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Property bubble going to collapse.

hockbeng

Alfrescian
Loyal
I wonder what does Mr Simon " Market has bottomed out" Cheong got to say?


Buyers, sellers at impasse
Owners still asking for sky-high prices while bank valuations fall


Loh Chee Kong


[email protected]


A DOWNTURN is usually the time for bargain-hunters to snap up properties on the cheap. But for now at least, the reality could not be more different, as prospective buyers discover.
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Said Ms K Chan, a HDB dweller looking to upgrade to a condo: “I thought this would be a good time to pick up a good bargain. But owners are still asking for sky-high prices.”
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According to industry players, the volume of transactions in the last month or so has dropped to a level only witnessed during the Sars outbreak when the market was practically frozen.
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The reason? A growing gap between falling bank valuations — which determine how large a bank loan buyers can take — and high asking prices by highly-geared sellers needing to pay off their outstanding loans.
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A random check by Today on 15 homes for sale — condos and various landed property types spread across the island — found stark differences between what owners are asking for and preliminary valuations by independent professionals.
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While it is normal for initial asking prices to be higher than the conservative value banks attach to a property, in six cases that Today found, the valuations were less than two-thirds of the asking price.
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For instance, while an owner of a four-storey bungalow in Holland Grove Drive was asking for $ 7.2 million, his property was valued at just $3.3m. Likewise, a Caribbean at Keppel Bay unit valued at about $700,000 was being touted for sale for $1.1m.
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SUBHD: ‘Better for sellers to cut losses now’

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Property agent Michael Leong lamented: “It’s very difficult to negotiate deals these days. Both sellers and buyers would hesitate for really long and in the end, they still cannot agree on the price.”
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Chesterton Suntec International director Colin Tan said the property bull-run of yesteryear – which pushed prices to record levels – has resulted in once-overly-bullish investors held hostage by the large loans they undertook.
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HSR Property Group executive director Eric Cheng thinks this is especially so in the luxury segment, where “people are more likely to be highly geared and own more than one property”.
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For sellers unwilling to budge on their asking price, the latest Citigroup report on the property market makes for grim reading.
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The bank forecasts mid-tier to high-end residential property prices here to fall another 35 per cent, bringing “prices back to 1998 levels”. For prices of luxury properties such as Ardmore Park, the fall would be even steeper – up to 60 per cent from their peaks two years ago, Citi estimates.
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Noting the current general scarcity of cash, Mr Tan said: “For sellers, maybe it’s better for them to cut losses now, rather than take a bigger loss later on. But sometimes you have geared up so much, the situation is out of your hands – you are stuck.”
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SUBHD: ‘Buyers can wait’
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Before buying a property, buyers can request from banks a preliminary valuation – determined by an independent professional – which estimates a property’s open market value.
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Such a valuation takes into account, among other factors, recent transactions and property launches in the vicinity. The banks would then carry out a final valuation onsite before granting a loan, capped at 90 per cent of the purchase price or valuation, whichever is lower.
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According to Mr Cheng, the final valuations usually do not veer much from the preliminary ones. In rare cases, banks may increase their valuation – by up to 20 per cent – to match the asking price, provided they are convinced of the buyers’ ability to finance the loan, he said.
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Still, the lack of activity in the property market, to some extent, means valuers are groping in the dark when setting the property value. “A lot of it is based on gut-feel,” said Mr Cheng.
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But Mr Dennis Ng, spokesman for mortgage consultancy portal www.housingloansg.com, believes that valuations accurately reflect current dire sentiments. He predicts the impasse will be broken in the second half of the year – when it becomes a buyers’ market. “Ultimately one party will give way,” said Mr Ng.
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For now, Chesterton Suntec International’s Mr Tan has this advice for prospective buyers: “You can afford to wait. Only go (into a transaction) when it is a property you really like and it is within your affordability.”

Owners still asking for sky-high prices while bank valuations fall
 

VIBGYOR

Alfrescian
Loyal
bottom out meh? prices still sky high..where got bottom out?

how to collapse if the govt. set the prices for land and HDB flats?
 

no_faith

Alfrescian (Inf)
Asset
imho, maybe but not so soon.
the govt can open the gate and allow more FT in to boost the property.
 

blur sotong

Alfrescian (Inf)
Asset
imho, maybe but not so soon.
the govt can open the gate and allow more FT in to boost the property.

Absolutely. This has been the maiin cause for propping up the property market for the recent years.

Pity the younger generations.

Their lives have been sold out with the prostitutes opening their legs so wide to welcome anybody.
 

kulgai

Alfrescian
Loyal
3 years have passed since the last posting....... see how accurate sbf predictions?

In the last few years, some have even sold off their houses and waited it out in their rented apartments only to witness the rapid erossion of their wealth due to the ever rising property prices. This is 1 mistake that repeats itself in every property cycle. Whilst there will be corrections along the journey, one whould never jump the gun so as to preserve one's wealth.
 

BuiKia

Alfrescian (InfP)
Generous Asset
Aiyah...property no right time or wrong time one. As long as it is for your own stay, anytime is also a good time as long as you can afford and like the place. If for investment, must have 2 house at least to play.
 

blissquek

Alfrescian
Loyal
In the last few years, some have even sold off their houses and waited it out in their rented apartments only to witness the rapid erossion of their wealth due to the ever rising property prices. This is 1 mistake that repeats itself in every property cycle. Whilst there will be corrections along the journey, one whould never jump the gun so as to preserve one's wealth.

Thats what exactly happen to my frd who wants to buy a landed then , a 3000 sq ft 2 storey terrace..asking $1.6 mio , 2 years back..now deal done at $2.8 million...what he cashed out and made $600k on his condo all gone up in smoke...

He is still " naked"..meaning without a house asset and still renting the apartment for the last 2 years...and..and, he keeps paying higher rent...

Many, like him still waiting for a correction....
 

valiant20

Alfrescian (InfP)
Generous Asset
Property still on the rise.. someone I know bought an older Semi-D (built early 90s) last year for 1.9 mil.. renovated the interior (adding rooms, redoing pipes, adding toilets, etc).. and just sold it for $3.5 million last week.. :eek: talk about an annual profit of more that $1 million..

P.s. he's a contractor so he did the work himself, prob got materials on the cheap as well.
 

Capano2121

Alfrescian
Loyal
SARS didi not affect Singapore much because of the stable "DOMESTIC" population back then thus property prices was not badly affected as hoimeowners were not too busy charging up the hill on the property market! Hong Kong was badly hit as some property prices plunged by as much as 80% (The condo project that was quarantined & the condos in the area). Property prices in Singapore will only keep going up not because the real value dictate but the homeowners that has already paid a premium for their current property especially HDB owners when they factor in the purchase price, lawyers fees & loan interest plus all the renovations that they have dumped in, it's at least 30% to 35% price increase for them to just breakeven!
Until some mad men comes along & start chopping FTs up & sent the garbage to their respectives embassies, prices of property will just keep moving up because PAP claims market forces but they are the one increasing the prices of every new property release!
 

BuiKia

Alfrescian (InfP)
Generous Asset
To know if the property is going up or down is really simple actually. Just look at our Ministers, are they still buys or selling? We know that our market is controlled so we observe the people who are controlling it. Too bad I got no one close to them.
 

kulgai

Alfrescian
Loyal
Thats what exactly happen to my frd who wants to buy a landed then , a 3000 sq ft 2 storey terrace..asking $1.6 mio , 2 years back..now deal done at $2.8 million...what he cashed out and made $600k on his condo all gone up in smoke...

He is still " naked"..meaning without a house asset and still renting the apartment for the last 2 years...and..and, he keeps paying higher rent...

Many, like him still waiting for a correction....

Exactly. Unfortunately when the correction finally comes, guess what? Many of these people wont even be in a position to buy back a similar property like the ones they used to own. :(
 

Narong Wongwan

Alfrescian (Inf)
Asset
sinkieland so small and there are so many other ways for them to prop up the market....
MIWs need the market to remain buoyant........dun count on any price plunge.


Absolutely. This has been the maiin cause for propping up the property market for the recent years.

Pity the younger generations.

Their lives have been sold out with the prostitutes opening their legs so wide to welcome anybody.
 

laksaboy

Alfrescian (Inf)
Asset
There may not be any plunge, but with all the recent talk of getting Sinkies to marry/make babies, don't be surprised if property prices are deliberately moderated by the govt. Expect some announcements about this policy in the ND Rally speech.

Prediction: the property developers are not going to be happy.
 

Dinkum

Alfrescian
Loyal
S'pore Govt will not allow the property market to collapse for if the property market collapses, the political cost is much too high.

If the mass market collapses, what would happen to all those buyers who bought up properties, especially HDB units at its recent high.

Banks would also face a huge fallout too. So at worst, they would ensure that the market consolidates and stabilises.
 
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