Singapore's "dark condos" point to supply overhang

[BlueKelah]

Agree no burst with current economic climate.

When interest rates go up, chances are because economy overheating or doing too well. So is more to damp the expected higher demand. Borrowing cost more expensive but if measure relative to income hard to say overall. The situation property is bad is when there is recession and job losses. This will drive unplanned supply into the market. Planned supply control right now, government can always use population and housing supplies to manage together with adjustment to current cooling measures.

The real mover of property price is the availability of credit. What TDSR has done is put a cap on how much the bank will lend out. Since there is not much increase in wages over the short term, the bank will not lend out more.

So for majority of investors who are speculating on property, this will affect the available leverage to them. Thus crimping their ability to push prices up.

So over a period of time, until wages slowly start to rise or existing debt gets paid off, then only can buyers afford something more expensive.

IF the average joe cant afford the average new condo on his average salary, then the average developer will have to adjust their pricing to reflect the affordability.

One only has to look at Japan and USA for a lesson on how low house prices can go in a recession. Just like stocks, there is always risk of a significant correction in the short term when a bubble forms.