Property News & Market Trends

Speculators, take heed. The Government is monitoring closely.

The last time the Government is a "little bit" concern, anti-speculation was introduced within 5 months in 1996. Though illy-timed, the market make a very sudden correction and history was made. Will it happen again? Unlikely. The last correction wipe off billions of dollars worth of assets of Singaporeans overnight! This time round, I suppose they will be more cautious in implementing a sweeping move.

However, speculators, watch out. Time may not be on your side. My advise? Take profits and "invest" prudently instead of "insane speculating". Economy is growing. F1 is on track. The 2 IRs will boost tourism & jobs. Expats are moving in. Population will increase as PRs surge. Overall, the property market is positive. Why spoil it?

Yet, in deep consideration of the freak price spikes in many areas, it's sending jittery to many in real need of homes & rentals. Though URA price index for private homes rose 7.9% in the Q2 over Q1, make no mistake, this is too broad an index. In reality, valuations can rise $100,000 in 1 month for a $400,000 home. A 59-yr lease home can be sold for $300-$500,000 above valuation. Prices shot up by $50,000 in 1 week for a $500,000 home. Can anyone tell me what sanity is that? There is only one conclusion - Singaporean "KIASUISM" at its highest peak!

Forget indexes. Forget reports. It's basically irrelevant. It's a cash-rich buyer/margin trading speculator-greedy seller/anxious developer market. And as famously said by Michael Douglas, "Greed is good". Well, you can't persecute them. Majority of these cash-rich buyers are throwing money 'cos it's too easy to make them. And it's none other than the enbloc sellers. Then again, they can't be blamed as developers are outdoing each other's record bids in a bid for Guinness. Then again, you can't blame them as one by one, they have proven to sell at record prices too! Evidence also points heavily to speculators. Yep, they are out in droves. In fact, I know of a group who can easily "eat" up to $70m worth of properties at one go with just a 3-5% of margin. Well, their ROI will put many professional fund managers & even GICs to shame. 500% return in 2 months to them is but "normal". How can you resist such temptation?

Can this market be set right again? Everyone knows that a steady 8-10% annual growth is a sign of long term prosperity. But with such dangerous spikes, many are going to get hurt very badly. And the government can't afford that. I say - a healthy correction must take place before the end of the year. Seasonally, the 3rd-4th Qtr can be more dynamic than the first half, going by these figures. If the government can't stop the speculators, the market will in 2008. Can you imagine a Pyramid marketing scheme in the property industry? This IS the scenario. Prices keep increasing for no apparent value.(Pity the valuers. They are pretty confused, chasing after prices.) The people who buy at the top end will suffer, really suffer. Ask those in 1996.

So, dear readers, if you're a speculator, get out before October. It takes 3 months before the Government stop monitoring and start taking action. Usually too late. Didn't I mentioned that "History teaches man that man never learn from history". Remember?(There, proven again.)

However, if you're a real investor, be prepared to cushion price drop by 20%, don't depend on steep valuation & high leverage. Then it'll be safe. Don't buy blindly. Go with fundamental values. It's no difference with choosing a stock. If you're considering selling and not buying, get it done in 1-2 month's time. Prices will continue to spiral up at least for the next 3 months. If you're a serious buyer, choose something manageable. Don't overstretch or the bank will come knocking if valuation drops. If you're thinking of upgrading, choose a cheaper property. If you're just worried about losing out on prices, forget it. You're probably at the upside now, unless the Government continue to "monitor closely". My take? Check caveats, if you know what I mean.

If you're an agent, pray that the market don't hit the stagnation index(where sellers' prices no longer meet buyers' offers). But whether prices goes north or south, you just transact. So, the more transactions, the better for you. May the predictable predicts the unpredictable. Cheers! - Danny 'Bingo'

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