Wednesday, March 19, 2008
About this Blog
Don't go on propaganding this rosy picture about IR and remaking Singapore, and so property price must go up. This rosy picture is good enough to keep Singaporeans with a fairly comfortable life but million dollars property is still out of the affordability for most. If such propaganda succeeds, then we will see more Singaporeans over paying for their property and living a miserable life working like dogs to pay off what should just be a roof over the head.
As long as the government is committed to meeting housing demand and keeping it affordable, there is no reason to believe that property price should go beyond the affordability of the average household.
Singapore Property is over-priced
Why's everybody blaming the US subprime problem for the poor take-up in the Singapore property market? The way I see it, the real problem is over-pricing. A typical unit in the suburb costs about $1M and can be rented for $3K which gives only a yield of 3%. That's a very high risk for such a low return. CPF gives 2.5% with no risk. Of course some people will argue that the rental yield is only to pay for the interest, "I can sell it at much higher price for profit" but if the present owner gets 3% and let's say he sells it at a higher price, then the next buyer will be looking at an even lower return ... eventually a property is only a home for someone and it boils down to people's affordability. With an average household income of $6K, a mass market priced above $1000 psf is simply beyond the reach of most people. It's simple mathematics.Don't go on propaganding this rosy picture about IR and remaking Singapore, and so property price must go up. This rosy picture is good enough to keep Singaporeans with a fairly comfortable life but million dollars property is still out of the affordability for most. If such propaganda succeeds, then we will see more Singaporeans over paying for their property and living a miserable life working like dogs to pay off what should just be a roof over the head.
As long as the government is committed to meeting housing demand and keeping it affordable, there is no reason to believe that property price should go beyond the affordability of the average household.
Tuesday, March 18, 2008
About this Blog
"In the long run, the major problem that Singapore will face is with talent renewal i.e. getting talented people to be involved professionally at the various levels of government and support industries. If this problem cannot be resolved, it will eat into the growth prospects of the country. This issue will be seen after the next five years and will ripen (given the current state of things) within ten to twelve years."
By: Anonymous
Posted: 18-03-2008
Here is what I feel we can see in the next five years:
Singapore, on a whole, is competitive and is still working hard to bring in investments. The economic fundamentals are sound and economic growth should not be a major issue. Making money should not be a problem in Singapore for the next five years. The only concern I have are the social problems which come with the changes that have been implemented and will be implemented over the next few years. There will be more social decay and while this will not have much impact in the short-term, it may grow to become one of the biggest problems we have as a nation.
The situation is dire in the US. I get my information not just from the media; it comes from my contacts in the States. On the ground, those in the financial industry are aware that there will be massive changes in the next few months due to the financial revelations that are gradually being made. Bear Stearns is just the tip of the iceberg and the Federal Reserve is aware of that. If they did not act over the weekend to contain the fallout from the Bear Stearns melt-down, we will see more financial institutions declaring similar problems early this week. Nevertheless, many folks believe that the actions by the Feds have come too late to be of significant effect on the inevitable outcome in the next few months; investor confidence has been shaken sufficiently that pull-out of funds could occur on the fall of a pin.
Ironically, this fallout may be necessary for recovery to even start. The later it happens, the longer it takes for the US economy to recover. As long as there are financial institutions that do not come clean (either of their own volition or compelled by circumstances e.g. Bear Stearns), there will always be uncertainty in the economy and that prevents the recovery at the various levels.
Now, in spite of the numerous claims that Asian economies are more or less decoupled from the US economy, I believe that it is a very optimistic view. Many countries, China included, have the US as a major customer where exports are concerned. The US$ is linked to much of the global economy e.g. oil and currencies. Thus, it is unavoidable that US-centric recession or inflation problems will cascade to other countries in the world.
Economic slowdown/recession is one set of problems. The other is inflation. If the US manages to resolve recessionary concerns, it will face another big hurdle in the growing inflation that its people are plagued with. Inflation is also something that many governments will have to put high up on their agenda this year and next.
The greater irony of all these is that it might be good for Singapore that we are not growing that quickly. The danger of uncontrolled exuberant growth is that a bubble can form unknowingly. When a bubble forms, it is a matter of time before it bursts. The problems that the world is facing right now serve to temper the growth that our country is having and helps to break bubbles that may form along the way. Though the bursting of these smaller bubbles may have some detrimental effect on our economy in general, they ensure that our growth is based on strong fundementals and not on just make-believe.
My feel for the property market is that there will be some reversal of the exuberance that we saw last year. A significant percentage (about 60% to 70%) of the price growths last year came from unfounded exuberance. This means that the bubbles that have formed will burst because the exuberance will have been negated by the global economic slowdown. Thereafter, the cycle starts again as exuberance starts to build together with the actual economic benefits of the implementations (IR, etc) coming in.
In the long run, the major problem that Singapore will face is with talent renewal i.e. getting talented people to be involved professionally at the various levels of government and support industries. If this problem cannot be resolved, it will eat into the growth prospects of the country. This issue will be seen after the next five years and will ripen (given the current state of things) within ten to twelve years.
Thus my humble view is that:
2008 - year of reduction perhaps to slightly better than late 90s levels.
2009 - increasingly better than 2008
2010 - significant exuberance from materialising benefits
2011 - year of changes - deflating complacency
2012 - reinventing singapore for the next mile
Major problem Singapore faces is talent renewal
Smart Buyers Collection is a collection of words of wisdom by various Singapore property watchers."In the long run, the major problem that Singapore will face is with talent renewal i.e. getting talented people to be involved professionally at the various levels of government and support industries. If this problem cannot be resolved, it will eat into the growth prospects of the country. This issue will be seen after the next five years and will ripen (given the current state of things) within ten to twelve years."
By: Anonymous
Posted: 18-03-2008
Here is what I feel we can see in the next five years:
Singapore, on a whole, is competitive and is still working hard to bring in investments. The economic fundamentals are sound and economic growth should not be a major issue. Making money should not be a problem in Singapore for the next five years. The only concern I have are the social problems which come with the changes that have been implemented and will be implemented over the next few years. There will be more social decay and while this will not have much impact in the short-term, it may grow to become one of the biggest problems we have as a nation.
The situation is dire in the US. I get my information not just from the media; it comes from my contacts in the States. On the ground, those in the financial industry are aware that there will be massive changes in the next few months due to the financial revelations that are gradually being made. Bear Stearns is just the tip of the iceberg and the Federal Reserve is aware of that. If they did not act over the weekend to contain the fallout from the Bear Stearns melt-down, we will see more financial institutions declaring similar problems early this week. Nevertheless, many folks believe that the actions by the Feds have come too late to be of significant effect on the inevitable outcome in the next few months; investor confidence has been shaken sufficiently that pull-out of funds could occur on the fall of a pin.
Ironically, this fallout may be necessary for recovery to even start. The later it happens, the longer it takes for the US economy to recover. As long as there are financial institutions that do not come clean (either of their own volition or compelled by circumstances e.g. Bear Stearns), there will always be uncertainty in the economy and that prevents the recovery at the various levels.
Now, in spite of the numerous claims that Asian economies are more or less decoupled from the US economy, I believe that it is a very optimistic view. Many countries, China included, have the US as a major customer where exports are concerned. The US$ is linked to much of the global economy e.g. oil and currencies. Thus, it is unavoidable that US-centric recession or inflation problems will cascade to other countries in the world.
Economic slowdown/recession is one set of problems. The other is inflation. If the US manages to resolve recessionary concerns, it will face another big hurdle in the growing inflation that its people are plagued with. Inflation is also something that many governments will have to put high up on their agenda this year and next.
The greater irony of all these is that it might be good for Singapore that we are not growing that quickly. The danger of uncontrolled exuberant growth is that a bubble can form unknowingly. When a bubble forms, it is a matter of time before it bursts. The problems that the world is facing right now serve to temper the growth that our country is having and helps to break bubbles that may form along the way. Though the bursting of these smaller bubbles may have some detrimental effect on our economy in general, they ensure that our growth is based on strong fundementals and not on just make-believe.
My feel for the property market is that there will be some reversal of the exuberance that we saw last year. A significant percentage (about 60% to 70%) of the price growths last year came from unfounded exuberance. This means that the bubbles that have formed will burst because the exuberance will have been negated by the global economic slowdown. Thereafter, the cycle starts again as exuberance starts to build together with the actual economic benefits of the implementations (IR, etc) coming in.
In the long run, the major problem that Singapore will face is with talent renewal i.e. getting talented people to be involved professionally at the various levels of government and support industries. If this problem cannot be resolved, it will eat into the growth prospects of the country. This issue will be seen after the next five years and will ripen (given the current state of things) within ten to twelve years.
Thus my humble view is that:
2008 - year of reduction perhaps to slightly better than late 90s levels.
2009 - increasingly better than 2008
2010 - significant exuberance from materialising benefits
2011 - year of changes - deflating complacency
2012 - reinventing singapore for the next mile
Monday, March 10, 2008
About this Blog
Low mortgage rate - beware of being lured into a mortgage trap. The following is a firsthand experience.
By: Anonymous
Posted: 09-03-2008
Let me just remind you people out there, I've fallen into this trap before I was offered a low housing loan for the first 3 years, when it expired the bank will start to increase the interest rate what started off a low of 2.5 % it went as high as 6 %. Imagine paying 6 % for $ 1million dollar loan. You will be working like a dog just to pay off the interest.
It's very true the housing loan rate follow SIBOR rate, when the rate drop do you think the Bank will offer you the same rate, the answer is NO. The rate they they offer new customers is definitely lower than existing customer just to attract new customers.
When SIBOR drop the Bank will not reduce your interest rate in tandem or immediately, rather you will have to approach the bank and bang thier table before they review your housing loan. At this very moment the Bank only offer me 3.8% down from 6 %.
But on the other hand when the SIBOR start to climb the Bank will automatically increase your loan interest.
Just to share real life experience......
Smart Buyers Collection: Low mortgage rate - beware of being lured into a mortgage trap
Smart Buyers Collection is a collection of words of wisdom by various Singapore property watchers.Low mortgage rate - beware of being lured into a mortgage trap. The following is a firsthand experience.
By: Anonymous
Posted: 09-03-2008
Let me just remind you people out there, I've fallen into this trap before I was offered a low housing loan for the first 3 years, when it expired the bank will start to increase the interest rate what started off a low of 2.5 % it went as high as 6 %. Imagine paying 6 % for $ 1million dollar loan. You will be working like a dog just to pay off the interest.
It's very true the housing loan rate follow SIBOR rate, when the rate drop do you think the Bank will offer you the same rate, the answer is NO. The rate they they offer new customers is definitely lower than existing customer just to attract new customers.
When SIBOR drop the Bank will not reduce your interest rate in tandem or immediately, rather you will have to approach the bank and bang thier table before they review your housing loan. At this very moment the Bank only offer me 3.8% down from 6 %.
But on the other hand when the SIBOR start to climb the Bank will automatically increase your loan interest.
Just to share real life experience......
Tuesday, March 4, 2008
About this Blog
By: Sean
Posted: 4-Mar-2008
Singapore property market is doomed to fall/decline this year and next year. The main reasons are as follows:
(a) There are still a significant number of speculators (estimated at 30%) still holding to their existing properties with the hope of making quick bucks before TOP. Unfortunately, there will be 30-40 condo developments numbering up to 20,000 units which will go TOP this year or next year. Its real unfortunate that in 2008-2009, the global economy will not improve. There will be over-supply on top of the existing sales that we see on Classified Ads every Saturday...We shall also see pages and pages of auction sales or files for bankruptcies. As such, some desperate speculators will have no choice but sell their properties at the prices which they have bought in 2006/2007 to escape from bank actions. Banks will be more stricter on extending loans and this will make life more difficult for speculators.
(b) Rentals at present moment are still steady but unfortunately getting slower and slower in uptake rates. With more and more units coming on-stream in 2008/2009, tenants will be spoilt for choice. In addition, the bleak economic prospects in US and the global economy might mean a cutdown in factory productions which ultimately will increase unemployment. We will see lesser and lesser tenants in time to come but greater and greater number of landlords willing to bring down rents.
(c) The property price in Singapore cannot be supported by the local population. This is because in 2007, property prices increase by 40% or more, mainly due to the rampant acts of speculators or enbloc sellers in the market and not by genuine homeowners. In contrast, average salary increases just an average of 5-10%. This is not consistent. Corrections are bound to happen anytime soon.
(d) Now, it seems that speculators have gone with the end of deferred payment so as the number of enbloc sellers who probably have already relocated to suburban areas. With these 2 group of buyers gone, the only ones left are the local and foreign buyers. Unfortunately, both groups of buyers are extremely cautious now with the pessimistic economic outlook. These buyers have got burnt from stock investments as well as got stuck with existing properties.
(e) Singapore is in big trouble now. We can see this with the 'aggressive activities by our ministers to tap the Middle East market and investment...hoping to get more investors from these countries to come to Singapore.'. Unfortunately, this is not going to happen anytime soon. The Middle East consumers/investors are more attuned to Muslim markets like Malaysia, Indonesia and Turkey and not Singapore. We can witness the thousands of Middle East tourists that come to Malaysia compared to a mere hundreds that come here. And bear in mind that the Middle East millionaires are more proned to dumping their properties when they see no real values in retaining them due to their huge pockets.
(f) Its true that the markets of the future belong to those rich in commodities like Middle East countries and Malaysia which are rich in oil and natural resources. Unfortunately, Singapore does not have any of these qualities. Singapore is in many ways like a miniature US. We depend a lot on the existing local talents as well as investments from overseas. Our economy is export-based with the US being our biggest customer. We will be the worst-hit when the credit crisis reach our homeland anytime soon unlike the Middle East countries which have high-priced oil to back them up. Even Middle East will be affected soon when their oil price drops when demand goes down with the recession in the long term. No one is immuned to the US economy.
(g) Property transactions in Singapore is probably the lowest in a decade in February this year. I hardly see any transactions going on in some areas of Singapore. This is a very bad sign. When there are no buyers but many sellers...and many many more sellers by the end of 2008...and economy gets worst in end-2008, and we will see even fewer buyers..unless there is a major price correction, many sellers will get burnt and lose everything including their 20% deposit to buy the property. Banks will lower their property valuations when economy gets bad and sellers will be hard pressed to compete for buyers' money.
(h) Even the IR, F1 Grand Prix, Youth Olympics etc will not do much to hype up the property market at a time of economic downturn. This is because F1 Grandprix is only held less than a week in a year so as the Youth Olympics. IR/Casinos are found not only in Singapore but also in Malaysia, Korea and US. When times are bad, no one will be gambling away their money at the casinos. In year 1996, Singapore property market experienced its most robust year, even better than 2007, where buyers pay people to queue up for units. At that time, our government even plans to have a bullet train to link to Malaysia, and are talking up plans to expand the Marina Bay area with their huge land reclaimation efforts. Government also has great plans for Tanjong Rhu area with a Marina and Marine Village planned. But the 1997 currency crisis came and every plans that we had go down buried in the grounds for 7 or more years....What makes you think that this wont happen again this year round ???
(i) Have you ever considered why Government corporations like Temasek and GIC are heavily investing in US/European banks to keep them afloat from the sub-prime crisis ?? It is because Singapore has so much stake to lose if these crisis goes uncontrolled....from the pattern, it seems that the damage is already done and cannot be undone despite the massive injections of funds from GICs and Sovereign Funds. The US economy is in debt to the tune of US$3 trillion or more....How to rectify these problems ???
And so, my friends, if you still think that the already overpriced property prices in Singapore will go up further, you are indeed dreaming. Wake up to reality !
Smart Buyers Collection: Singapore property market is doomed
Smart Buyers Collection is a collection of words of wisdom by various Singapore property watchers.By: Sean
Posted: 4-Mar-2008
Singapore property market is doomed to fall/decline this year and next year. The main reasons are as follows:
(a) There are still a significant number of speculators (estimated at 30%) still holding to their existing properties with the hope of making quick bucks before TOP. Unfortunately, there will be 30-40 condo developments numbering up to 20,000 units which will go TOP this year or next year. Its real unfortunate that in 2008-2009, the global economy will not improve. There will be over-supply on top of the existing sales that we see on Classified Ads every Saturday...We shall also see pages and pages of auction sales or files for bankruptcies. As such, some desperate speculators will have no choice but sell their properties at the prices which they have bought in 2006/2007 to escape from bank actions. Banks will be more stricter on extending loans and this will make life more difficult for speculators.
(b) Rentals at present moment are still steady but unfortunately getting slower and slower in uptake rates. With more and more units coming on-stream in 2008/2009, tenants will be spoilt for choice. In addition, the bleak economic prospects in US and the global economy might mean a cutdown in factory productions which ultimately will increase unemployment. We will see lesser and lesser tenants in time to come but greater and greater number of landlords willing to bring down rents.
(c) The property price in Singapore cannot be supported by the local population. This is because in 2007, property prices increase by 40% or more, mainly due to the rampant acts of speculators or enbloc sellers in the market and not by genuine homeowners. In contrast, average salary increases just an average of 5-10%. This is not consistent. Corrections are bound to happen anytime soon.
(d) Now, it seems that speculators have gone with the end of deferred payment so as the number of enbloc sellers who probably have already relocated to suburban areas. With these 2 group of buyers gone, the only ones left are the local and foreign buyers. Unfortunately, both groups of buyers are extremely cautious now with the pessimistic economic outlook. These buyers have got burnt from stock investments as well as got stuck with existing properties.
(e) Singapore is in big trouble now. We can see this with the 'aggressive activities by our ministers to tap the Middle East market and investment...hoping to get more investors from these countries to come to Singapore.'. Unfortunately, this is not going to happen anytime soon. The Middle East consumers/investors are more attuned to Muslim markets like Malaysia, Indonesia and Turkey and not Singapore. We can witness the thousands of Middle East tourists that come to Malaysia compared to a mere hundreds that come here. And bear in mind that the Middle East millionaires are more proned to dumping their properties when they see no real values in retaining them due to their huge pockets.
(f) Its true that the markets of the future belong to those rich in commodities like Middle East countries and Malaysia which are rich in oil and natural resources. Unfortunately, Singapore does not have any of these qualities. Singapore is in many ways like a miniature US. We depend a lot on the existing local talents as well as investments from overseas. Our economy is export-based with the US being our biggest customer. We will be the worst-hit when the credit crisis reach our homeland anytime soon unlike the Middle East countries which have high-priced oil to back them up. Even Middle East will be affected soon when their oil price drops when demand goes down with the recession in the long term. No one is immuned to the US economy.
(g) Property transactions in Singapore is probably the lowest in a decade in February this year. I hardly see any transactions going on in some areas of Singapore. This is a very bad sign. When there are no buyers but many sellers...and many many more sellers by the end of 2008...and economy gets worst in end-2008, and we will see even fewer buyers..unless there is a major price correction, many sellers will get burnt and lose everything including their 20% deposit to buy the property. Banks will lower their property valuations when economy gets bad and sellers will be hard pressed to compete for buyers' money.
(h) Even the IR, F1 Grand Prix, Youth Olympics etc will not do much to hype up the property market at a time of economic downturn. This is because F1 Grandprix is only held less than a week in a year so as the Youth Olympics. IR/Casinos are found not only in Singapore but also in Malaysia, Korea and US. When times are bad, no one will be gambling away their money at the casinos. In year 1996, Singapore property market experienced its most robust year, even better than 2007, where buyers pay people to queue up for units. At that time, our government even plans to have a bullet train to link to Malaysia, and are talking up plans to expand the Marina Bay area with their huge land reclaimation efforts. Government also has great plans for Tanjong Rhu area with a Marina and Marine Village planned. But the 1997 currency crisis came and every plans that we had go down buried in the grounds for 7 or more years....What makes you think that this wont happen again this year round ???
(i) Have you ever considered why Government corporations like Temasek and GIC are heavily investing in US/European banks to keep them afloat from the sub-prime crisis ?? It is because Singapore has so much stake to lose if these crisis goes uncontrolled....from the pattern, it seems that the damage is already done and cannot be undone despite the massive injections of funds from GICs and Sovereign Funds. The US economy is in debt to the tune of US$3 trillion or more....How to rectify these problems ???
And so, my friends, if you still think that the already overpriced property prices in Singapore will go up further, you are indeed dreaming. Wake up to reality !
Subscribe to:
Posts (Atom)
