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As discussed in other threads, my conjecture and assessment is that we are at the cusp of a downturn in the private property market. So rental yields will soften as I expect vacancy to push towards and beyond the 10% mark.
Whether there will be fire sales or not in the coming year depends on interest rate and economic environment.
Happy to hear alternate views.
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The current property cycle has lasted longer than expected on the upside - not only due to demand from owner occupiers who bought to stay but also from more (newbie?) investors who bought for rental income. This has introduced an unstable dynamic into the Singapore property market because investors do not behave the same as owner occupiers.
The latter will try their best to hold until interest rates and economic development prevent them from doing so. But the former may cut and run for other reasons e.g. overcommitment, can make more money elsewhere, panic etc.
Not too sure if it will spread from the rental market to the actual house prices but I am monitoring the situation for the tree house (search for rental and for sale at the tree house and analyze for yourself).
I also would discount the frequently heard argument that property prices cannot fall because there are a lot of cash rich people on the sidelines waiting to buy. Property is an asset good unlike a normal consumption good. For the latter, demand rises as price falls and vice versa. For an asset good, demand booms when prices rises and demand evaporates when prices stagnant or fall - the momentum phenomena we are all familiar with.
Look at the high end property market where the buyers disappeared when there was no more quick capital gains to be made. I believe the same will happen for the mass market when there is no more rental income.
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(03-12-2013, 08:37 AM)nsengkia Wrote: The current property cycle has lasted longer than expected on the upside - not only due to demand from owner occupiers who bought to stay but also from more (newbie?) investors who bought for rental income. This has introduced an unstable dynamic into the Singapore property market because investors do not behave the same as owner occupiers.
The latter will try their best to hold until interest rates and economic development prevent them from doing so. But the former may cut and run for other reasons e.g. overcommitment, can make more money elsewhere, panic etc.
Not too sure if it will spread from the rental market to the actual house prices but I am monitoring the situation for the tree house (search for rental and for sale at the tree house and analyze for yourself).
I also would discount the frequently heard argument that property prices cannot fall because there are a lot of cash rich people on the sidelines waiting to buy. Property is an asset good unlike a normal consumption good. For the latter, demand rises as price falls and vice versa. For an asset good, demand booms when prices rises and demand evaporates when prices stagnant or fall - the momentum phenomena we are all familiar with.
Look at the high end property market where the buyers disappeared when there was no more quick capital gains to be made. I believe the same will happen for the mass market when there is no more rental income.
I concur.
"property prices cannot fall because there are a lot of cash rich people on the sidelines waiting to buy"
The statement is the same as saying stock price cannot fall because there are a lot of value investors on the sidelines waiting to buy...
“夏则资皮，冬则资纱，旱则资船，水则资车” - 范蠡
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03-12-2013, 09:42 AM
(This post was last modified: 03-12-2013, 09:43 AM by Temperament.)
It's always the same investment principles-aka assets allocation and staying power. If you watch your cash flow properly you should be alright. i admit one can miscalculate about cash flow if not careful; Especially provision has not been made for "margin of safety" (aka allowance for unforeseen circumstances)
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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