead - which implies that as the deflationary environment abates, property is replacing cash as king.
Whatever the reason, the ongoing surge in property transactions certainly warrants some study. Singapore is unique in many ways, but if the property market here is an anomaly, it would be useful to know why - if only to help the market function more efficiently and help those who really need a home to get a clear picture of where property prices are headed.
Source : Business Times - 29 May 2009
Newbie
See the big picture.
Newbie
Thanks for sharing. I re-post the chart below. Hope you don't mind.
I'm a potential buyer.
Junior
1997 property bubble burst / Asian currency crisisThanks for sharing. I re-post the chart below. Hope you don't mind.
1998/99 HDB upgraders on the move to snap up condos, push up PPI from 100 to 140
2000/2001 NASDAQ crash, PPI back down to 120
2002 HDB upgraders on the move, again, but index higher than 1999 liao
2003 SARS, PPI back down to 110
2004 -
2005/06/07 financial bubble in the US, property rebounded to 1996 level at 180
2008 crash again back to 140
2009 HDB upgraders on the move again
[IMG]file:///C:/DOCUME%7E1/jitkiatt/LOCALS%7E1/Temp/moz-screenshot-6.jpg[/IMG]
Newbie
From the chart, this is historical record low for sales of new units. Meaning it has bottom out... Therefore, future outlook should be increasing. And what that happened, prices will become very bullish.
Newbie
Hi Firec
No problem. Thanks!
To clear the looming supply, you need to chalk up 9000 units on consecutively from now to 2013. (That is if you assume, no more additional new additions by developers.)
From 1996 - 2002. We managed to chalk up 48763 units over 7 years.
Or if you look at year 2000 - 2006, it is 46912 units over 7 years.
I left out year 2007 bec that is obviously an outlier (overly easy credit situation, we are not returning to that anytime soon).
After a bull year, the next 2 years always feature below average trend take up. The mkt is going to take a longer time to come back from 2007 bumper year crash (14000+).
That is why I do not think this year we will exceed 7500 units unless price cuts come in. The supply of HDB upgrades will be thinning out as prices have indeed fallen, makes the springboard less springy.
Already at current figures, many have been surprised but will there be a repeat of this feat?
(I have not looked into the capital values over the years yet but I doubt the data will be easy to find. I will put it up once I get them.)
With the H1N1 still an unknown and more retrenchments (check around, some companies in Raffles Place that have not gone through any retrenchment exercise are drawing up shortlists.)
Once the mkt clears the buyers at this price levels, the only way for them to move units fast is for the economy to do a 180 degree turn in outlook or for prices to gradually fall.
Artitcles trying make the current figures look impressive by quoting a "90% of last yr sales and it's only May" figure are just plain misleading if they do not mention:Last yr's figure was 4392 units! The worst since 1996!
Newbie
Very well articulated.... great post!
Junior
A lot of people know there is an oversupply. But they don't know that oversupply is concentrated at the highend/luxury segment. That's why both GS analyst and Kwek Leng Beng said price of highend segment will stay flat for next 2 years.
Therefore, whether 7,500 new home sales can be achieved in 2009, the key thing to watch for is the price of HDB resale flat.
Senior
If we get another 1200 units sold in May, the 5 month total will cross 5000 units. That means the average of 350 units a month for the remaining 7 months will ensure we cross 7500 units. Even if we assume 800+ units for May, an average of 400 units a month for the remaining 7 months will clear 7500 for full year. Not that difficult.
Newbie
That is like selling 8 One Amber sized developments. Not an easy feat (if no discounts are dangled) which was why the April cumulative sales figure took everyone by surprise.
The analysts are assuming this trend is sustainable for the rest of the year and none of them have taken on the supply issue head on in their report and use it as a caveat to their bullish projection: "Supply may dampen prices." Just one sentence.
The supply of buyers at the current price levels will be exhausted sometime down the road and anymore sales later will depend on the risk appetite and lower pricing.
Newbie
If the high end is going to be sluggish, whither the mid tier and mass mkt?
I have been checking prices of HDB 4-5 room, prices have come off about 3% on average for the outlying areas. It will not crash but the the HDB upgrader spigot will be closing soon.
The stock mkt effect only comes into the equation when there is a general air of speculative interest in the air.
Junior
Have you read Goldman Sachs report (go to the WFW thread and look for it)? I think your comment is a bit unfair to them.
Junior
Extract from GS's report about supply:
Senior
that's true. its just that may sales is likely to be very good so i think at least 1000 units sold in may is possible. as for the rest of the year, i guess the buying will cool off but around 400 units a month seems ok if it comes from a good mix of all the CCR, RCR and OCR on a monthly basis. Don't forget, monkey sized unit also 1 unit, penthouse also 1 unit and many monkey units and/or a certain Caspian like project combined probably can sustain that 400 units a month on average i guess.
Junior
Sales of May09 may cross 1400 units. The sales are very good this month. let's wait another 2 weeks to see the official data.
Newbie
Interesting to see developers trying all sorts to infuse the market with "upbeat" news...
Leasehold Botannia condominium project at West Coast fully sold
By Wong Siew Ying, Channel NewsAsia | Posted: 29 May 2009 2051 hrs
*report never say took them how long to achieve this*
15 out of 40 units at Martin Place Residences sold
By Wong Siew Ying, Channel NewsAsia | Posted: 29 May 2009 2118 hrs
*15 out of 40 out of 302 units blah...blah...blah... so are we suppose to pop the champagne now???*
Senior
i think the CNA report focused on the wrong thing for Martin Place. The key idea is that the 15 units sold out of the 40 units released yesterday was achieved without any advertising and that 95% of the 1st block ie half the project is already sold before its launched. But the interesting thing will be to see what is the response for the remaining units today when it is officially launched with full page advertisement.
Interesting to see developers trying all sorts to infuse the market with "upbeat" news...
Leasehold Botannia condominium project at West Coast fully sold
By Wong Siew Ying, Channel NewsAsia | Posted: 29 May 2009 2051 hrs
*report never say took them how long to achieve this*
15 out of 40 units at Martin Place Residences sold
By Wong Siew Ying, Channel NewsAsia | Posted: 29 May 2009 2118 hrs
*15 out of 40 out of 302 units blah...blah...blah... so are we suppose to pop the champagne now???*
Newbie
I have not looked at GS report and did I mention GS? What is it with you and your accusations?
Just looking at their assumptions, are they saying that the 11500 units withdrawn makes the supply look less worrying?
But I think they are forgetting that the enbloc owners are renting right now. Not everyone can squat with in-laws or are the enbloc units not primary homes of the owner?
What happens when renters vacate their rental units and start buying? The previous rented unit is now vacant although there is now 1 more home purchase recorded. It is zero sum when that happens.
I'd be happier if the government opens the immigration spigot wider and this adds to the total number of family units.
Newbie
You got me there. With some developers slashing units into 2, the 7500 may be reached, then I will not feel so bullish if the 7500 is breached.
But before you blame me for moving the goalpost, this is a new tactic that more developers seem to be using in order to preserve psf.
Then the same momentum has to continue for 2010 as well before that translate to a stampede?
Newbie
40 units project are easy to sell and makes for good advertising when the papers yell "FULLY SOLD".
Projects priced correctly will sell.
I think prices may just bobble (+/- 10% to 15%) along for the next 2-3 years as the market soaks up the supply.
Pretty much like how the HDB's oversupply experience where prices did not really go anywhere from 2000-2005.
Just pray that the local banks do not retrench. If the economy does not turn, there is a limit to all the cost savings that the various creative measures can muster sans retrenchment.
There's still a lot of clean up required with the US. Like trying to ensure GM' euthanasia rather than slaughter.
There is a danger that the supposed improved housing sales may get stymied by the rates increase lately.
AIG hasn't really unwound all their toxic products yet.
Banks in Europe are not doing that well either. Now Opel needs to be bailed with Germany's $$$.
Green shoots? Sporadic maybe.
Newbie
http://hottrendswatch.blogspot.com/
Another one convinced that the looming supply is going to weigh on price.
Newbie
Moving the goal post or the urinal bowl, your shoot at forcast is off the mark.
At the rate its going, 7500 will be reached by Oct.
You got me there. With some developers slashing units into 2, the 7500 may be reached, then I will not feel so bullish if the 7500 is breached.
But before you blame me for moving the goalpost, this is a new tactic that more developers seem to be using in order to preserve psf.
Then the same momentum has to continue for 2010 as well before that translate to a stampede?
Senior
I think its more likely that we get a stampede now and maybe over next few months and then things cool off later this year and into 2010.
You got me there. With some developers slashing units into 2, the 7500 may be reached, then I will not feel so bullish if the 7500 is breached.
But before you blame me for moving the goalpost, this is a new tactic that more developers seem to be using in order to preserve psf.
Then the same momentum has to continue for 2010 as well before that translate to a stampede?
Junior
Visited Tresalveo near Marymount MRT... i think they managed to sell close to 100 units in May compared to 2 units last month. Price around 950psf, even higher than The Arte.
The Mezzo also managed to sell off 50/60 units this month, compared to 10 units last month ... looks like this month new home sales figure is going to exceed last month.
Newbie
Like you, I'm extremely bullish about property. I bought Alexis (1 unit) and Tresalveo (2 units). Which condos did you buy?
Senior
how much did you pay for alexis?
Junior
i hear that indonesians are coming to buy with cash.
rupiah strengthened. they moving the funds here because prices are still lower than 2008. and property agents and bankers very busy. same for insurance agents. arrrgh..i didnt manage to ride the high wave.
and banks are more easy going now. aiyahhh..
Senior
i dont think rich indons keep rupiah as their main currency....
Newbie
That is not my forecast. Just that if the total units sold this year exceeds 7500, I take it that the mkt is getting bullish.
The mkt has to consistently clear this number of units for the next 4 years to make a decent dent in the supply.
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