Wednesday, June 18, 2008

About this Blog

When is Singapore Property going to crash ?

Singapore Property To Deteriorate By Year End

Posted by: Sean, 18 June 2006 in this Singapore Property Forum thread.

If property price can throw up like stone last year, I am sure the stone will also drop the same this year.

The fact is Singapore economy is going to slow down significantly by the end of this year, and this will definitely affect property prices. URA has already announced that 65,000 new condo units will TOP from 2008-2011, bringing in huge supply to the already dying property market. Imagine only 500 units sold every month but 65,000 new condos on the pipeline.

In May, we have 440 units sold but this is pathetic sale taking into account lots of new condo launches last month. Imagine we have over 20,000 real estate agents but every month, Singapore sells less than 500 units. Is this number sustainable ???? Can real estate agencies maintain their business or file for bankruptcy ??

Prices will adjust accordingly when the economy goes down. As the saying goes, what goes up will come down eventually just like the stone that you throw up. This is basic economic fundamentals.

The US economy will soon start to raise interest rates to tackle its inflationary problems, and this will bring the world economy into a recession. Soon, we will witness our mortgage rates going up chasing one after another. In 1998, interest rates went up to almost double digit (9%), making the cost of loan unbearable. What makes you think this is not possible in the future ??

And with over 65,000 new units TOP from now till 2011, we will see an abundant number of vacant units as tenants numbers will dwindle. Rental rates will significantly deteriorate. When ROI drops, property prices will follow suit. By then, will property prices increase or decrease ??? Only fools will continue to subscribe to the belief that property prices will pick up.

Very soon, the economic tsunami will come to our shores. We will witness a huge economic downturn in Singapore as we are mainly export-based economy unlike our neighbors in Asia which have a large internal economy. We will lose jobs, lose foreigners, lose our competitiveness.

And with neighboring countries catching up with us, its silly if we still persist on with our current extremely high property prices. My bet is property prices will deteriorate significantly by the end of this year due to the TOP of signature condos like The Sail, RiverGate, Watermark, Cosmopolitan and condos at Sentosa Cove etc which will bring in roughly 5,000 new luxury units to the market. These condos rental performance will set a gauge on property performance in the near future. I doubt everyone can get $10,000 a month rental for a 2-bedroom condo in Sentosa Cove in order to achieve more than 5% ROI. If this is not possible, then be prepared for an eventual downturn.

Join the Singapore Property Forum to discuss Smart Buying Tips here.

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


Post a Comment

Dear visitors:
Your comments are most welcome!

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 :)