Analysts differ on whether prices will fall

I won't worry too much about the analysts - they couldn't predict the last crash either!

The Straits Times
www.straitstimes.com
Published on Jan 13, 2013
Analysts differ on whether prices will fall

Private property prices could fall as much as 5 per cent by June, a property consultant said yesterday, though other analysts were less negative.

The Government announced its seventh and most comprehensive round of cooling measures so far on Friday evening.

These will not affect Singaporeans buying their first homes but investors will feel the pinch.

"The hefty ABSD... will have a drastic impact," said PropNex chief executive Mohamed Ismail yesterday.

Additional buyer's stamp duty (ABSD) - first introduced in December 2011 - was raised by 5 to 7 percentage points across the board.

Mr Ismail expects sales volume to drop by more than half, and private property prices to slide 5 per cent within the next six months.

Apart from the new measures, a bumper crop of residential supply coming onto the market could also drive down home prices.

Minister for National Development Khaw Boon Wan said on Friday that as many as 200,000 residential units are under construction.

Half of those are HDB flats and the rest are private condos. They are expected to be completed within the next two to four years.

"For the moment, there is a temporary shortage and that's why some buyers panic," Mr Khaw said.

He added: "My assurance to Singaporeans: Please don't worry. We have enough homes... There will be enough homes for everybody even though the population is increasing somewhat."

DWG analyst Lee Sze Teck expected price rises to be minimal: "As with all policy changes, there will be an initial knee-jerk reaction as investors reassess their options. Transaction volume in 2013 is likely to be lower than last year and price growth is likely to be flat."

A Goldman Sachs report said that home sale volumes could fall 30 per cent quarter on quarter although the bank expects price levels could still be supported as interest rates are still low.

Savills research head Alan Cheong had the most bullish outlook on property prices, even expecting them to rise this year as developers have paid high prices for recent land tenders.

He thinks high-end condo prices could still rise between 3 per cent and 5 per cent, and mass market condo prices could shoot up as much as 15 per cent.

"People still wanted to sign contracts at the eleventh hour on Friday. If they thought prices would drop more than 7 per cent, why rush to sign? They would instead have forfeited their options," Mr Cheong said.

Melissa Tan

"Minister for National Development Khaw Boon Wan said on Friday that as many as 200,000 residential units are under construction.

Half of those are HDB flats and the rest are private condos. They are expected to be completed within the next two to four years."

Khaw Boon Wan didnt mention as many as 100,000 to 200,000 foreigners will be admitted into Spore within the next 2 to 4 years.

200,000 units , if base on average price of S$900,000 per unit, the total value of these units is S$190 billions. Can the market digest this stocks ?

Singapore's median age is increasing. Therefore, there will be more people buying house for residence or investing as the proportion of population whose age is 30s or 40s increase. Family size gets smaller too. Coupled with immigrants, the demand is there.

In the next few decades, demand will tapered off or decrease as the population ages.

key to the issue is interest rate. My broker who reads a lot of articles and careful with risk, had this to said. Because the crisis is so deep rooted, interest rates will be low for a long time and the only real prove that economy is in its normalcy is when interest rate start to rise.

So Goldman is right - will still be supported because of low rates. Gov policy is actually fine tuning n political posturing.

Ability for market to digest those 200k unit is the last thing we have to worry. It will calm down the market and bring the price to very reasonable because there is simply too much cash in the system due to low interest rate. I believe there will be enough time for people to sell them if they cannot afford to maintain with smaller losses.

The last thing we want is things like Interest Rate to come prick the bubble. Is better we solve the problem quickly before the ultimate happens. We may not recover for a long time like what happens in Japan if we keep restraining the supply because the property price is artificially supported high.

(13-01-2013, 11:14 AM)ValueBeliever Wrote: key to the issue is interest rate. My broker who reads a lot of articles and careful with risk, had this to said. Because the crisis is so deep rooted, interest rates will be low for a long time and the only real prove that economy is in its normalcy is when interest rate start to rise.

So Goldman is right - will still be supported because of low rates. Gov policy is actually fine tuning n political posturing.

I believe your broker is correct , the Fed committed to keep interest rate low till 2014 and will review when un employment falls below 6.5%. Probably only happen in 2016/17.

This is the 7th cooling measures , every dip turn out buying opportunities ! This is simply great chances for us , sell high buy low again

(13-01-2013, 10:39 AM)Bibi Wrote: Khaw Boon Wan didnt mention as many as 100,000 to 200,000 foreigners will be admitted into Spore within the next 2 to 4 years.

Good point. It's weird that they didn't realize that from 2007-2011 they would be letting in a record number of foreigners, and to ramp up supply accordingly.

All KBW needs to be is to check with the Manpower Minister on immigration policies in the next 2-3 years, and you will know if demand for stay-in and investment property will be sustained by the current planned supply, or if it is insufficient.

(13-01-2013, 10:58 AM)Stocker Wrote: 200,000 units , if base on average price of S$900,000 per unit, the total value of these units is S$190 billions. Can the market digest this stocks ?

http://www.spp.nus.edu.sg/ips/docs/media...020208.pdf

We are not disclose the full picture of current market environment. These are my thoughts -

1. Target population 6.5m , current population is 5.3-5.5m? We have more issues if property price dip lower. Foreigners buying cheap

2. Which property developers have build land bank past 5 years ? Most property developers are cash rich now , waiting patiently to bid cheap land . Will government sell land cheap? UOL tried but failed.

3. This is the 7th cooling measures , do we expect 8th, 9th , 10th coming months? I personally expect more measures when buying Euphoria happens again

4. Key aspect is interest rate, when do we expect rising interest rate environment? Year 2014? Year 2016? If we assume year 2016, do we expect cont rising / flat / reduce prices ? I assume the price up 15-20% from here to year 2016, and later correct 20% , still not worst off.

5. Next key aspect is Singapore unemployment, I experienced unemployment 7.5% during Asia financial crisis . Thousands resume going for 1 bank job. Property prices dip 30-40%, people are selling due to repayment issues . Will repayment issue happen after we build up our CPF over past 10 years ? Yes it will of you buy more than 1 unit.

The catalysts for property crash will come from external......euro countries, china and etc.....

http://investideas.net/forum/viewtopic.p...5&start=40

(13-01-2013, 08:54 AM)Musicwhiz Wrote: "People still wanted to sign contracts at the eleventh hour on Friday. If they thought prices would drop more than 7 per cent, why rush to sign? They would instead have forfeited their options," Mr Cheong said.

Melissa Tan