Saturday, June 21, 2008

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Singapore Property Correction By Year End

Posted by Sean, 21 June 2008, in the Singapore Property Forum

Last year, condo prices went up by 50-100%..Can u say its guided by sentiments or greed ?? Apparently, its the developers and agents who manipulate people to pay such crazy prices...eventually these people are stuck now unable to sell their units ! So, this year, we are going to have multiple problems from all fronts as follows:

(a) US sub-prime crisis blowing out to Asian economies - affecting our exports/economic performance in the next 2 years or more

(b) Oversupply of condos from now till 2011 - more than 60,000 units will TOP at a bad economic period.

(c) Tenancy rate dropping - judging from the current selling price asked and dreamt by owners (eg. 2 bedroom in The Sail asking for S$2 million. an ROI of 5% translated to S$100,000 meaning about $9,000 monthly rental). Any fools will know this is an impossible feat to achieve. Who will rent a 2 bedroom for $9k ??? As such, be prepared for a major SHOCK when all these luxury units TOP . See how much rental can they garner in the current bad economic condition.

(d) Slow down of major economies in US, Europe and even China which is now facing a huge natural calamity in its doorstep. These 3 contribute more than 50% to Singapore exports revenue.

(e) Interest rates starting to pick up - We can see the interest rates picking up steam towards the end of this year to control inflation.

(f) Number of buyers will drop severely by the end of this year - all the buyers who seriously need a home might have already bought their homes. Some foreigners who rented units have also bought to cut down their rental expenses. As such, by end of this year, number of buyers will drop tremendously leaving only a small cream of genuine buyers and cautious investors.

It's very clear Singapore property market is moving towards a major correction towards the end of this year cause by then, we will have a clearer picture on oversupply of condos, on US and Singapore economic health, and on Interest Rate progression.

May also want to read:
History of Singapore Property 1960 to 2008
Buy or Not Buy: How to decide amid mixed market signals
Smart Buyers, 10 reasons to wait
Property Price Index Graph Plotter & Online Property Valuation


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