Saturday, September 27, 2008

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Property Buying Advice: Lesson from Boom-Bust Property Cycles of the World

While Singapore property buyers are wondering why property prices in Singapore haven't fallen yet, property prices have already been falling all over the world. The Global Property Guide, a property research group, reported that for the first half of year 2008, property prices fell in 21 of the 33 countries. We have been getting similar gloomy news about the China property market too.

Business Times - 25 Sep 2008 on the meltdown of the China property market:

"After months of steely resistance, Chinese property developers have finally thrown in the towel and slashed prices as sales fall. Whether the move succeeds in putting a floor under the market will help determine the fate of the economy over the coming year, especially because China needs to spur domestic demand to counter weakening exports as the global credit crunch intensifies."

On the "steely resistance" put up by developers in the initial stage of the property downturn, forumers at the Singapore Property Forum have these views to share with property buyers still waiting on the sideline:


"This pattern is observed in many countries. Price booms, but after market changes, bust is delayed whilst sellers remain in denial or act tough. All the while, sales volumes are threadbare. Finally, they give up and lower prices. Same thing here in Singapore. Thankfully, most buyers/upgraders/investors can wait. They can wait indefinitely. All the while, the supply glut /TOPs grows closer and closer. Why buy now when you can buy later for less? China carried a myth that prices could not fall because of rapid growth, Olympics etc. What myths do we carry? Yes, IR, F1, YOG etc. "


"Agreed with you, Ann. Your boom to bust cycle pattern is part and parcel of this game. Only problem is our bulls in this forum thread refuse to understand the rule of the game and are trying their very best to hold the market, as if they can, by shouting and screaming at all the bears. They refused to admit that our mythology of F1, IRs, YOG and Global City presentation had already been factored in during the last Bull run that ended last year. Hope when they finally realize the rule of the game, they can survive with enough seed money to play the next bust to boom game. "


"Agree with both of you.
The longer the bulls wait, the louder the crash. Because when they finally realise that nobody is buying all those hypes of F1, IRs, YOG and Global City; it'll be too late. They'll find themselves having to live with the reality of the economic downturn - low rental yield if they're lucky to find a tenant at all, higher mortgage rate and some will face downright problem with even securing a bank loan, lower bonuses or even pay freeze if not retrenchment ... by which time most buyers have already vanished !!!
The long term outlook of Singapore is not as rosy as all the media would like us believe. Both US presidential candidates have vowed to bring back jobs to America. It's going to be a world threatened by protectionism. That can spell doom for an exporter like Singapore. China and India are getting most of the foreign capital inflow with the attraction of their huge domestic market. So how do we compete ? Until we figure out a workable strategy, at the very least, we'll have to become cheaper or be squeezed out of the global market."

May also want to read:
History of Singapore Property 1960 to 2008
HDB Resale flats Price Index 1990-2008: Graph & Chart
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.

Smart Buyer :)