Property still good investment: Analysts

It's always a good investment isn't it? Until HDB hits $2 million per unit and private property hits some crazy $3,000-$4,000 psf for mass-market condos!

The Straits Times
www.straitstimes.com
Published on Feb 09, 2013
Property still good investment: Analysts
They cite White Paper population estimates as supporting future demand

By Esther Teo Property Correspondent

LAST month's cooling measures might have dampened sentiment but the White Paper on Population has perked up property investors with the prospect of 6.9 million people needing homes.

Marketing agents are already starting to use the White Paper in their sales pitches while developers believe that the population policy will help their business and the real estate industry in general.

But experts warn that there could be a number of market cycles between now and 2030, when the 6.9 million figure could be reached, so prudence and a long-term perspective are essential.

They suggest looking for property in good locations and in business areas, so the property can be easily leased even if there is a large supply of homes competing for tenants in the future.

ERA Realty key executive officer Eugene Lim said that in the light of the sort of population growth suggested in the White Paper, "it is a given that property prices then will be higher than (they are) today".

"Prices might not escalate immediately but with limited land and an increasing population, prices should go up, it just depends on how much," he added.

International Property Advisor chief executive Ku Swee Yong said that if the population grew to 6.9 million by 2030, investors with a long-term perspective of more than 10 years should buy immediately, regardless of the recently hiked additional buyer's stamp duty (ABSD).

"They should buy and hoard freehold properties in districts 9, 10 and 11 because these will become a smaller proportion of the housing stock in the future."

The Jan 12 fresh curbs levy on Singaporeans buying their second home an ABSD of 7 per cent, from none previously.

There is already some movement. While investors initially retreated from the ABSD sting and tighter loan limits, more are now "optimistic" and could be enticed to relook the market.

ERA's Mr Lim said that some buyers have already started to look for value deals in the resale market where sellers are now more willing to negotiate on the back of the curbs.

But Mr Ku said there needs to be more certainty from the population paper before any decision on buying is made.

Mr Chris Koh, director of Chris International, said that the Government's plans to grow the population is essentially ensuring that housing demand remains strong.

With such low interest rates, both investors and upgraders can consider buying a home now, he suggested.

"The risk, however, could be if another more drastic set of measures get introduced," he noted.

Potential home buyers seem more cautious.

Accountant Terence Chan, 41, told The Straits Times that while he is looking for an investment home, he is not convinced that now is the best time to buy.

"Everything is still up in the air, whether it's the population plans or how the recent measures are impacting prices," he said.

"I am not comfortable with making a decision now because it still seems I have to pay more with the ABSD and loan limits. I might wait for some of the measures to be removed first."

esthert@sph.com.sg

There is actually quite a lot of nonsense in the statistics - i have noticed there are very few landed deals in district 9, 10, 11. And for the transacted prices in d9,10,11 tend to be far lower than advertised.

Non core areas are catching up fast though and look pricey to me. Using london zoning as a guide the SW is now commanding only a tiny premium over the east end.

Property investment when it pays off has got to be good i suppose, you are sacrificing liquidity, for most people adding leverage, and concentration in a portfolio. But it is one of those things that wipe some people out every decade or so just because they cant survive the inevitable correction. Its amazing how fast the collective has forgotten 08-09.

So in a nutshell, i think its good to have some property in your portfolio, a lot more when you think prices are low, but never with enough leverage to ensure you cant take a hit (loss of income, etc type scenario).

With this 6.9m white paper , more will buy than to sell.
What's cooling measure ?

Cfa. Do u think housing prices will go up or down with 6.9m people? Obviously depends on land use and how many more houses get built to give the supply/demand picture?

Since i dont know the answer to the latter q i wont be making the prediction re property prices based on this supply/demand thing. But the resentment on the ground is real and eventually will lead to dramatic policy changes (either by pap to keep power or opposition when in power) to force down the prices of homes. I am bearish sg property. I might be wrong of course.

The prediction did not take into account political risk. Let us see in 2016, how the political risks assigned to Singapore. And when some MNCs hollow out of Singapore.

With 6.9m, the demand is confirmed but supply still under "promise or planning".

(09-02-2013, 12:22 PM)cfa Wrote: With 6.9m, the demand is confirmed but supply still under "promise or planning".

PM already said by 2030, population would likely to be significantly below 6.9mil which is just a planning parameter (based on worst based scenario).

think property should correct down

(09-02-2013, 04:15 PM)potatolover Wrote:

(09-02-2013, 12:22 PM)cfa Wrote: With 6.9m, the demand is confirmed but supply still under "promise or planning".

PM already said by 2030, population would likely to be significantly below 6.9mil which is just a planning parameter (based on worst based scenario).

think property should correct down

But right now, people (foreigners and locals) are inclined to buy properties at SG due to our political stability and future prospects. This speculative demand component is what is driving prices up. I know of ppl who own 3 properties (by taking loan on his last 2 property purchase). In fact, I believe if every family only owns 1 home, we will have a surplus of homes. Its the speculative demand which is a problem.

(09-02-2013, 04:15 PM)potatolover Wrote: PM already said by 2030, population would likely to be significantly below 6.9mil which is just a planning parameter (based on worst based scenario).
think property should correct down

Do u know who are the best actors and actresses? Nope, they are not from Media Corp. They are the politicians. Jim Rogers also mention before dont be foolish to trust the politicians. That includes the oppositions.

(09-02-2013, 05:23 PM)Bibi Wrote:

(09-02-2013, 04:15 PM)potatolover Wrote: PM already said by 2030, population would likely to be significantly below 6.9mil which is just a planning parameter (based on worst based scenario).
think property should correct down

Do u know who are the best actors and actresses? Nope, they are not from Media Corp. They are the politicians. Jim Rogers also mention before dont be foolish to trust the politicians. That includes the oppositions.

That's why, i think PM/PRESIDENT of a country should only allow 2 terms for life. If not a dynasty will form. Like our "Lee & Lee dynasty". It should be ending soon, i hope.