<TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR>Herd instinct may lead to property bubble
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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->THE recent surge in sales of new condominium developments seems like a godsend, but there's a fear that things may be building up to a bubble.
It could just be speculative demand as some of the terms offered by developers are very attractive. Commonly, there is a 5 per cent deposit and a 15 per cent payment within eight weeks, with no further payment till the Temporary Occupation Permit (TOP) period, which may be in two to three years' time.
People who book these apartments basically invest 20 per cent of the property price and may flip the property within the two-year period and make a tidy profit.
Last month, 1,825 new homes were sold, according to the Urban Redevelopment Authority, up from 1,673 in May and 1,216 in April. At this rate, 20,000 units may be sold this year, with a good number having their TOPs in two to three years' time. That's when a crunch could come about, as buyers put their properties on the market before having to fork out the full amount. Will there be ready buyers?
The recent surge in sales boils down to the herd mentality of Singaporeans and I suggest that caution be exercised. No need to follow the crowd. After all, the property prices are not so attractive when you think that a condominium of about 1,000 sq ft may cost up to $1 million, not a small amount of money.
Anil Bhatia
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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->THE recent surge in sales of new condominium developments seems like a godsend, but there's a fear that things may be building up to a bubble.
It could just be speculative demand as some of the terms offered by developers are very attractive. Commonly, there is a 5 per cent deposit and a 15 per cent payment within eight weeks, with no further payment till the Temporary Occupation Permit (TOP) period, which may be in two to three years' time.
People who book these apartments basically invest 20 per cent of the property price and may flip the property within the two-year period and make a tidy profit.
Last month, 1,825 new homes were sold, according to the Urban Redevelopment Authority, up from 1,673 in May and 1,216 in April. At this rate, 20,000 units may be sold this year, with a good number having their TOPs in two to three years' time. That's when a crunch could come about, as buyers put their properties on the market before having to fork out the full amount. Will there be ready buyers?
The recent surge in sales boils down to the herd mentality of Singaporeans and I suggest that caution be exercised. No need to follow the crowd. After all, the property prices are not so attractive when you think that a condominium of about 1,000 sq ft may cost up to $1 million, not a small amount of money.
Anil Bhatia
