More empty homes on the horizon

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#1
More empty homes on the horizon
The housing vacancy rate in Singapore may hit a record high of 9.8 percent in 2016 as private home completions rise from 19,900 units in 2015 to 20,900 by the end of next year, according to media reports citing a Barclays report.

Aside from the private home supply glut, the occupancy rate will also be pressured by growing public housing completions over the coming quarters.

Barclays expects public housing completions to increase from 28,000 units in 2014 to 26,000 this year and 20,000 by end-2016.

As a result, the overall vacancy rate increased to 7.2 percent at the end of Q1 2015. Island-wide private home rents have fallen five percent from their Q3 2013 peak, while suburban rents have fallen six percent from their Q2 2013 peak, the report said.

History shows that prices tend to drop significantly when the vacancy rate exceeds eight percent.

During the Asian financial crisis between Q2 1996 and Q4 1998, for instance, private home prices plunged 45 percent as the vacancy rate climbed from 6.2 percent to 9.7 percent.

With an annual private home demand of only 15,000 units we estimate 55 percent of total annual household formation of 26-27,00 to live in or enable upgrades to private homes we estimate the vacancy rate could reach 9.8 percent by 2016E, noted Barclays.
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#2
Here's something I did up:

[Image: Property-Price-Chart-1975-2015-Copy1.jpg]

With property prices finally moderating down, I think the sector has gotten a lot more interesting. Some property developers have reaped and sowed from the boom years, and have significant cash holdings to take advantage of a significant downturn if and when it comes.
http://theasiareport.com - Reflections From Finding Value In Asia
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#3
Will the forecast for falling private and public housing prices in 2016 bring down the Singapore share market ?
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#4
Looking back 40 years, the Singapore property price index has been roughly tracking per capita GDP.
Notice the cyclical nature of the former amidst the secular growth of the latter.

[Image: gdp-per-capita&title=false]
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#5
Comparing Singapore property price index to the stock index...

[Image: stock-market&title=false]

... and per capita GDP to stock index...

[Image: stock-market&title=false]
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#6
Positive correlation spotted
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#7
With faster border crossing into Johor Baru , the surplus JB property stock will be looking for Singapore rental tenants who are willing to commute daily, So may be the overall vacancy rate is already over 8%.
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#8
(06-06-2015, 07:27 PM)soros Wrote: With faster border crossing into Johor Baru , the surplus JB property stock will be looking for Singapore rental tenants who are willing to commute daily, So may be the overall vacancy rate is already over 8%.

If the Malaysian/JB Govt dont shoot themselves in the foot via bad policies again...
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster
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#9
(06-06-2015, 07:33 PM)opmi Wrote:
(06-06-2015, 07:27 PM)soros Wrote: With faster border crossing into Johor Baru , the surplus JB property stock will be looking for Singapore rental tenants who are willing to commute daily, So may be the overall vacancy rate is already over 8%.

If the Malaysian/JB Govt dont shoot themselves in the foot via bad policies again...

They always very good at shooting their own feet. With the revised road tolls n more coming soon, I cant see any attraction in commuting in and out of jb daily. More cost n more jams.
The thing I am scared most is not nightmares or market crashes..... Its my greed that I fear the most.

When people ask what is my target price, I never have any good answer for it because Philip Fisher said before (in Common Stock Uncommon Profit) that the best time to sell is never. Equity investment is buying into ownership, not betting slips.

The path to greatness and wealth is necessarily dangerous.... because greed is a fearsome fore that threatens your success at every step.
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