Saturday, February 9, 2008

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Smart Buyers Collection: main cause of today's boom is the massive rate of enbloc dislocation..

Smart Buyers Collection is a collection of words of wisdom by various Singapore property watchers.

By: Oct10
Posted: 12-10-2007

I recently sold my suburban investment property in July 2007 just after it crossed the 1996's peak value for similar property types.

I took the 96 peak as a benchmark that while there may still be some upside in today's property boom, it's not going to be very much more.

In my mind the 1996 frenzy was greater than the current one, even without the IRs, F1, 6m population, etc. Back then, Hong Kong was priming for its return to Communist China in 1997, and many Hongkongers were buying up properties in Singapore and taking up residency here and elsewhere in their bid to secure external homes. Singapore was one of the four roaring economic tigers, the sense of job security was much higher than now, employer's CPF contribution was at its highest, bank loans were easy to obtain, expats here had very generous housing package (unlike now), every IPO was many times oversubscribed, people were queueing up for property launches DAYS in advance, and practically one out of four sales was a subsale ...

No, today's frenzy is nowhere like that in the mid 90s. To me, the main cause of today's boom is the massive rate of enbloc dislocation over a very short period of time, something we didn't have in the mid-90s. The IR factor is puny compared to the other forces at play in the mid-90s. Yes, there may be more enbloc-induced wealth this time, but the appetite for speculation was stronger last time.

Once the enbloc pace slows down, I think we may not see any huge upside anymore now that we have largely surpassed the 90s' peak.


Anonymous said...

Current HDB prices are also absurb, passing the $750K mark for a brand new 4 room flat in Bishan - Natura Loft.

How high can resale prices fetch when the income cap is $8,000.

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