Tuesday, October 21, 2008

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Singapore Property Crash: Deferred-Payment-Scheme Property Buyers Not Eligible for Bank Loans Cannot Pay Developers Come TOP

The New Paper reported in the article "FIRE SALE: OWNERS DUMP CONDOS" October 20, 2008; that stock market losses have forced some property owners to resort to 'fire sales' for a quick return to liquidity.

According to some property agents, some of their clients are willing to give as much as 20% discount or even more. Even with the hefty discount, these luxurious multi-million-dollar apartments are hardly a steal.

The situation is worse for those who opted for deferred payment schemes because some are no longer eligible for loans, and cannot meet payments once the developers issue the Temporary Occupation Permit (TOP). If they fail to sell off their properties before TOP, they may have to sell at even greater discounts.

The high-end property market seems to be hit the hardest, according to a property agent who said , 'My colleagues who specialise in high-end properties are not doing well. They do not have any transactions at all.'

Many of these high-end property speculators are stuck because they can neither sell their property, nor rent it out to cover their mortgages, as the rental market has slowed down a lot.

In response to the report, forumers at the Singapore Property Forum have these advice for property buyers:

"Not yet (time to buy), give it another 6 mth to 1 year, then you can see what "lelong lelong" is like ... bears be patient ... "

"Yes, be careful that all this lelong lelong shouts may not really be bargains at all .. for $1M you cannot even get a small studio ... look at the real investment value in terms of rental yield ... don't pay too much attention to the discount given .. after all, to begin with, these properties are really over-valued .. "

"Good advice - properties are still over-valued. Price has to come down more. "

"There are fire-sales already? 20% off. Although I am a bear but I didn't expect the drop to be quite so steep so fast. I was expecting a protracted argument with the bulls for at least 3-6 months or so and for prices to correct about 20-30% only in 2009.... OK, it looks like the crash may be bigger than expected. Would 50% be possible by end 2009? ... This is good for me because I can get a bigger unit with my budget after waiting for over a year but in a way, I feel bad for the people who have overcommitted on property."

"This is only the start of the mother of all meltdowns ... you've plenty to pick and choose from ..next year this time "

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


Anonymous said...

to buy any assets is foolish to say the least. people dont even know if they still have current job this time next year. and IRs long being an excuse from bull side have prove to be a dream for the time being. Sands and GIC are either having financial problem or concerns of operating it in a downturn. IRs will no doubt be very behind schedule..

Anonymous said...

Ask yourselves one question, during the Asian Financial crisis, did Lehman , Citibank, GM , AIG and now possibly GE go down? And Warren Buffet Berkershire lost 30% in one day? Is this worse than 1997-8? If so , during that time property collasped by at least 50%, so go figure it out all of you out there.

Anonymous said...

better prepare for winter, it will be snowing heavily for a long time, set aside at least 50k cash under the pillow just in case lose job and still got family to feed

Anonymous said...

I agree, during the Asian financial crisis, ONLY Asia was affected and bear in mind, Asia is VERY SMALL (ie China & India still growing)...at that time, and even then properties were half of what they are in early 2008.

NOW...we are talking about a near COLLAPSE of the financial system, with America and the ENTIRE European continent in shivers. How can properties in Singapore drop by a mere 30???

If it does it means our government is doing a great job in calming nerves because this crisis is going to hit VERY HARD. The Banks are stuck and slowing down in lending, there's a total change in mindset on credit facilities. I agree with PM LSL, the return is going to be a long an arduous ride. Actually, there's no rush to buy ANYTHING anymore unless you have spare cash to PARK. Cos, you're just paying interests to the banks for nothing if you buy on credit/loan.

ANYBODY PLONKING DOWN 1M or more for property? If you don't have the CASH, you'll CRASH.

Anonymous said...

I visited Singapore for the first time in December 2007. It was a one week vacation for me and wife.

We decided to see some Flats/Condos for sale. I was shocked at the asking prices. Even though Singapore is a small country and real estate is a premium commodity, I was convinced that this was a "bubble" waiting to burst.

I believe the prices in Singapore are still inflated and there is a lot more downside.

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