Tan Kin Lian's Blog: Supply and demand for property

Wednesday, November 30, 2011

Supply and demand for property

Many people in Singapore believed that property prices will never fall in Singapore, due to our limited land and strong economy. They should take into account another important factor - demand for the land. Right now, we are enjoying strong demand from foreigners working in Singapore. But this demand can fall, when there is a global recession. At that time, there will be an over-supply of property and prices will fall. When prices fall, it can take a long time to recover. http://www.cnbc.com//id/45477559

7 comments:

Tan Kin Lian said...: Property prices are at a high level, relative to the average income in Singapore. The high prices are being sustained due to the belief that the prices will never fall. This is what caused prices to rise in America and Japan as well, before the crash in these countries.

It is better to invest in property at a level that can be sustained over the long term. The current property prices in Singapore are probably 50% higher than the sustainable level (my estimate) and has to fall by 35% to reach a fair level. The trouble is - if it falls by 35%, it is likely to fall more - due to bearish sentiment.; November 30, 2011 7:29 AM
rex said...: rex comments as follows,

totally agree with the comments.
However it is hard for many less informed singaporeans to think this way. Especially when Lee Kuan Yew himself visited hdb dwellers recently and told the owners, "the price will keep going up, don't sell", somethng to that effect. Many people believe in his "wisdom" and pledge eternal loyalty to him.

rex; November 30, 2011 10:00 AM
GG said...: Unlikely will not fall significantly as you claim. Situation in S'pore is different from US. New buyer(i.e. investor and newly minted Singaporean) entering the market will take prevent any fall in prices.; November 30, 2011 2:42 PM
Spur said...: Looks like LKY's Golden Age has arrived. But only for property developers, property salesman, and those in top 20% income bracket who can afford to play and buy and sell more than 1 properties.

The average S'porean can look forward to retirement age of 80, since all retirement savings used up to pay for 30+ year mortgage. Or look forward to strike jackpot at casino, or strike Toto.; November 30, 2011 6:47 PM
rex said...: rex comments as follows,

to GG, How different is Singapore from US in property market? What makes you so confident we are so "different"?

If you take a serious look at the situation in singapore, the prices are artificially propped up by political leaders comments, and as well by the so-called new entrants, and also easily available low interest loans. These are all fake,unsustainable long-term factors, same as USA when the housing bubble collapsed in the Lehman period.

Singaporeans are not used to shocks, because we are living in a delusion created by politicians, and we have a low class Media (ranked 154th in the world) which constantly praises itself like crazy, instead of helping to create awareness and deep thoughts of important issues, as any responsible national publication ought to do.

The day cometh when politicians die, when the media is liberated, the fake is exposed, and to some extent foreigners lose confidence and some policies have to change to reflect the realities of life.

don't forget Interest rates - did you think how ridiculously low and unreal it is?
And Loan Tenure You will realise it is completely absurd, irresponsible for Mah Bow Tan to allow 30 year loans. Any change in the interest rate, or job losses, which will surely happen, will result in large number of defaults (same as in USA BAD DEBTS SUBPRIME LOANS when the govt for the politics, allow people with no money to buy houses - which led to a big crash and lehman bond fake CDO products).

Singapore governance is merely hanging on a thin thread of several white haired or no-haired gentlemen, do not be deceived into thinking that property prices will always rise. Read more widely and think harder.

rex; December 01, 2011 8:08 AM
michael13 said...: Recall the property price for a typical HDB 5-room flat fell by about 35% to 40% in value in 2006 from the peak in 1996/1997. Singapore cannot be exceptional. It's better to act prudently than following blindly the seasonal politicians' advices. They had been wrong in the past and many times. The global economic situation is different and fragile NOW. The 'difference' can become 'the most expensive English word' this time. TKL is right in his assessment of local property market and its related issues.; December 01, 2011 6:07 PM
Weng Mao Fa said...: A retired principal just bought a Condo unit for investment purpose.
Her 80yo mother feel very proud and telling all relatives. His brother was a shipyard manager just retrenched by employer. He had dementia though having a bunglow. What is the meaning of life?; December 01, 2011 9:37 PM