Friday, December 19, 2008

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Impact of US Dollar Crash on Property Price

Extracted from the Singapore Property Forum :

Citizen wrote:
if US$crash and very likely it will, interest rates will skyrocket and a panic ensue, creating a BIG rush out of US$ assets in billions and even trillions. The market will be in another turmoil Assets and economies invested heavily in US$ can be destroyed and the consequences are disastrous. Dont dream that Singapore overpriced property is a hedge and all these major economies and investors cannot find a safe heaven and divert to Singapore. when investors are so badly hit, there is a spiral effect and it will create even more fear. Affected economies will look after their domestic problems and investment before looking outside. Look around and do some serious research in other countries, there are far more safer, cheaper and attractive options than investing in Singapore overpriced properties. Even our Temasek and GIC if you see are investing overseas and they haven proven correctly that their return is still better so far. Think about it carefully what so attractive and competitive of overpriced properties in Singapore. It has not even fallen to meaningful level and probably not because the budget next month should again likely to aim at propping up properties prices and improve sentiment and some unwary speculators and investors can be trapped or does it really matter. Better to stay away from such BIG financial commitment. No big deal to miss the boat except for the wealthy and rich speculators who always want more. Ordinary citizens and small invesors :Be safe than sorry, no need so much or show off or envious about. Humble opinion.

Anonymous wrote:
US$ crash is for sure, funds of US$Trillin will flow to Asia for sure, this is the reverse of 1997 Asia financial crisis. China will push demand till 2-4x of current US demand, want to do biz, want infrastructure projects....80% is in Asia. RMB$4Trillion development is just the beginning, another 5 round of bigger size stimulus packegae is on the way in coming months to years.
Why US property drive to big bubble in 2007? The bubble started to build up in 1998, influx of Millions of Asian flew to US afetr Asia crisis, that is the beginnig of Silicon Valley...wall st.....every corner of US, you will immigrants & foreign talents. US property up all the way from 1998 to 2007. When Asia crisis started for 1 yr, US property escalate. So later next year, we will start to see influx of ang mo.
Quesstion now is US drop in demand can be pick up by Asia? US drop in dmand is the most 1-2%, is not drop by 10-20%, with China + India= 10x US population, can't the govt stimulate the economy to achieve a small drop in US demand?
Cheap US$ with 0% rate is everywhere in the world next year, they are printing it unlimitedly, Obama will have to print more, when the effect of these money surface, tyhe begin of another big bubble, especially in Asia which have US$Trillion of reserved & is going to cash out when times come, plus all the rush of coneversion of US$ to asian currency to flock here.....worse than tsunami when it triggers....

Guest wrote;
Money needs to be constantly circulated as efficiently as possible to maintain economic productivity. Right now, too much money is idle in banks and reserves, and not being put to productive use.

As Americans spend less, China knows already that it needs to start spending more to hasten economic recovery, else if this trend continues, it will lead to ever slowing growth and eventually social instability as more people go out of work and can't afford basic necessities.

The US can only do so much as reduce their interest rates to near-zero so it needs China to do it's part as well as all the economies are interconnected. I expect in the next one year we will start seeing increased spending from the Asian powers, better flow of liquidity and recovery in the health of the global economy.

So what does this mean for Singapore property 2009? Prices will probably remain above 2006 levels, but not as exuberant as 2007. A good time to upgrade or purchase for own-stay, especially if there are urgent sales from owners of multiple properties (and there are plenty of such these days). I see a great future for Singapore as a global city for the wealthy, but private property is still too expensive an investment option for most people, and unlikely to be able to "flip" for quick profits.

May also want to read:
99 Leasehold Property: Calculation of Depreciation Rate based on Singapore Land Authority Data
Spore Property History 1960-2008
Property Investment Tip: Don't put all your eggs in one basket
HDB Resale Price Index 1990-2008: Graph & Chart


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