Property News & Market Trends

Where are the property prices heading?

I supposed that's on every potential buyer's & seller's mind.

If you look at what the experts said, the rise will continue probably for the next 3 years, all the way to 2010. Supplies will catch up by then. However, if demand did not maintain at this current level, I'm certain a correction is inevitable.

This is karma. The reason why all markets go through a cycle. When sellers try to test the treshold of buyers. Until the end of this year, I'm quite sure the sellers will triumph. Is this a good thing? Long term, I doubt so.

A sharp spike in price increase within a short period will force developers to build more, faster, at a higher price. Resale sellers will take the lead from developers.

Those developers who do not have enough land bank to take advantage on, will go for more expensive enbloc sales. More record prices will follow. 6 - 9 months later, these projects will demand higher prices as developers aim no lower than 30-40% profit margins.

This, will in turn drive prices in the neighbourhood higher and so the real estate tsunami continues. This price wave will not stop till demand saturates, as in sub-sales now. Agents are already feeling the lack of enthusiastic buyers for sub-sales. A quick check will show you that there are at least 600-800 sub-sale units placed on sale on one Saturday! In fact, this went on every Saturday since 4 weeks back.

The worrisome figures point to 2009/10. An estimated record 30,000 new units will be ready for occupancy. If the expatriates and PRs didn't arrive or the IR didn't take off as brillant as all of us expected, doomsday will follow. The consolation is, 99% of Singapore & her potential investors are fully confident that the 2 IRs will soar and an expected 60,000 homes will be required to house these new foreign talents. That will make supplies scarce.

The real question is - what happens after 2010? We all know 2008 belongs to Beijing, and casinos are springing up everywhere in Asia over the next 3 years. Can Singapore capture the targetted number of tourists? Will demand for properties continue thereafter?

So, the conclusion is - buy prudently. Don't over commit. The supplies and choices are still aplenty. If you can afford to wait, 2011/2 may be a better time to buy for a long term gain. If not, just go for short term flipping, abeit a smaller margin.

The word of wisdom is - don't be too greedy. - Danny 'Bingo'

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