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Thursday, June 23, 2011

Where are Property Prices Heading?

There was a time when the property market was in the doldrums and Wee Cho Yaw was buying up land parcels like they were chocolates and at exorbitant prices too (for that time). I had an inkling back then that he probably knew something that the general populace did not know. On hindsight, I think that this something might be the relaxation of immigration rules, leading to the flood of immigration that has fuelled the rising property prices and caused many Singaporeans much grief.

It was likely not a state secret even at that time, but the general populace (like you and I) generally doesn't recognise policy until it sits next to him in the MRT... and by then, it is too late to make an investment decision.

People like us see trees and miss the forest. People like Wee Cho Yaw see the forest so very clearly that they don't have to look at the trees. They can see trends develop before they develop. Partly, they see the terrain from a privileged perspective because they are way up there. Partly, they are used to looking for trends because seeing trends is how they make money.

Well... it seems that newly released land parcels aren't attracting the attention of property developers. For some reason, the big players have stopped buying. They're also rushing construction schedules so as to be able to get their units to market early. Are they afraid that if launched too late, prices may have dropped? AND Jackie Chan, who being an actor nothwithstanding, is a very savvy property investor. Well... Jackie Chan just sold a property for a tidy profit.

So, I'm thinking that property prices will be heading south in the next 2 years. The neighbour has been dangling his property for sale at something of an exorbitant price (for this time). He hasn't quite put it on the market. He has talked to me, looking quite casual about it... and he has talked to both The Panda and Grandpa Panda. But I wouldn't buy even if I could afford his exorbitant price.

Something tells me that the winds are changing. HDB regulations have widened the gap between HDB flats and private apartments. This effectively dries up demand from potential HDB upgraders. This takes away a great deal of demand for private properties. The flood of immigrants has slowed. This takes away even more demand. There are some concerns about China's economy. US fundamentals stay weak and the quantitative easing procedures don't seem to bring any real solution.

I really think it is time to sell, not buy. But well... let time tell if I am right.


Wen-ai said...

I do hope you are right! The last rebound of property prices took everyone by surprise. Basically prices were only weak for a mere 3 months... but the supply of completed units of both HDB AND private will be coming on board in the next 2 years... I just wonder if prices ever were to fall, will it ever retreat to 2004-2205 level? Your thoughts?

petunialee said...

Wen-Ai: In my opinion (for whatever it's worth)... no. I don't think it'll drop back to 2004-2005 levels. The developers paid a lot for the land. The price of the land would form the lower threshold of apartment prices. I'm thinking that maybe it'll drop to half there?