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Singapore property market outlook for 2012 and 2013 - stephenkhoo - 03-23-2012 09:34 PM
Singapore property market outlook for 2012 and 2013
By Mr Propwise
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By Mr Propwise | Property Blog – Tue, Mar 6, 2012
9
In 2011, buyers from China were the biggest group of foreign property buyers in Singapore. (Yahoo! file photo)
By Dennis Ng
In 2011, buyers from China were the biggest group of foreign property buyers in Singapore. But if you are counting on foreigners to continue buying properties in Singapore in 2012 and 2013, I am afraid to say that you may be disappointed.
The following factors are worthy of our consideration when studying the prospects of the property market in the next two years.
Factors that determine Singapore's property market
Since interest rates are at a historical low now, it can only go up from here, and not down. In fact, interest rates on home loans can shoot up to 3 per cent to 4 per cent. In my opinion, this could probably take place in 2013 when U.S. interest rates start to climb due to the threat of rising inflation.
In the next two years, more than 30,000 condominium units will be completed. With a huge supply of new condominiums, do you think rental rates would go up or down? So when rental rates indeed go down and interest rates go up, would this make property investments more attractive or less attractive? With rental yield now at 3 per cent to 4 per cent, what would the revised rental yield be when rental rates drop? Would some properties go from yielding positive cashflow, where monthly rental income exceeds monthly housing loan installment, to having a negative cashflow?
In addition, HDB built 8,000 units in 2008. But in 2011 and 2012, HDB is going to build 25,000 units in each year, totaling 50,000 units in the span of two years. With supply of both condominiums and HDB flats expected to surge in the next two years, coupled with an economic slowdown as a result of the next global financial crisis, do you not think that the demand for properties would drop?
Singapore aside, given that the U.S. and Europe, each constituting 23 per cent of the global economy, are likely to experience an economic slowdown in 2012, the rest of the world seems to be headed for another recession. And when that happens, would a global recession, coupled with global sovereign debt problems, especially in the Euro zone and U.S., not trigger a global financial crisis?
By considering all the above using an upside / downside analysis, do you think Singapore's property market presents more upside potential or downside risks? And what will your decision be as to whether you should invest in condominiums now?
We should not just look at Singapore's property market alone
Apart from casting our sights on the local economic situation, we must also track closely the activities in Hong Kong. Why is this so? Well, this is because Singapore and Hong Kong are always closely linked in terms of property market trends and movements.
With respect to this, most market players have the impression that property prices in Singapore are slightly lower than prices in Hong Kong. So if Hong Kong's property prices fall, Singapore's property prices might fall as well.
So, with the latest land sales in Hong Kong fetching prices that are below market expectations, could this be a possible sign that the Hong Kong property market is beginning to go downhill?
As it is, Hong Kong's government—which is boosting the supply of land to try and curb a more than 70 per cent surge in home prices since early 2009—has already sold two sites in August 2011 that missed estimates as home price gains have stalled. This is due to concerns that the economy is sliding into recession. The Hang Seng Index (HSI) also fell 23 per cent from its November 2010 peak to below 18,000 points in September 2011.
According to figures released by the Hong Kong Land Registry, August 2011 home transactions experienced the biggest drop since February 2009. An index tracking home prices, compiled by Centaline, fell in June and July—the first consecutive monthly drop since December 2008.
Vincent Lo, chairman of Shui On Land Ltd., had reportedly said, "The last few weeks, the property market has come down a little and transactions have virtually stopped."
Echoing similar sentiments, Yu Kam-hung, a Hong Kong-based senior managing director for valuation and advisory services in Greater China at CB Richard Ellis Group Inc., said, "Property prices will start to decline soon and we are likely to see that in the rest of the year."
He reportedly added that "Prices will trend down by about 10 per cent in the next two years and I don't rule out the chance that they may fall as much as 20 per cent in the worst case scenario."
Property buyers from China may not continue their buying spree in Singapore. As it is, I am beginning to hear from some Chinese business owners that there is increasing difficulty for them to obtain loans in China. And some of them already know of friends who are starting to have cashflow problems in China. So if China business owners have cashflow problems, do you think they will have the ability or willingness to continue snapping up properties in Singapore in 2012 and 2013? Probably not.
In my opinion, the global financial crisis has already started, but most people just do not feel it yet. In fact, they won't find anything amiss until things become very ugly. When that happens, market sentiments can make a 180 degree flip within a very short time.
Many people, especially the middle-class Singaporeans are still happily buying properties. That said, my millionaire mentors and I are least interested in buying properties, especially condominiums, because the proposition simply failed our rule that upside must be at least double the potential downside.
But it must be said that I could always be wrong. When it comes to investing, we cannot afford to be overly confident. We must be mindful of the possibility of being wrong. So even if property prices rise instead of fall, I would only make less money by not buying more properties now, which is fine by me.
Personally, the number one investment question that I always ask is, "What if I'm wrong, will I be financially okay?" Next, I would do a simple upside / downside analysis and only invest when the upside is at least double the downside.
While these two investment rules may seem too simple to be true for some people, they have indeed helped me make millions of dollars and prevented me from suffering substantial losses thus far.
In this respect, it seems like I am able to see the future not because I have some supernatural abilities, but because I train myself to be logical and rational when analysing information and drawing my own conclusions.
In my books and seminars, I share this thought process that I personally go through, before making any investment. Since this thought process is made based on hard facts, anyone can arrive at the same conclusion by going through this process, unless he or she already has a biased view of the market.
And if you think that instead of investing in condominiums, you would be better off investing in commercial properties, as some seminar trainers are now advocating, do think again. Recently, I spoke with two multi-millionaires who specialise in investing in commercial properties. And they shared with me that the upside / downside is not working in the investors' favor. In fact, they are also not considering buying more commercial properties, but may sell if the price is attractive enough.
I also have a friend who bought a commercial property near Tai Seng MRT station in 2010, where its location is obviously rather convenient. The property's temporary occupation permit (TOP) was in May 2011, but even after a few months, he still has not found a tenant. This is in spite of the theoretical rental yield of about 5 per cent to 6 per cent based on current property prices.
With all above information provided, you should be in a position to decide for yourself the prospect of Singapore's property market. At all times, do remember that hope is not an investment strategy. Every investment can only be taken into consideration after doing your homework. Only after doing your research based on the available information, would you be able to take a calculated risk.
Dennis Ng is director of Leverage Holding and Master Your Finance. This article is posted courtesy of http://www.Propwise.sg, a Singapore property blog dedicated to helping you understand the real estate market and make better decisions. Click here to get your free Property Beginner's and Buyer's Guide.
Related Articles
Singapore Property — If the Minister is Worried, Should We Be Too? (at Propwise.sg)
A Look Back on 2011 and Looking Forward to 2012 (at Propwise.sg)
How Will Singapore Property Fare in the Year of the Dragon? (at Propwise.sg)
@yahooSG on Twitter, become a fan on Facebook
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chow
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chow • Singapore, Singapore • 15 days ago
Just my 2 cents worth. When property prices last peak in 1996, it took 10 years for it to climb back to the same level. Just search for "Property Price Index singapore" to find the chart. It means folks who bought during the historical high in 1996 took 10 years to get back the same selling price... More
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yanT
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yanT • Singapore, Singapore • 16 days ago
build 8000 HDB per year,.... and now... its clearly shown that, we can build 25,000 unit per yr!!! this mean, during this stupi.d MBT time, he try to cut down the supply, so as pricing can be control and shoot up!!!!! what a moneky action!!! pui
2 Replies
Win
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Win • Singapore, Singapore • 16 days ago
Most people behave like herds and jump in (buy) when the market is unstoppable. Many cash rich buyers feel safe to put their money into a tangible asset. Holding on to cash only erodes their value as inflation eats it up. No one can catch the bottom of the market.As long as one is comfortable with... More
1 Reply
noseynose
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noseynose • 16 days ago
The rich had bought long time ago and sold or are selling the goon middle income r picking up. the rich always get richer!
2 Replies
Lucymum
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Lucymum • Singapore, Singapore • 16 days ago
Everyone can give an outlook but Nobody can give an accurate outlook.
2 Replies
jon lin
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jon lin • Singapore, Singapore • 16 days ago
Well...seems like we Singaporeans get what we want after all... we complain to the Government and they respond and our property prices will come down after all... nice.....
2 Replies
Vote For Change
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Vote For Change • Singapore, Singapore • 16 days ago
Our government want to grow our population to 6.5 million by or before 2025.
Imagine our population is now 5.5 million. We need to accommodate 1 million more people in 10 years time ie. 100,000 per year. So how many flats or private houses we need to build to accommodate this big number?
8 Replies
Jimmy
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Jimmy • Singapore, Singapore • 15 days ago
well, the fact of the matter is, there is no need to over think all these data. data can be skewed in whichever way the author wants us to read.
we just need to look at ourselves for the hard truth.
... More
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KM
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KM • 16 days ago
Will we end up like the US , where the property bubble burst and they are now suffering ?
Conventional wisdom tells me that history repeats itself...
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Wee
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Wee • Singapore, Singapore • 16 days ago
how i wish the property crash then everyone will get to buy the house at cheaper rate XD
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Jimmy
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Jimmy • Singapore, Singapore • 16 days ago
I am speaking as an average working Singpaorean. I can only afford to lease a 99-year flat from HDB.
I have a family to feed and parents to support.
I will never be able to afford a private property at current prices and will need to work for the rest of my life even if I can afford one... More
1 Reply
Lamb Chop
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Lamb Chop • Singapore, Singapore • 15 days ago
Property prices have double since the last 4 to 5 years. But mostly due to speculation and profit hiking. That means developers are making profits many folds over the actual building cost. Every other things almost stay status quo or small inflation incurred. Moreover, salary has only seen moderate... More
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Clarissa
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Clarissa • Singapore, Singapore • 16 days ago
i feel very frustrated reading just the first 2 paragraph of this article, How many times must u ask rhetorical questions? if this drops and that rise , do you think this and that? i was horrid to see all the following paragraphs end with a "?" if i want to be asked questions all the time do u... More
7 Replies
avatar
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avatar • 16 days ago
Message to all PRC's thinking of buying property in Singapore...WE Singapore NSmen WILL NOT waste our time to protect your property in times of war.
5 Replies
Gideon
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Gideon • Singapore, Singapore • 16 days ago
What if a war starts in the middle east?
5 Replies
Wilson
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Wilson • 16 days ago
Currently, there are still 125,000 people looking for a home... so what if they are building 50,000 HDB flats and 30,000 condos... Not forgetting, more FTs are coming in every year.... supply can never catch up with demand since the last MND Minister screwed up his numbers. Or should I say even out... More
2 Replies
Toolang
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Toolang • 16 days ago
Happy days coming. Soon will prices will be $1300/sq ft............and eventually $2000 sq ft........$3000 sq ft. Quickly go and buy two units so that by the time prcs hit $2000 sq ft you get one for free. This is what developers want you to believe.
1 Reply
Khaw has no guts!
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Khaw has no guts! • 16 days ago
Cheap money is going to stay for at least 3-4 years. ECB throw in $1 T of euros into banking system and not forgetting the USD T thrown in by the FEDS. The author is simply hoping fear mongering will work in his advantage. People are calling wolf since 2008 but prices have persisted till now. The... More
6 Replies
Ben
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Ben • Singapore, Singapore • 16 days ago
I would say Up or Down is dependant on the Government. Just implement a policy to make it up and make it down.
2 Replies
Lazy
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Lazy • Singapore, Singapore • 16 days ago
The writer miss the most important factor, the SG government. Singapore government did not want the property price to go down as this is one of their biggest milk cow.
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RE: Singapore property market outlook for 2012 and 2013 - stephenkhoo - 03-25-2012 09:34 PM
By Jessica Cheam, Housing Correspondent and Daryl Chin
Property firms and agents are tapping other avenues to remain in business now that Singapore's once-booming resale market - for HDB flats and private homes - has taken a big hit from the Government's cooling measures.
Fresh estimates from agency bosses show the number of resale deals in both markets for the first quarter dropping significantly compared to sales done last year.
But the slowdown in these markets has fuelled activity in others. Sales are soaring at launches of mass-market condominiums. Buyers snapped up a record 3,138 new private homes last month, including executive condo units.
Background story
Increased activity in:
•New mass-market condos
•Commercial and industrial properties
•Rental market
--------------------------------------------------------------------------------
REASON FOR DECLINE
'There's a mismatch of expectations between buyers, who expect prices to come down and hence make low offers, and sellers who have no urgency to cut prices.'
ERA key executive officer Eugene Lim, on the dip in resale transactions for the private property market
To get a slice of the action, property agencies such as PropNex and ERA are increasingly looking for direct deals with property developers to market new launches, which also offer their agents an alternative revenue stream.
Agents are also counting on the buoyant commercial and industrial sector, which is not affected by the recent cooling measures. Many of them have diversified into selling such units to make up for lost income from the dampened interest in the residential sector.
Some have also gone into subletting HDB flats to those - many of them foreigners - who would rather rent than buy now.
The Government, in its latest round of cooling measures last December, slapped a 10 per cent additional buyer's stamp duty on all foreigners buying homes, effectively killing a significant source of demand in the private property market, especially for high-end homes.
The Housing Board has also offered a record number of more than 50,000 flats in two years, and raised the monthly household income ceiling to $10,000 to allow more to bid for new flats instead of turning to the resale market.
Data from property agencies OrangeTee and ERA Realty put the number of HDB resale deals at 4,000 to 4,500 for January to mid-March.
This is almost 30 per cent lower than the 6,228 deals in the first three months of last year, and 24 per cent less than the 5,921 in the fourth quarter of last year.
OrangeTee's research and consultancy head Tan Kok Keong said the large number of new flats and recent moves by the HDB to set aside a larger number of flats for second-time buyers have reduced demand in the HDB resale market.
As a result, the cash premium paid above a flat's valuation, known as COV or cash-over-valuation, has also dipped.
ERA and PropNex said, based on their transactions this month, that the median COV across all flat types and towns was about $25,000 - lower than the $35,000 in the fourth quarter of last year.
ERA key executive officer Eugene Lim said, however, that the drop in COV has lured some buyers back into the market, with more units being sold this month compared to January.
Over in the private property market, ERA has spotted a 30 per cent dip in resale transactions for the first three months to date, compared to the fourth quarter last year.
'There's a mismatch of expectations between buyers, who expect prices to come down and hence make low offers, and sellers who have no urgency to cut prices,' said Mr Lim.
PropNex chief executive Mohamed Ismail pointed out that buyers may also opt for new units because they need to fork out only the initial downpayment - 20 per cent of the purchase price, or higher if the buyer already has an existing home loan.
The buyer can take the next two to three years to shop around for a loan while the project is being completed. Buying a resale unit means having to take a hefty loan immediately.
Sales in the commercial and industrial sector have heated up. Mr Ku Swee Yong, chief executive of International Property Advisor, said such investments are attractive as interest rates are still low and these units do not come with the tight restrictions imposed on homes.
PropNex real estate agent Casey Ng, 46, who has been brokering home deals for the past 10 years, diversified into selling commercial and industrial units at the start of this year.
He took up a course on the commercial market recently, and in the past week alone sold two properties in an industrial park in Woodlands Avenue 12.
'It's a different ball game as buyers are not as emotional about a place as compared to residential units,' said Mr Ng.
Smaller agencies, which have also felt the brunt of the slowdown in the resale residential market, are changing course too.
Mr David Huan, key executive officer of Rainbow Cottage, said his 60 agents now focus on the HDB rental market, where the number of units approved for subletting per year shot up from about 15,000 in 2009 to 26,000 last year.
He attributes this to the relaxation of subletting rules in recent years and the reduction of the minimum occupancy period, meaning more flats will qualify to be rented out.
'There might not be enough for us to sustain in the resale market, so we have to concentrate on where the possible business avenues might be,' he added.
RE: Singapore property market outlook for 2012 and 2013 - stephenkhoo - 05-03-2012 11:49 AM
More measures will harm property market: OrangeTee
More measures will harm property market: OrangeTee
May 2, 2012 - PropertyGuru.com.sg
Share14 | | Comment | E-mail to friend | Bookmark & Share
By Romesh Navaratnarajah:
Data for Q1 2012 released last week by the Urban Redevelopment Authority (URA) showed that residential property prices in Singapore dropped for the first time since Q2 2009, recording a 0.1 percent slip. This is in contrast to the 0.2 percent rise seen in the previous quarter.
According to OrangeTee Research & Consultancy, the decline “is within market expectations, as the market starts to feel the effects of market cooling measures introduced in December 2011”.
However, landed property prices are still resilient, marking a marginal increase in the quarter.
“The resilience in landed property prices can be attributed to the scarcity of landed properties as well as the profile of landed property buyers; less susceptible to market conditions,” said the firm.
While overall rents for Q1 2012 rose by 0.3 percent, it is still lower than the 0.4 percent growth in Q4 2011. Occupancy rates also dwindled marginally to 94 percent from last quarter’s 94.1 percent.
“According to URA’s statistics, a total of 10,796 units from developments with sales licenses are expected to be completed for the whole of 2012. As this is 10 percent above historical level, we expect the weakening rental market to cause occupancy rate to soften in the coming quarters, especially in the high end market,” said OrangeTee.
The main concerns lie in policy and supply. “The threat of more government cooling measures which could again have a negative impact on sentiments and possibly overly restrictive policies which might create further negative image of Singapore as an investment destination,” it said.
The slew of new project completions from 2013, along with a tightening of the immigration policy, could also affect rental demand.
Moving forward, “improving economic indicators and a recovery in the stock market has boosted confidence of buyers which has resulted in a strong primary sales market”.
“Without external factors that could trigger a rapid destruction in wealth, we maintain our view that the market will likely avoid a sharp fall in prices in 2012,” noted OrangeTee.
RE: Singapore property market outlook for 2012 and 2013 - stephenkhoo - 05-03-2012 05:22 PM
http://www.erc.com.sg/eblastimages/pptylanding/pptylanding3.html
Hopefully now you've deemed me someone who MIGHT be worth listening to... Now we can get on to the good stuff...
You probably want to know what all this is about...
You probably want me to hurry up and explain how YOU are going to make more money in property as a result of meeting me today (and believe me... YOU WILL)
So allow me to do so with a little story ...
"Why I Believe ANYONE Who
Wants To Be Rich Should Invest In Property..."
Let's face it. ALL the rich invest in property, there is NO exception.
I was not born with a silver spoon in the mouth. I went through a similar route of climbing the corporate ladder like many of you did. After being promoted 7 times in a row in my job with a publishing company, I was fired by my boss because my next promotion will be to take over HIS job.
All of a sudden, I felt my world has fallen apart....
I felt awful. But I told myself it's either sink or swim. Seething with anger, I was only left with $10,000 in my bank account and wondering what I should do with my life...
Somehow I just knew that property investment is the way to go, since that is what all the rich people do. I bought my first property in the late 90's. It was a shophouse unit worth $2.2 million at 49 Club Street, the former IndoChine Bar & Restaurant. Together with a few partners, we pooled in our money along with a 80% bank loan and later sold the property off at... $5.95 million!
I was astounded...
So this was how the rich leverage their money in property investment. Finally I felt that I could see light at the end of the tunnel and used the profits to invest in a 2nd property.. and then the 3rd property... and then the 4th property.. and the rest is history...
"Could Making Money In Property Investment
Really Be This Easy...?"
The right way of investing in property can produce riches. However, many of us are not taught how to do so.
Students who have been following my calling for property trends all know that I walk the talk and put my own money in. I myself find it amazing that my portfolio is now worth hundreds of millions, the figures are all verifiable!
My proudest acheivement is to have created 10 multi-millionaires and at least 20 millionaires from among my students. There are many others who have attained financial freedom and enjoying passive income through their property investment. Throughout the years, many of them have became my personal friends and we now invest in properties together.
If they can do it, it shouldn't be that hard.
"So How Did They Do It?"
First let me tell you how they DIDN'T do it...
- They DIDN'T buy property from new launches, which will only make the developers richer
- They DIDN'T invest blindly in overseas properties that they cannot see and touch and know nothing about
- They DIDN'T listen to the so called 'advice' from unethical property agents who are only out to earn your commission
- They DIDN'T follow the crowd and buy properties during market peak and end up suffering great loss when the market crashed.
- They DIDN'T limit themselves from investing in property by saying they do not have enough capital
- They DIDN'T stop themselves from investing in property because they cannot get a loan
- They DIDN'T stop themselves from owning multiple properties just because of the government ruling (in a legal way of course)
The truth is that many of the 'problems' that stop most people from making a profit from property investment are not problems at all IF ONLY they know the right way of investing.
Making money from property investment is not hard at all.
There are so many opportunities right here in Singapore and foreigners are flooding here to snatch a piece of the pie. Just recently I was telling my students to buy projects in the Robin region and those who dared went into Robin road have made a pile from their investment.
In one of my recent classes, I analyzed with my students the en-bloc potential of Crystal Towers and few days later it came out in the news that it was pursuing an en-bloc sale. So you see, I share with my students EVERYTHING during our gatherings and they just follow straightforward advice to make money in property.
So, is it that hard to make money from property investment?