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Coffeeshop Chit Chat - Sinkapore BOOOOM time before the BOOMZ!</TD><TD id=msgunetc noWrap align=right> </TD></TR></TBODY></TABLE><TABLE class=msgtable cellSpacing=0 cellPadding=0 width="96%"><TBODY><TR><TD class=msg vAlign=top><TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR class=msghead><TD class=msgbfr1 width="1%"> </TD><TD><TABLE border=0 cellSpacing=0 cellPadding=0><TBODY><TR class=msghead vAlign=top><TD class=msgF width="1%" noWrap align=right>From: </TD><TD class=msgFname width="68%" noWrap>Fkapore <NOBR></NOBR> </TD><TD class=msgDate width="30%" noWrap align=right>4:35 am </TD></TR><TR class=msghead><TD class=msgT height=20 width="1%" noWrap align=right>To: </TD><TD class=msgTname width="68%" noWrap>ALL <NOBR></NOBR></TD><TD class=msgNum noWrap align=right> (1 of 3) </TD></TR></TBODY></TABLE></TD></TR><TR><TD class=msgleft rowSpan=4 width="1%"> </TD><TD class=wintiny noWrap align=right>32572.1 </TD></TR><TR><TD height=8></TD></TR><TR><TD class=msgtxt>Economy
The balloon inflates
Infused with foreign money, Singapore moves from recession to over-heatedly buying up properties, cars, stocks, you name it. By Seah Chiang Nee
May 2, 2010 SEEMINGLY at the wave of a magic wand, Singapore has moved from crisis to boom – or to be precise, a buying frenzy – in a few short months.
The strongest run is in property, with Singaporeans and foreigners snapping up private and public flats throughout the island, some of them paying ridiculously high prices.
The spectre of an asset bubble hovers above the real estate market, and this has led to a few government measures to discourage speculation.
And the splurging by Singaporean consumers has also extended to stocks, cars, and other expensive items.
I experienced at first-hand its extent near my estate recently after a big hawker centre closed for renovation.
On the same weekend, instead of moving to a similar centre elsewhere, its traditional customers spilled into many of the diverse more expensive restaurants in a shopping mall.
The restaurants, used to only average business, were scrambling to cope with the overflowing crowds.
Why are Singaporeans spending and spending in these uncertain times?
The main reason is, of course, a strong rebound from the republic’s worst modern-day recession, which was officially pronounced over last November.
The recovery had caught even the government by surprise. In the first quarter that followed, economic growth soared by 32%, from minus 2.1% in 2009.
With this year predicted to be a strong one (7%-9% growth), Singa-poreans, especially the Yuppies, are going on a buying spree for stocks, real estate, cars and luxury items.
The spending spree is undoubtedly fuelled by foreign money and new wealthy and above-middle class arrivals, as well as high liquidity and low interest rates.
It prompted a foreign magazine to report: “Singapore has gone from being one of the most depressed housing markets (in 3rd quarter of 2009) to being the second-frothiest in the three months to March.”
The bubble threat is felt most in resale public flats (these Housing Development Board flats house 80% of the population) that foreigners on PR can buy.
The property hunt pushed up prices of resale government apartments by 40% in the last three years, and by 3.8% in the last quarter.
In the more expensive private sector, the jump was even sharper – by 7.1% in the last four months of 2009.
The impact was a painful spike in the general cost of living.
Mercer has ranked the republic as the world’s 10th costliest city, even more expensive than Hong Kong (11th), New York (23rd) and London and Amsterdam (both ranked 27th).
Two other over-heated items that were related to real estate were cars and stocks.
Cars – already the world’s dearest, the average price of one has just gone up by S$5,000-S$10,000 because the Certificate of Entitlement (COE) that a car buyer needs to have has skyrocketed.
The COE for a big car, for example, has hit S$45,000, up S$9,400, while that for a small car (below 1,600cc) is S$34,001, a 19.8% increase.
“It’s like a tsunami in the car market,” said an enthusiast.
Stocks – Singaporeans also chased stocks from the pre-crisis low of 1,450 (as measured by the Singapore Straits Times Index) to just below 3,000 at the time of writing – only a few hundred points from its record 3,800.
A potential asset bubble, especially in property, is causing concern that Singaporeans who have over-paid may be burned should the foreign money leave or another crisis hit the city.
Aspiring to own a property is the passion of every Singaporean. As a result, some upper middle class investors buy several to get a healthy return renting to foreigners.
Some take loans of 20-30 years tenure, hoping the rents will help them repay the banks. It works only as long as the economy is strong and foreigners keep coming in.
In past downturns, property bubble busts had wiped out entire savings and caused bankruptcies.
Will the current frenzy lead to an over-bought, over-priced market and create a potential time-bomb?
“The risk of an asset bubble is quite high in certain (economies) such as China, Hong Kong and Singapore,” said a property consultant.
Aware of the risks of Singapore having too many over-valued properties, the Government has taken a few mild measures to dampen speculation.
It has threatened a bigger stick should the buying frenzy continue.
Is a bubble forthcoming?
Moody’s Investors Service said that mortgage lending was accelerating at a rate that made Singapore more susceptible to a property bubble than Hong Kong or South Korea.
A Singaporean said in a letter to the press: “The property market, including the Government flats, is a bubble.
“When the interest rate goes up, as it surely will, the bubble will burst, and a lot of people are going to get hurt.”
An added reason is the rising demand by foreigners in a territory that is the 12th wealthiest in the world in terms of gross domestic product per capita.
Each square foot of land is a desirable asset whose value never declines for long.
(This was published in The Star on May 1, 2010)
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The balloon inflates
Infused with foreign money, Singapore moves from recession to over-heatedly buying up properties, cars, stocks, you name it. By Seah Chiang Nee
May 2, 2010 SEEMINGLY at the wave of a magic wand, Singapore has moved from crisis to boom – or to be precise, a buying frenzy – in a few short months.
The strongest run is in property, with Singaporeans and foreigners snapping up private and public flats throughout the island, some of them paying ridiculously high prices.
The spectre of an asset bubble hovers above the real estate market, and this has led to a few government measures to discourage speculation.
And the splurging by Singaporean consumers has also extended to stocks, cars, and other expensive items.
I experienced at first-hand its extent near my estate recently after a big hawker centre closed for renovation.
On the same weekend, instead of moving to a similar centre elsewhere, its traditional customers spilled into many of the diverse more expensive restaurants in a shopping mall.
The restaurants, used to only average business, were scrambling to cope with the overflowing crowds.
Why are Singaporeans spending and spending in these uncertain times?
The main reason is, of course, a strong rebound from the republic’s worst modern-day recession, which was officially pronounced over last November.
The recovery had caught even the government by surprise. In the first quarter that followed, economic growth soared by 32%, from minus 2.1% in 2009.
With this year predicted to be a strong one (7%-9% growth), Singa-poreans, especially the Yuppies, are going on a buying spree for stocks, real estate, cars and luxury items.
The spending spree is undoubtedly fuelled by foreign money and new wealthy and above-middle class arrivals, as well as high liquidity and low interest rates.
It prompted a foreign magazine to report: “Singapore has gone from being one of the most depressed housing markets (in 3rd quarter of 2009) to being the second-frothiest in the three months to March.”
The bubble threat is felt most in resale public flats (these Housing Development Board flats house 80% of the population) that foreigners on PR can buy.
The property hunt pushed up prices of resale government apartments by 40% in the last three years, and by 3.8% in the last quarter.
In the more expensive private sector, the jump was even sharper – by 7.1% in the last four months of 2009.
The impact was a painful spike in the general cost of living.
Mercer has ranked the republic as the world’s 10th costliest city, even more expensive than Hong Kong (11th), New York (23rd) and London and Amsterdam (both ranked 27th).
Two other over-heated items that were related to real estate were cars and stocks.
Cars – already the world’s dearest, the average price of one has just gone up by S$5,000-S$10,000 because the Certificate of Entitlement (COE) that a car buyer needs to have has skyrocketed.
The COE for a big car, for example, has hit S$45,000, up S$9,400, while that for a small car (below 1,600cc) is S$34,001, a 19.8% increase.
“It’s like a tsunami in the car market,” said an enthusiast.
Stocks – Singaporeans also chased stocks from the pre-crisis low of 1,450 (as measured by the Singapore Straits Times Index) to just below 3,000 at the time of writing – only a few hundred points from its record 3,800.
A potential asset bubble, especially in property, is causing concern that Singaporeans who have over-paid may be burned should the foreign money leave or another crisis hit the city.
Aspiring to own a property is the passion of every Singaporean. As a result, some upper middle class investors buy several to get a healthy return renting to foreigners.
Some take loans of 20-30 years tenure, hoping the rents will help them repay the banks. It works only as long as the economy is strong and foreigners keep coming in.
In past downturns, property bubble busts had wiped out entire savings and caused bankruptcies.
Will the current frenzy lead to an over-bought, over-priced market and create a potential time-bomb?
“The risk of an asset bubble is quite high in certain (economies) such as China, Hong Kong and Singapore,” said a property consultant.
Aware of the risks of Singapore having too many over-valued properties, the Government has taken a few mild measures to dampen speculation.
It has threatened a bigger stick should the buying frenzy continue.
Is a bubble forthcoming?
Moody’s Investors Service said that mortgage lending was accelerating at a rate that made Singapore more susceptible to a property bubble than Hong Kong or South Korea.
A Singaporean said in a letter to the press: “The property market, including the Government flats, is a bubble.
“When the interest rate goes up, as it surely will, the bubble will burst, and a lot of people are going to get hurt.”
An added reason is the rising demand by foreigners in a territory that is the 12th wealthiest in the world in terms of gross domestic product per capita.
Each square foot of land is a desirable asset whose value never declines for long.
(This was published in The Star on May 1, 2010)
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