Friday, August 29, 2008

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Buying Property Advice: Private Property Subsales 97% Profitable: Premature to enter Private Property Market now

The Business Times reported on Tue, August 26, 2008, that 97% of the subsales in the private property market for the first seven months of this year have made profits.

In response, forumers at the Singapore Property Forum cautioned property buyers that it's premature to enter the property market now. Some of their views are given below:

"Look at today business time about Subsales. If you decide to buy the subsales at current price, beware that you are paying 30-100% more from the earlier buyers. They can sell below your value and still make a profit in the future. You will definitely have a big loss later. Unless you are ok with that fact, then it's fine as some of those locations are quite alright. "

".. there are always people who think they're acting ahead of the herd and when actually they have bought at still higher prices in the subsale market creating the peak price for themselves..but take note, there aren't may subsales and there aren't many such buyers around (to take over your hot potatoes) .. "

"that's why i think it's still premature to buy now ... in fact buying now means you're most likely to be right at peak of the property cycle ... kiasu will make you even more prone to suing .. like minister mah said, "let others go first, there are many more boats coming .."

"Yes, you have to be careful when you buy right now. Know the details of the project. There should be some developers able to lower their price later but you have to monitor the sentiment also. When it improves, some of the area where price is good might turn around, however, higher one might be still tough. "

"i think it's best to wait until next year .. signals to watch out are the 3 Rs: Recession, Retrenchment and Repossession .. when you hear the last R, then it's time to come out from the hiding and start property hunting. "

"You are right. The bottom is always at the time when some people turns bankrupt and repossession of properties by banks. "

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


Anonymous said...

superior profits made by speculators need to be flushed out to ensure an safe and orderly property market. The Government had made them too good for them to reap such large profits with no productivity or contributions to the country. Only misery and division within the country would eventually surface. Government has to take measure to establish an equilibrium, perhaps restore the capital gain tax now (like in other countries) and other measures to curb speculation. We cannot let speculations and market forces to rule our small state of a city within a city.

Blogger said...

The current US Subprime crisis is a concrete evidence of how free market forces driven by greed can fail utterly. Government regulations are definitely needed.

Anonymous said...

In today's market there is a very much mix environment that is unusual from previous downturn when every industries are badly hurt because of US market. This time round, you may witness an unusual phenomenon in the market. You will see some industries suffering because of US subprime. We have already seen those directly related are already being hit badly and are still trying as hard as possible to stay afloat to avoid being sucked into the whirlpool, while following are those indirectly related evidently will soon be pulled down into the downward spiral by the subprime crisis. While on the other hand, we have industries growing robustly from strong Asia strong especailly from super econmony like China & India. I believe we will not see the 3 R surfacing because depending on which side of the fence those currently had bought properties during the recent property boom. yers are on but definately there will be repossesion when people who over invested and there are those who unable to sustain their property because of retrenchment. Prediction early 2009 we might see a trickle of panic selling from investors. Should market further drag to Q2, we may then witness a tsunami panic sellers (both investors and owners). If things don't improve & will treat of oil price increasing, we may see this happening as early as Dec 2008. So we have a pool of panic seller while also we have on the sideline a pool of property vultures waiting. If the supply are greater than the demand then we are in for a game of property hunting unless it swing otherwise.

LiQiang said...

Smart, I am currently house-hunting, in anticipation of returning home from overseas with my new family. However I am loathe to enter the property market when price are this high.

This is my dilemma: Only resale HDB and private property are options open to me.

With a new condo, as it's off-plan anyway, I can pretty much just move in with the babies and the bags. I'm self-employed, and this way I can work productively from nearly day 1, and bring in some income.

With a HDB flat, I will need to rent somewhere while I hunt for a suitable unit, possibly need to renovate, THEN move in. During which time, for oh about 6 months optimistically, I expect to have less time to focus on work and therefore less income.

Going the second route seems like the financially prudent option. But the easy route is tempting. Am I being a sucker if I cave in and buy private property at this point in the cycle? Is the HDB route worth the hassle for the money I save? (I can afford the monthly payments on the condo, but I hate not getting a bargain!!)

Do advise me if you can, I am on the verge of making an offer on the (sub-sale!) condo unit. I promise I won't take your word as gospel. ;)

Thanks, Liqiang

Smart Buyer said...

Dear Liqiang,
Focus on the big picture of what your priorities are: Is it asset appreciation, lifestyle or minimum financial commitment (so you can have the money for other things that are more important to you)? Don't let short-term inconveniences like renovating your home cloud your mind.

In any case, don't over-stretch yourself financially at an uncertain time like that. You may want to read "Buying Property Checklist" in the post:

Best wishes to your home hunting.

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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 :)