Wednesday, June 25, 2008

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Property Market Correction Ahead

It seems the buzz is back in the private property market and buyers are seeing lower price tags too.

Healthy weekend home sales as attractive pricing draws buyers (Business Times - 24 Jun 2008)
Price levels set below those at nearby units launched recently or not yet completed.
.. ‘Buyers will bite if you price your developments below recently launched or yet-to-be completed projects nearby and about 10 to 15 per cent above older properties in the vicinity,’ said Savills Singapore’s director of business development and marketing, Mr Ku Swee Yong. ...


Subsales carve out bigger slice of home deals (Business Times - 24 Jun 2008)
In some popular projects, average subsale prices slipped by up to 5% in the first five months
JLL's head of research (SE Asia) Chua Yang Liang expects the percentage of subsales to continue to increase till end-2008 before some high-profile projects receive their Temporary Occupation Permit (TOP). Property market watchers are keeping tabs on the potential unwinding of positions by speculators and specuvestors as the scale of such transactions could lead to a much-predicted slide in subsale prices that could ripple through the broader market. 'The danger for the market lies with short-term speculators who decide to hold back in anticipation of a higher gain but only to be caught up by insufficient investment breath. This could result in a later surge in fire sales by these speculators, or in their returning units back to developers, who in turn may be hard put to find buyers at a time when sentiment may be weak,' he argues.
Savills Singapore director (marketing and business development) Ku Swee Yong says that agents have a long list of units in high-profile condos available for the subsale market. 'But asking prices have yet to come down to a level that would be attractive to potential buyers. So we're not seeing that many subsale transactions,' he says.

For buyers who've been standing on the sidelines all this while, the question now is: Will you wait for a market correction (down ~20%) or a market crash (down ~40%) ?

That'd depend on your risk-appetite and how urgently you need to buy a property.

For investors like me who have their homes and who have already made their money in the last property peak, there's really no urgency to buy at all. People like that are in a good position to wait for the ultimate market crash, which may not come though, but what the heck, our biggest risk is to make less money from property. If a market crash does come, which is probable in view of the deteriorating global economic turmoil, people like us will be handsomely rewarded.

For home buyers who need to buy a property urgently and would like to go property-hunting, here's the cue: You're most likely to get the best bargain in a distress sale ! One more advice, do bring along with you an impartial party, preferably one with substantial experience in buying properties, on your property hunt.



May also want to read:
Buy or Not Buy: How to decide amid mixed market signals
When to Buy, When Not to by
Property Price Index Graph Plotter & Online Property Valuation
History of Singapore Property 1960 to 2008




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The blogger here has been affectionately named by close allies as "Smart Buyer" but really, he's not smart. Smart Buyer just believes that being prudent is smart. That's the essence of the message of this blog and Smart Buyer hopes it'll benefit other property buyers.

Smart Buyer :)