Thursday, October 30, 2008

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Property Buying Tip: When to Buy? Wait for the Bottom?

Tina wrote:
Bears are waiting for property prices to reach its lowest. But they are truly stupid. The answer is simple. When property prices reach its lowest, that will be the time when the property market will start recovering. By then interest rate will pick up back again ! Imagine buying a property now and taking up a loan of interest rate less than 2.5% a year. Say, the downturn lasted for 2 years. That means a huge savings in interests. 2 years later, interest rate pick up to 5%, and when the bears bought, they are tying themselves up with a higher interest package loan while old timers enjoy a good rate package. At the end of the day, no such thing as losing or winning cause the banks will still earn the same amount from you. Also, with the current high construction costs, its very unlikely property prices will drop more than 20% from now till end 2009. 2010 property market will recover so does the stock market.....To wait to buy at 20% discount but ending oneself paying higher interest package for property loan is simply not worth it....In addition, no one knows when the property market will reach its lowest...its simply a gamble, a risk to take..

Anonymous wrote:
Housing loan rate will cut to 1% soon with US Fed rate going to 0-0.5% within next 2 moths. Bears will say rate is not a consideration, let them be, they do not know the significant. This rate will here to stay for a long period. Construction & material cost is still on high side, it will down a bit & shoot up to historical high in next 12-18 months due to hyper-inflation kick in. Rental yield of HDB at 7-10% now, price will be sustainable for a while for low to mid end condo. This yield will be here to stay due to strong demand. Wait till China take action on global economy within next 12 months, will see a good run, wait, it will come.

Anonymous wrote:
Reality has proved that bulls have been stupid buying properties at peak prices ... so who are the stupid ones to teach the smart ones ... Only stupid people will tell you that it is stupid to aim to buy "When property prices reach its lowest, that will be the time when the property market will start recovering." Anyone with some brains will know that's the best thing that can ever happen to a property investor. Even to buy when market has shown slight upturn is better to buy on the downturn when you have no idea when it'll end.. The downturn, according to most analysts, will reduce in property price plunging by 40% - 75%. Only stupid people will even consider mortgage rate gong from 2.5% to 5% as a sound reason for buying now. Commodities prices have already dropped as much 80%, so will construction costs in the longer as the global economy enters into a "savings" era from a "credit" era. In the new era of "expensive, tight credits", property have to come down because there is simply no money to chase up the property price. Best thing, when property price drop by 50%-75%, buyers may need only a small mortgage or no mortgage at all ... so you don't even have to consider mortgage rate.

Extracted from the Singapore Property Forum

May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
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 :)