Wednesday, July 2, 2008

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Prime Property Price Fall: Mass Market and HDB Resales will eventually see snow-ball effect

Prime property price falls for the first time in 4 years. Eventually one'd expect to see a snowball effect into the private condos mass market and HDB resales market. We'd all remember that it was the prime property market that triggered the recent property boom in the first place. It's therefore logical to expect a reversal of the market movement now, right ?

Let's examine some market responses in the news excerpts below:

Mass market stays buoyant as buyers find price is right - Business Times, 2 Jul 2008 .....
Dr Chua added that demand remained favourable in the OCR supported by average nominal wage increases in the Q1 2008 and ‘dislodged residents of collective sale sites’ ... CBRE Research executive director Li Hiaw Ho noted that in the private property market, most of the transactions were mid and mass-market projects with the majority of transactions in the $750-$1,000 psf price bracket.

Prime property districts’ prices show 1st fall in 4 years: DTZ -Business Times, 2 Jul 2008 .....
PROPERTY prices in the prime districts of District 9, 10 and 11 have registered their first fall in four years and DTZ Debenham Tie Leung believes that this downturn in sentiment could spill over to the non-prime districts. .... DTZ’s basket of properties for prime freehold non-landed resale residential homes include Cairnhill Crest, The Pier at Robertson and Botanic on Lloyd and capital values averaged $1,410 per square foot (psf) in Q2 2008, reflecting a 4.7 per cent quarter-on-quarter (qoq) decline. Capital values had remained at $1,480 psf for the two previous quarters.

Private home prices may have peaked - Straits Times, 2 Jul 2008 .....
But things were cheerier among cheaper homes, with prices of suburban condominiums and HDB resale flats continuing to climb.

Slowdown in private market spells end of en bloc fever - Today - 2 Jul 2008
Cushman and Wakefield managing director Donald Han said that in such a weak market, it would be futile for sellers to wait for their right price. “In some cases, you are better off making a decision to sell your unit directly on the open market.”..... Mr Nicholas Mak, Knight Frank director of research and consultancy, said some developers who bought during the high face the challenge of waiting out weak market sentiment - although different developers will have different holding strength. ..... The worst-case scenario - where a developer has to sell at less than cost, resulting in a write-off on the balance sheet - will only happen in a recessionary scenario, such as during the Asian Financial Crisis or Sars period, said Mr Mak.

Prices of HDB resale flats still climbing - Straits Times, 2 Jul 2008
4.4% jump in second quarter, given strong demand, tight supply and higher valuations

PRs help drive flat resale prices - Today, 2 Jul 2008
AS SOARING rental rates add to their cost burden, more Permanent Residents (PRs) are snapping up Housing and Development Board (HDB) resale flats.

In summary, we are seeing a downgrading of housing demand: It started with the dislodged, cash-rich enbloc sellers downgrading to the mass market which results in a shortage of supply causing price adn rent for condos to soar, this then causes foreigners to buy instead of rent which causes HDB resales price to surge, ....

Will we see a reverse market action? Probably but it's going to take time. Time unfortunately is not on the side of all those desperate home-seekers which maybe forced to over-commit. Like this desperate home-seeker, everything is working against him. Time will also bring on more supply, possibly even over-supply, but for these desperate home-seekers, it'd have all come too late. Worst of all, if the economy plunges into sharp decline, it'd also be these desperate home-seekers who stand to lose the most. *sigh*

So if you can afford to wait, it's best to wait.

May also want to read:
History of Singapore Property 1960 to 2008
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
Your Property Investment Determines Your Financial Success in Your Life
HDB Resales: West Sees Highest Price Increase


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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.

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