Saturday, August 16, 2008

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Property Investing Advice: Signs to check which way property market is heading

ARE property prices still on the way up, or are they heading to a slippery slope already?

If you are confused with so much talk on the property market these days, you are not alone.

One property consultant in a news report may say property prices will go up, but another consultant in the same report will probably say that the high prices cannot be sustained in the current climate.

So, who do you believe?

With the help from well-known market commentators - Chesterton International's research head Colin Tan and Knight Frank's research director Nicholas Mak - The New Paper compiled a checklist of 10 factors for bewildered sellers and buyers to consider before they sign on the dotted line.

Bear in mind that no one factor alone affects property prices because a cocktail of different elements are at play.

But if you do notice more of the following, you'll know that something is brewing.

More homes in the market

Plain Economics 101 - more supply vs same demand, or higher demand vs even higher supply, will eventually lead to lower prices.

For example, if the Housing and Development Board decides to bump up construction of flats in a big way, be prepared for a ripple-down effect on the property market.

Rentals start dropping

Rentals may dip due to a slowdown in demand or more supply in the market.

When rentals start dropping in a weak market, more landlords may have problems meeting their monthly instalments and up to a point, the gap will be so big that they will have to sell the property.

Agents get aggressive

You leave your name at a condo showroom and agents keep calling you, even for other projects that you didn't view.

It means that agents are getting desperate and buyers are not biting.

More units put up for sale

The Straits Times Classifieds on Saturdays come packed with numerous property advertisements, even more than during the 1996 property heydays.

And developers start to launch their projects in double-quick time to beat the rest.

No one's home?

You drive along the expressway at night and you see flanked on both sides newly completed swanky condos, but few lights are switched on, suggesting that the projects are not fully tenanted.

Asking prices have dropped. Again.

If you've been house-hunting, you'll see the signals.

A unit you've been looking at has dropped its selling price three times in the last six months, but no one is buying.

Property not moving

A unit has been advertised for more than six months, but has seen no takers. This means that buying activity has slowed down.

More units put up for rent

This means that the owners could be leveraging.

If the seller can't sell their units in a bad market, they'll try to offset their monthly mortgages by renting out their units instead. This means that buying activity has slowed down.

Economic weakness and uncertainty

If there's economic uncertainty, investors, both locals and foreigners, will be spooked and unwilling to invest in the real estate market for fear of falling prices.

Falling wages & rising unemployment

If companies are freezing recruitment and employment numbers and wages fall, affordability is also affected.

This leads to a drop in demand and similarly, prices.

This article was first published in The New Paper on July 7, 2008.

hehe, i guess i'm seeing all the elements mentioned in the article, except the last one, which is just a matter of time. that means it's a cocktail with full ingredients. property is surely heading down for now.

Posted by anonymous at the Singapore Property Forum

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


Anonymous said...

Singapore is very different and whatever downturn or retrenchments or the record low decline in Stock Exchange, this bunch of Singaporeans are very rich. On top of that, you have the very strong developers who can hold on to their land and control supply. It is easy to control in Singapore, a tiny dot through the media and publicity. They have ready cash to invest, speculate and thousands after reaping handsome gains in the last property cycle, en-bloc sales and other investments. The developers borrow with no much difficulties as the banks and Local Banks have given them billions dollars of property loans. They have very strong financial positions and from time to time, they together with the property agents, made a few speeches to prop up the market. It is easy to control the mentality of majority of SIngaporeans. Another category are the foreign talent or wealthy foreigners which the Government is strongly encouraging them to settle and giving out PRs freely (it is easy to obtain a PR nowadays). I urge Singaporeans and NS servicemen, you must live with unaffortable high living costs sooner or later. SIngaporeans must learn to accept the system. We as Singaporeans, must take it or you can leave the country, no problem to attract foreigners.

Anonymous said...

To say Singaporeans are very rich now is an over-generalisation. There's a group of Singaporeans who are probably rich, but as for as true housing need is concerned, it is the poor who are badly in need of it.

I'd not want to speculate on the holding power of the developers and particularly, not use it to exploit the fear of my fellow men. The plunging property stocks says it all.

I'd not in any way instigate my fellow men to buy a property that's beyond their means with all sorts of "smooth", but less than convincing, arguments. Instead I'd remind them that affordable housing has always been a national policy and there's no reason to believe that it'd change now.

I'd not cause more pain to my fellow men by telling them that they "must live with unaffordable high living costs" because if it has now become their destiny to slave and make the rich richer.

Instead, I'd urge my fellow men to stand up and fight for a fair share of they deserve!

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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 :)