atans1

Property prices will hop-a-long

In Economy, Property on 07/02/2011 at 8:57 am

The govmin is stepping hard on the brakes to prevent property prices from being a one way bet, and to appease those S’poreans who missed the boat.

Some of those who missed the boat are daft enough to expect a property collapse. Why shld it?

FTs are still flooding in; interest rates are low; credit is easily available (bit harder than the recent past, but still easy); people are more optimistic despite the efforts of ToC, TR, WP, SDP, Tan Kin Lian and Goh Meng Seng*; and the economy is expected to do 5% this yr.

The US is printing money, some of which will find its way here,

Then there is the Budget which shld more money in our pockets, so that we can afford to take out bigger mortgages.

And best of all. It is difficult for any government to stop the momentum of rising property prices. Despite the attempts of the Chinese authorities  over the past year or so, property prices continue to rise. Juz more slowly.

If you believe property prices will ease-off significantly, keep on whistling in the night, or pray that there will be a global recession. The data shows that 2008 excepted (when M’sians flooded in and bot because of fears of instability in M’sia), property prices fall 20% when there is a recession.   

*If they are believed, most S’poreans are poor and unhappy. S’poreans are unhappy but they are not poor. They can afford the interest payments on mortgages on S$500,00 HDB flats. They are unhappy because they are envious of richer S’poreans.

  1. […] This post was mentioned on Twitter by lat hat nam, Home4utoday, Kat Jaff, HomeBuyer, Imran Hussain and others. Imran Hussain said: Property prices will hop-a-long « Thoughts of a Cynical Investor: It is difficult for any government to stop the… http://bit.ly/dW0ABc […]

  2. It is a speculative bubble because there is no rental revenue.
    For condo there is an oversupply
    For HDB the govt, like deBeers, played on supply to make money and keep taxes attractive
    It will burst because it is a speculative bubble not sustainable in the long term when compared to Singapore median income and expected growth.
    The 1996 bubble deflated during 10 years while the economy was growing fast.
    The 2006/2010 bubble will deflate.

  3. Government is providing tons of liquidity. As long as HDB keeps on extending cheap loans to the majority of Singaporeans, its hard to see prices falling.

    “It is difficult for any government to stop the momentum of rising property prices. Despite the attempts of the Chinese authorities over the past year or so, property prices continue to rise.”

    Agreed. That’s why prices will rise until the bubble bursts.

    “If you believe property prices will ease-off significantly, keep on whistling in the night, or pray that there will be a global recession.”

    A global recession isn’t off the cards yet. And a black swan event could happen.

    “They are unhappy because they are envious of richer S’poreans.”

    Can’t tell whether you are kidding or not. Surely you are not being serious. Some of these people have made a fair bit money from the market.

  4. Property prices will not drop in the next 2.5 yrs. At most drop 1% q-on-q but will see annual increase of 7%-10%pa over next couple of years. If you want to flip just focus on those segments that have risen the least and factor in the 12%-16% sales tax as cost of doing business. Don’t just focus on residential markets. The next big recession or market crash will not come so soon, but it will be when the masses least expect it. Huat har!!

  5. No responsible gov will want a very lucrative market to burst. No responsible gov will want the masses to bay for their blood in the aftermath of a mismanaged property market.

    Yes, it will rise only according to economic fundamentals. It will not rise beyond economic justification. However, if and when there is a recession, the market should hold or the gov should be wise to prop up the market till the economy recovers.

    In other words, for the sake of not aggravating the economy,and speed up depression, because of economic disruption, property values will be maintained and stable.

    So don’t hope for a property collapse,no need, unless the gov is a foolish one.

  6. @Lester

    “However, if and when there is a recession, the market should hold”

    Should hold… based on what? Just curious as to your line of reasoning.

    Look at 2009 for example. Didn’t hold there.

    “… or the gov should be wise to prop up the market till the economy recovers.”

    I’m sure the US, UK and Irish governments were trying to prop up their markets too.

    I’ve heard this stand echoed by many of the older generation. They have a lot of faith that the Government has complete control over the property market. And yes, I’ve heard the usual reasons before: control over land supply, immigration, our government is more efficient, etc etc.

    Just curious as to the reasons. Is it something psychological?

    “So don’t hope for a property collapse,no need”

    I don’t buy in SG.

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