Thursday, January 1, 2009

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Property Buyers' one reason for not buying: Private Property Prices are still too high

Some comments on the article "Time to lower home prices; Straits Times 31 Dec 2008"...

"see who blinks first".
Its a seige. You rather starve than sell? OK, let's see if Singapore devlopers are somehow unique in being able to defy all history and the world in dissociating price from recessions and supply gluts. Already, once-proud markets have capitulated... from New York to London to Shanghai to HK... no one is immune.

"hunters pointed to just one reason: Home prices are still too high."
"Prices shooting beyond their (buyer's) means"
Its so funny. Like Bush, Pernanke and Paulson in early 2008 who, die, die also won't say the "R" word, developers won't admit that prices are too high even though its obvious to all. Machiam like "voldermort".
This denial still continues even when they tacitly admit to the realities.... sure, ok, I give in, you can have a 'rebate', a 'discount', a 'stamp duty absorption', 'furniture rebate' etc... just don't call it like what it is... a price fall.

"But the situation is set to worsen sharply for sellers as the economy contracts sharply"
Its not only worsening for sellers, but also buyers. As economy hits salaries, bonuses, and job-security of buyers, there will be fewer able or willing to pay the unrealistic price premiums commanded by sellers.

Posted by Ann in the Singapore Property Forum
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


Anonymous said...

Hey ann, well said. Totally agree with you.

I can understand what the developers, especially the big boys, are doing. Most of them are listed company. And to say that their property prices fall will not only affect the books but theirs shares too, it will create a chain reaction that will be mess later. After all, listed company must be responsible to their shareholders.

I dont think developers are in denial. From a business point of view, what they are doing are perfectly right. There's no way they can ever say that prices are falling. In fact, they are more selective in the words and actions during such down time.

And from a crisis management point of view, developers are doing quite well. Trying to "squeeze juices out of stones", think of better marketing strategy and perks to lure back buyers. I believe what they are trying very hard to contain now is the falling prices to the 2004-2005 period. Kudos to them and good luck too.

The blatant truth is prices are falling. The figures transacted in URA data speaks for itself.

What will make the situation more bleak for the developers are when sellers ( including those DPS) go all out to sell their property in the 2004-2005 prices range. And to make matter worst, smaller developers whom are low in fund will follow suit.

As an interested buyer myself, even with a massive price reduction, I am having second thoughts in committing such a big price tag item. I guess most buyers priority shifted. Moreover, i dont think we fully felt the full blown "Perfect Storm" yet.

The meaning of buying within one's means seems awfully vague during such times when job security takes centre stage.

Well then, either way, all the best to you Ann, the Bulls or Bears, Buyer or Sellers in the coming new year 2009!

Derek said...

Dear Smart Buyer,

There have been repeated mentions in the media (usually by parties with vested interest) that large developers have the financial muscle not to lower prices because of the profits they have made over the last few years.

My gut feel is that no corporation, no matter how large, can withstand the global storm that is now upon us. However, I will be going to examine the financial reports of the large developers to see if any clues can be found.

I would appreciate your views on this.

Thank you.

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