Jul 25, 2009

The Property Boom is Back

Hard to believe, but it's true. The facts speak for themselves. Latest news on the HDB market:
ST July 24, 2009
HDB prices hit record high
By Jessica Cheam

PRICES of Housing Board flats have reached a historical record, rising 1.4 per cent in the second quarter this year, reversing a first-quarter dip of 0.8 per cent.

Fresh data released from the HDB on Friday shows the resale price index rising to 140.2 - beating the previous record set in the fourth quarter of last year when it hit just over 139.

The figures have come in slightly higher than flash estimates released earlier this month which showed that prices rose 1.2 per cent.

Sales of HDB resale flats also surged 58 per cent, reflecting improved market sentiment, to reach 10,184 transactions in the second quarter, compared to 6,446 in the first quarter.

And here's a snapshot of the private property market:
July 24, 2009
Buyers snap up home deals
Lower prices, pent-up demand driving surge in sales of private homes
By Melissa Tan & Smita Krishnaswamy

THE current recession-defying surge in home sales is being driven by pent-up demand from local buyers with enough savings to swoop on lower-priced units and a determination to invest or upgrade.

These buyers are not acting on impulse but have been saving up for years.

Another key factor is the fear of missing the boat ahead of another property boom, The Straits Times has found after speaking to buyers and market analysts.

Last month, an all-time record of 1,825 private homes were sold, continuing a major upswing that started in February. The June figure exceeded that of August 2007 - the height of the last property boom.

On recent weekends, showflats have been crammed with families, couples and singles. Some want to buy a condo as an investment with prices still quite low; others wish to upgrade from HDB flats.
And just six months ago, practically all the real estate analysts were saying that 2009 would be a disaster for the property market. In fact, June was cited as the time when things would go really, really sour, just because of the number of projects that would TOP around then.

One of those situations where truth turns out to be stranger than fiction.


JamesNeo said...

Never listen to the "experts" . bet they will say the boom is back. then when the bubble burst in 1-2yrs they will say correction haha

Anonymous said...

Does the Gahmen also play a part in this? I would think so. They have quite a few trump cards to play around and it worked this time! Due to luck or talent, I am not sure.

But not always lah. At one time property was also very hot and then crashed and did not recover for many years. Maybe those times their trump cards they played did not work.

Anonymous said...

Positive sentiment seems to be main driving force now. However, property prices must ultimately reflect fundamentals over the long run.

I thought recent suburb condo prices going at $1000 psf is getting near to being unaffordable even by upper middle class income standards.

Oikono said...

Just throwing out a hypothesis:

Could it be an influx of foreigners that are propping up private property rentals/housing prices, in turn pushing more locals into the HDB market? When I was in South America, every other retrenched banker I met was planning to move to Singapore to get a job...not exactly strong scientific evidence, but just throwing out some gusses.

Anonymous said...

Mr Wang,
once thing is for sure. The people is sure that the rules of CPF will change again given large loss of TH, GIC and reserves. Therefore they feel wiser if they use up the CPF rather than been lock by the Lee forever.

How do I know ? My nephew is one of them that think likewise and fear that CPF will be gone and quickly buy a flat.

Anonymous said...

Mr. Wang,

Asking around, it could be the increase number of PR and new citizens in the past 2 years that is keeping prices up as the HDB now implements build on demand schemes which sends the increase demand to the resale market.

Anonymous said...

I still believe the market will face a hard reality soon
People are now buying because they see the prices as lower than 6 months ago, and so hope that they will be able to do a quick sale after the "economical crisis" is finished
This is another speculative move due to over inflated HDB prices

1/ The current prices are still much higher than before the "en bloc" speculation craze
2/ There is still a bulk of new units coming up
3/ There is a non zero probabilty that the Singapore population has decreased
4/The economical crisis is not finished

Anonymous said...

Did you say that you bought your property earlier this year? I admire your foresight. Good for you.

Onlooker said...

Artificial boom.

Anonymous said...

My sentiments too, James. Experts do have their agendas and are fed by their 'expertise' in spinning - upwards, downwards and sometimes sideways and backwards.

Lost Citizen

Anonymous said...

Fred Harrison is one interesting chap. Just google his name. Nouriel Roubini is not the only guy.

Is Singapore insulated from what goes on around? Even though the government policies attempt to manage property prices, people need to remember that property are just assets.

People also need to do their sums right with basics looked into: upfront interest paid to banks over 1st 7 years, CPF accrued interest owed over time, fees etc ...

Looking back, if your average psf does not go up by $150 - $200 at the point you need to sell to shift or upgrade, you are technically under water, not to say how much CPF liquid funds you may have nearing 55 years old.

I dunno noe abt CPF life etc etc but I do think that properties are a musical chair game. One cannot just rely on salary income alone.

Anonymous said...

There are so many more projects still in developers' inventory... they are most surely coming out one by one soon.

I don't know why fools are rushing in! And speculators are even asking higher prices than the peak last year. Amazing.

Anonymous said...

It's a ponzi scheme, like the CPF.

The Gahmen simply lets in more PRs and foreigners to support the property market, and to inject cash to the CPF.

No wonder the Gahmen says Singapore depends on non-Singaporeans.

Anybody out there who can recommend how to invest in foreign assets? I want to move my $$$ away from Singapore before the party ends.

The Dude said...

Current "boom" is driven by largely speculative forces, and not likely to be sustainable. I'm sorry, property agents, but I don't share your optimism, and in fact, I think property prices will come down by Dec 2009.

Anonymous said...

"Current "boom" is driven by largely speculative forces, and not likely to be sustainable. I'm sorry, property agents, but I don't share your optimism, and in fact, I think property prices will come down by Dec 2009."

It is actually hard to say exactly when it would come down. But one thing is for sure. It is unsustainable in the long run.

If the price increase outpace the salary increase and people's access to their CPF. Where will people get money to pay for the flats?

The only other way to sustain the price increase after that is to give cheap access to credit like a subprime type of loan.

The influx of foreigners won't help much as they have no access to the public housing market.

Well actually, the only way they can influence is to drive up the price of the private market, chasing locals to the public market which in turn drive up the prices.

Whatever it is.. this is not sustainable for the next 10 years.

lobo said...

One of my Chinese (China) ex-colleague says that some Chinese are so rich, that agent fly them in to buy properties. Yes, the agent pays for the tickets.. and the Chinese doesn't even bat an eye when told about the prices. Apparently, it is much higher in (some parts of) China, that our rates seem cheap to them.

This makes for a ready supply of buyers who will push up pricing of houses, public or private.

Anti-Chronic Singapore said...

Well, this is not similar to previous property booms that we had seen.

If you check official population figures, in 2004, there were 4.2m people (Singapore citizens are 73%, PRs were 9% and Non-residents were 18%).

By 2008, there were 4.8m people (65% Singapore Citizens, PRs were 10% and Non-residents were 25%).

Most recently, local media had reported that Jet Li bought a GCB here and the question whether if he is Citizen or not remained unanswered.

I a few PRs who managed to own landed properties in Singapore.

It seems that the growth now are not driven by Singaporeans but by many of the people the Government imported.

And houses (or what URA termed as dwelling units) were not growing as fast as the population figures and as a result, demand still in some ways higher than supply.

Anonymous said...

a good way to end the unrealistic party is to give politics a good "shake."

vote in some oppo and you'll see a lot of speculative or high-net asset investors dumping sg ppty...