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04-02-2018, 05:52 PM
(This post was last modified: 04-02-2018, 05:53 PM by Life is a game.)
Bro Blue. I am doing some funny thinkings here. In fact I think rising interest rates is better for property in short term. People will be forced to start purchasing their house earlier in view of the rising interest rates. Lock down the good rates first. The rising interest rates will force money to go back to banks but while they are well capitalised, it may be difficult to loan out to good businesses who have saved up enough money to fund their own expenses. But if property business is booming then banks will start finding developers to take their money. Worse case scenario if property market go south... we still have bullets to withdraw absd and boost back sentiments.
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Increase by 0.2% to 0.8%. No sweat to them. Wait till 2% plus then say.
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04-02-2018, 07:26 PM
(This post was last modified: 04-02-2018, 07:30 PM by Big Toe.)
The housing market is again in a strange place right now. There is somewhat strong demand for new private homes BUT rental market is in terrible shape right now.
I just visited a relatively new development, studio in the city next to MRT, prime AAA CBD location. Rental only $3K.
Not enough to cover anything. Bear in mind holding cost = Cost of capital + Interest cost +maintenance + property tax(Non owner occupied) and we have not even started talking about depreciation for the leasehold. It is completely irrational. Goes to show that there is little else to invest in for better yield.
And I visited another commercial retail property in the east(those pigeon hole type), first floor facing the road completely empty.
Speaking to some tenants, a first floor pigeon hole can be rented as low as $800. Bear in mind maintenance is already a few hundred dollars.
Then there is one property up north, retail also. facing main road, completely empty for about 1.5-2 years now. The only bright spot in retail property is probably the better locations of HDB shops due to higher population density and ready catchment. Tenants for residential, retail & industrial units are in very short supply. Too many units chasing after too few tenants. Excellent time to be a tenant.
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04-02-2018, 08:09 PM
(This post was last modified: 04-02-2018, 08:11 PM by CY09.)
There is demand because everyone thinks housing prices will continue to appreciate and simply because our foolish love for properties.
It is only when the masses start to realize that either i) the yield on property are not as great or ii) that property prices fall drastically until they get "margin called"; will we then see a reversion to the mean. Or in some cases, the loan repayment of un-rented retail units are eating into the earned income of individuals until it becomes too painful. The rising interest rates is going to be painful wake up call for local property owners when the cost of debt funding significantly exceeds that of their property yield.
As a 20+ year old individual with a limited amount of capital, I shall just be an observer watching the comedy sketch written by my older peers of this island. Will this end in tragedy or will the government save everyone.
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Just curious, let's use a data point in 2008 GFC, how many property owners in percent terms affected ? How many are younger gen owner of HDB then that were were forced to sell. Then we know for sure younger generation needs to avoid or not.
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