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Singapore Property Bubble 2012: Here we go again

sense

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Home prices sputter, poised to fall this year
Business Times - 04 Jan 2012

By KALPANA RASHIWALA

(SINGAPORE) Prices of both private homes as well as HDB resale flats are poised to fall this year. This was foreshadowed in the official flash estimates for the fourth quarter of last year which showed a slowdown in growth for both segments.

Urban Redevelopment Authority's private residential property price index rose a mere 0.2 per cent quarter-on-quarter in Q4 2011, its most anaemic growth in 10 quarters since the index bottomed out in Q2 2009.

From the 15.8 per cent q-on-q increase in Q3 2009, the index has now moderated for nine consecutive quarters, according to CBRE's analysis. The 0.2 per cent q-on-q hike in Q4 was lower than the 1.3 per cent q-on-q rise for Q3 last year. For the whole of 2011, the index rose 5.9 per cent - a marked slowdown from the 17.6 per cent jump in 2010.

Most market watchers say it is a given that prices will go down this year, amid the weaker economic outlook and poorer sentiment, especially after the introduction of the additional buyer's stamp duty (ABSD) last month.

'Developers know they need to cut prices but the difficulty is in gauging how much. If they don't cut enough, buyers are not going to act. But if they give too much, there's always a fear that buyers will expect a bit more. What you want to do is to give enough for the fence sitters to come back into the market. Despite the weaker economic outlook, there's still a lot of cash and liquidity in the market,' says Knight Frank chairman Tan Tiong Cheng.

DTZ's head of Asia Pacific research Chua Chor Hoon predicts a 10-15 per cent drop in URA's overall private home price index in 2012 citing the ABSD which took effect on Dec 8 and the economic slowdown. The luxury housing segment, where there are more foreign buyers, is expected to take the biggest hit given the top ABSD rate of 10 per cent levied on their residential property purchases.

CRBE executive director Li Hiaw Ho expects overall demand for new private homes to be trimmed by 15-20 per cent this year.

'Prices of luxury/prime condos may fall by 10-15 per cent in 2012, and mass-market condos, by 5-10 per cent,' he added.

URA's flash estimates show that the price index for non-landed private homes in Outside Central Region (OCR) - where mass-market condo projects are located - was the star performer, though it has also dimmed somewhat. It rose 0.6 per cent q-on-q in Q4 last year, a slower rise than the 2.1 per cent increase in Q3 2011. The full-year 2011 increase of 7.7 per cent was also slower than the 15 per cent climb in 2010.

Prices of non-landed private homes in OCR increased the fastest as demand was supported by HDB upgraders as well as investors, notes DTZ's Ms Chua.

Credo Real Estate executive director Ong Teck Hui notes: 'The strong run in the OCR market has led to their current (Q4 2011) prices being 28.3 per cent above their pre global financial crisis peak in 2008, while prices in Core Central Region (CCR) and Rest of Central Region (RCR) are only 6 per cent and 15.9 per cent higher than their respective 2008 peaks.'

The price index for non-landed homes in CCR - which includes the traditional prime districts, financial district and Sentosa Cove - appreciated 0.5 per cent q-on-q in Q4, following a 0.7 per cent gain in Q3. The full-year 2011 increase was 4 per cent, significantly lower than the 14.2 per cent rise in 2010. The index for RCR for Q4 was unchanged from the preceding quarter, taking the full-year appreciation to 4.4 per cent, after rising 17.6 per cent in 2010.

In the public housing segment, HDB's resale flat price index rose just 1.7 per cent q-on-q in Q4, after rising 3.8 per cent in Q3. The full-year 2011 increase was 10.7 per cent, slower than 2010's 14.1 per cent climb.

The ramp-up in supply of Build-To-Order (BTO) flats launched by HDB last year as well as the increase in buyers' monthly household income ceiling from $8,000 to $10,000 has led to more first-time home buyers switching to BTO flats from the resale market, say agents.

ERA's key executive officer Eugene Lim says that cash over valuations (COVs) stabilised at around $30,000-40,000 in Q4, based on transactions handled by ERA. 'Going by what happened in the last recession, flats were sold at or below valuation. If Singapore enters a recession this year, COVs may also turn negative and hence transacted prices also fall.' He predicts HDB's resale flat price index may ease 5-8 per cent for the whole of 2012 in such a scenario.

The drop will be more severe if the HDB proceeds to allot a higher proportion of new Build-To-Order (BTO) flats to second timer buyers, as this leads to further diversion of demand from the HDB resale market.

However, if Singapore escapes recession, the HDB resale flat price index should still increase by up to 5 per cent this year, even if the government sets aside more new flats to second timers, he added.

PropNex CEO Mohamed Ismail forecasts a correction of up to 3 per cent in the index. Dennis Wee Group senior manager Lee Sze Teck reckons it could ease up to 5 per cent.

HDB will launch 3,890 BTO flats in Choa Chu Kang, Punggol, Sengkang and Tampines this month.

Source:: www.businesstimes.com.sg
 

sense

Alfrescian
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Will Property Prices drop in 2012?

What are some of the economic and property experts saying about home prices in the following years? Some are already expecting a 20 per cent fall in Q1 of 2012. How will they perform in the wake of the recent property curbs and sudden increase in home supply?

There is one thing all the analysts agree on – property sales will likely fall as a result of the new cooling measures, with prices dropping in the process. Analysts noted that the measures are aimed at moderating investment demand rather than speculative purchases, as was the case with previous cooling policies. The new rules are also targeted mainly at foreign buyers. Any foreigner who wants to buy a home will have to pay a stamp duty of 10 per cent on top of the existing buyer’s stamp duty of about 3 per cent. The tax will be based on the purchase price or market value of the property, whichever is higher. Permanent residents who buy a second and subsequent residential property will pay 3 per cent more in stamp duty. Overseas properties will be excluded from this count. Singaporeans who already have two residential properties will have to pay the extra 3 per cent on their third and subsequent home purchases.

WHAT ANALYSTS SAY

  1. Standard Chartered – Property prices to plunge by 20 per cent to 30 per cent over the next year
  2. PropNex – High-end home prices to drop by 15 per cent to 20 per cent and mass-market home prices to fall by 10 per cent to 15 per cent in the next six months.
  3. CIMB – Prices to fall by 15 per cent to 20 per cent next year.
  4. UOB Kay Hian – Prices to weaken by 10 per cent to 15 per cent next year.
  5. Goldman Sachs – Prices to fall by 15 per cent over the next 18 months.
  6. OCBC Investment Research – Prices to soften by 10 per cent to 20 per cent over the next two years.
Standard Chartered’s analysts have perhaps the grimmest outlook for the property market. They already predicted last month that property prices would slide by up to 30 per cent over the next three years due to slower population growth and an unprecedented supply of new homes coming onstream. ‘This announcement is a negative surprise for the market,’ they said in a report last Wednesday. ‘It is also the first time since 1996 that the Government has imposed stricter residential market measures on foreigners and permanent residents.’ StanChart also expects the new policy to cause sales volumes to fall 20 per cent in the first quarter of next year. A potential oversupply of private homes in the next few years could be another factor putting pressure on prices, they said.

PropNex chief executive Mohamed Ismail described the Government’s move as ‘the harshest cooling measures seen so far’, and said the new rules will pose ‘a major psychological setback’ for the market. He said the volume of private home sales in the central core region, which includes areas such as Orchard and Newton, will likely dive by 40 per cent, while sales in the mass-market segment will drop by 20 per cent in the next six months. Mr Ismail predicts that in the next six months, property prices will plunge by 15 per cent to 20 per cent in the central core region and 10 per cent to 15 per cent in the mass-market segment.

‘The Government has taken out the bazooka,’ wrote CIMB Research analysts the morning after the new measures were announced. They have forecast that a 15 per cent to 20 per cent weakening of property prices next year is ‘very conceivable’ because of the new policy. Luxury homes, typically the playground of foreigners and investors, are likely to bear the brunt of slumping prices, but new mass-market units should still see a healthy demand from Housing Board upgraders, they added. ‘On a philosophical note, locals may now feel less aggrieved, given a more level playing field,’ the analysts said.

UOB Kay Hian analysts expect that prices will slide by 10 per cent to 15 per cent over the next year. They also predict that the number of private homes sold each month will slide by 25 per cent to 30 per cent next year. ‘The move was unanticipated in the light of the increasingly uncertain global macroeconomic environment,’ they noted last Thursday. ‘However, the recent pickup in the primary home-buying activity may have prompted the Government to take these steps after the review of its housing policies that were a hot issue in the last elections.’ The move will act as a strong deterrent for foreign buyers as their transaction costs would increase by 10 per cent overnight, UOB Kay Hian added, with the high-end segment likely to be the most affected.

Goldman Sachs believes private home prices will fall by 15 per cent over the next 18 months, with the high-end segment facing more immediate pressure. This is because foreign buyers and permanent residents account for 44 per cent of sales in the high-end sector, which includes areas such as Sentosa Cove and Districts 9, 10 and 11. Each of the important drivers of demand – foreign buying, job creation and credit availability – will likely see signs of softness over the next year, the analysts noted. ‘While credit is relatively cheap, it is not as readily available, with banks more conservative on valuations and equity term loans,’ they said. Their conclusion – the residential property market will go into a ‘state of paralysis’.

OCBC Investment Research said property market observers had expected the Government to introduce new rules to curb demand for property among foreigners after the election, when both immigration and property prices became hot-button issues. But as the euro zone debt crisis worsened and economists warned of slower economic growth in Singapore next year, few people thought the Government would push ahead with more property cooling measures. Now that it has, OCBC analysts forecast that private home prices will fall by 10 per cent to 20 per cent over the next two years. The measures are ‘fairly onerous’, they said, given that foreigners and companies accounted for a fifth of all private home sales so far this year. ‘We expect a negative knee-jerk share price reaction for the developers,’ they added.

Source: The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.
 

sammyboi

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Loyal
don't worry, the foreigners will buffer you from any price correction.

The Middle class FTs are simply experiecing the ""middle class syndrone"....to buy with the herd.

throughout history, the more u predict the likely scenario, the most unlikely it would to happen because it is already factored or priced into people's head
 
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sense

Alfrescian
Loyal
Remember this?

http://news.asiaone.com/News/Latest%...20-269085.html
MM: Your HDB home value will never drop
RazorTV
Sun, Mar 20, 2011

As most Singaporeans live in HDB flats, Minister Mentor Lee Kuan Yew strives to make home ownership the most valuable possession for Singaporeans.
"85% of Singaporeans are living in HDB flats and we intend to keep the values of these homes up. It will never go down," said MM Lee.
The MP for Tanjong Pagar said that home renewal and refurbishing programmes in Singapore ensure that the value of housing here will continue rising.

He was speaking at the launch of Tanjong Pagar GRC's 5-year Master Plan on Saturday.


Before election: Sweet talk, making fantastic promises
After election: Pinning you down and fucking you in the ass.

How you like your PAP government now, Sinkies? :biggrin:

Another perspective on why LKY is losing it now... ie. he is being fooled by randomness (probably due to age).

FBR-NoSwanIsBlack.gif

Page 102 of the book by Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in the Markets and in Life, 1st ed. (W. W. Norton, 2001).
 
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sense

Alfrescian
Loyal
An interesting contrarian view on the 2012 property prices:

Why property prices will remain high
Published on Jan 31, 2012

THE report ('Record number of homes to be built, further easing prices'; last Saturday) quoted experts forecasting a steep decline in home prices of up to 15 per cent this year. This was based on a drop in transactions last month and a record supply of 77,089 uncompleted homes at the end of last year, of which 39,184 remained unsold.

And in the public housing market, an overwhelming supply of 25,000 units will be released, on top of last year's batch of 25,000 units, which is unprecedented in recent years.

Despite the large incoming supply and cooling measures, which will put pressure on home prices, an excessive price fall is unlikely because of current strong fundamentals.

What is also vital to consider is the equally huge demand backlog in private and public housing.

Between 1995 and 2010, there was strong population growth amid an undersupply of housing. This led to a dire imbalance, which resulted in robust home transactions and escalating prices in recent years.

Based on official data, the population of citizens and permanent residents expanded by 758,200 in the 1995 to 2010 period. But the increase in available private homes within the same period was only 128,896.

Working on 3.5 persons per household, 758,200 equates to 216,628 households. So, as of December 2010, there was a housing deficit of 87,732 (216,628 minus 128,896).

This strong pent-up demand can easily absorb the 77,089 uncompleted homes in the pipeline until 2015. And this is not taking into account the housing requirements of new immigrants, who may need about 20,000 to 30,000 homes from now until 2015.

Last year, 107,000 foreigners were added to the population. According to some experts, a 1.8 per cent population growth will most likely support home price growth in a favourable environment.

Currently, the property market is well supported by favourable key fundamentals such as low interest rates, low home vacancies, future population growth and the spillover effect from an imbalance in the resale HDB market.

All these factors will contribute to a positive impact on the residential property market in the coming years.

In the absence of a severe global economic recession accompanied by massive job losses, a sharp property price correction is highly unlikely this year.

Wong Toon Tuan

http://www.straitstimes.com/STForum/Story/STIStory_761065.html
 

rectmobile

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Loyal
No, I don't think so. LKY is absolutely right. In fact, all properties HDB or otherwise, will always be on the uptrend in Singapore in the long run. The key phrase here is 'in the long run'. Admittedly, there will be rollercoaster rides in between due to cooling counter-measures, economic conditions, etc. These are corrections which present buying opportunities for the savvy investors. Even with the latest cooling measures, not all properties will correct in the same manner. Core area condos may plunge 30-40%, mass market condo might plunge 15-25%, landed may go down slightly only - 10% perhaps. This could be yet another opportunity to pick up bargains.

can i ask you a question? If the property prices keep going up.. how are those newly weds going to buy it? Are they going to slog for the whole life just to pay for it? For those new entrepreneur who want to set up an office or business, are they going to pay high price for that as well? How are people going to pay for all these unnecessary high priced rent and mortgages. This is totally ridiculous.

Singapore property prices are not driven by market forces, it is artificially being pushed up by the govt's policies and pace of property expansion... There is not free market forces to speak of..

Why aren't singaporeans see the whole picture.
 
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no_faith

Alfrescian (Inf)
Asset
If the property prices keep going up.. how are those newly weds going to buy it? Are they going to slog for the whole life just to pay for it?

Singapore property prices are not driven by market forces, it is artificially being pushed up by the govt's policies and pace of property expansion... There is not free market forces to speak of..
yes, average newly weds will going to slog life and pass on the loans to their kids in future.
in sinkapore, the basic needs...shelter, you cant even have it.:eek:
every mth the instalment you paid is just for the interest. wtf, you never get to pay the actual price of the flat.:oIo:
 

greedy and cunning

Alfrescian
Loyal
can i ask you a question? If the property prices keep going up.. how are those newly weds going to buy it? Are they going to slog for the whole life just to pay for it? For those new entrepreneur who want to set up an office or business, are they going to pay high price for that as well? How are people going to pay for all these unnecessary high priced rent and mortgages. This is totally ridiculous.

Singapore property prices are not driven by market forces, it is artificially being pushed up by the govt's policies and pace of property expansion... There is not free market forces to speak of..

Why aren't singaporeans see the whole picture.

how can properti price fall one. even there is a minimum asking price when lta sells land. does not matter what market situation you must pay
the min price if you want to buy , no buyer also no problem what.
 

melissamarietan

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Buying property in Singapore has always been issue because the prices have always increased… and if the prices are going to decrease this year then it’s good news as people can at least think of investments. If I surely have enough savings I’m going to buy property for investment.
 

Alantis

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Loyal
you should have buy property for investment 2-3 years ago; if you have not, you should still get into it now although the up side is relatively lower now moving forward.

Although Singapore is not totally resistant to market slow down, we have build an economy with plenty of liquid around to support the escalating property prices. Not baring from any significant and major economic crisis, the economy is still growing gradually and stabilized over time. Even if its not for capital gain when buying a property, it will be a good tool to fight inflation in this country.
 

sense

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With 2.5 months left to go for 2012, Property owners are happy, while property hunters are gasping for air.

Mah Bow Tan must be very happy that the Singapore reserves is not raided but in fact gotten more fat.

2012_Q3_208.gif
 

sense

Alfrescian
Loyal
Five drastic ways to stop property price hikes
Published on Oct 13, 2012

I AM sceptical that the the latest measures will stop rising property prices ("35-year limit set on home loans"; last Saturday) and suggest stronger supplementary rules.

First, Housing Board flat owners must live in their flats for a minimum of 10 years before they can sell or upgrade. HDB flats are meant for citizens and should not be open to speculation or rental income as a primary function.

Second, the HDB upgrader who buys a private property must sell his HDB flat within six months after completing the purchase of the private residence or after a temporary occupation permit for it has been obtained. This will ensure a sufficient and steady supply of resale HDB flats in the open market. The principle behind this is that if you can afford private property, you do not need subsidised housing.

Third, impose a capital gains tax on profit from the sale of residential, commercial and industrial properties sold within the first five years after purchase, at the following rates: For the first year, 30 per cent, the second year, 25 per cent, the third year, 20 per cent, the fourth year, 15 per cent and for the fifth year, 10 per cent.

Fourth, restrict the resale of landed, freehold or 999-year leasehold properties by permanent residents (PRs) and foreigners to Singaporean buyers.

Finally, restrict PRs and foreigners to a maximum ownership of two private properties with effect from Jan 1 next year. If they wish to own additional properties, subject them to a 30 per cent property tax.

David Goh

http://www.straitstimes.com/premium...astic-ways-stop-property-price-hikes-20121013

_____________________________________________

MBT shouted at David, YOU WANT TO RAID #%^#$%^#@$!$% THE ***king RESERVE?
 

Loofydralb

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Loyal
No, I don't think so. LKY is absolutely right. In fact, all properties HDB or otherwise, will always be on the uptrend in Singapore in the long run. The key phrase here is 'in the long run'. Admittedly, there will be rollercoaster rides in between due to cooling counter-measures, economic conditions, etc. These are corrections which present buying opportunities for the savvy investors. Even with the latest cooling measures, not all properties will correct in the same manner. Core area condos may plunge 30-40%, mass market condo might plunge 15-25%, landed may go down slightly only - 10% perhaps. This could be yet another opportunity to pick up bargains.

You'll be retarded if you listen to LKY long enough.

EVERYTHING will go up in the long run! Its called inflation.
 

kopiauntie

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Loyal
With massive monetary easing in Europe and Quantitative Easing (Infinity) in the U.S., where do you think is the outlet ?

Inflation, of course !

Buy gold, silver, palladium, platinum, properties, food commodities, 4D and TOTO.......amongst other things .....
 

sense

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Loyal
Buy gold, silver, palladium, platinum, properties, food commodities, 4D and TOTO.......amongst other things .....

Buy Gold? It's currently in a consolidation phase, one should only consider buying or selling short gold when a channel breakout occurs:
20121013_GC.gif


Same for silver:
20121013_SLV.gif


Same for Palladium among the rest:
20121013_PALL.gif
 
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Einfield

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Loyal
I fire cow and replace with you better.
Good policy but unfortunately conflict of interest with the ruling party.

You can add for landed, only new citizen after 10 years are allowed to buy landed.
 

Einfield

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Loyal
Base on what data?

Paper currency is worthless when US keep printing and Euro may break up.

Gold and precious metals on the other hand are limited supply, for now.
 
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