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OUR READERS ASK US TO WRITE MORE ON PROPERTY INVESTOR UPDATES
Since the last time we wrote about the property market coming back to life.
The press has been flushed with lots of positive news. All these news of
property market coming back to life is fueling latent demand. Singapore is
one of those rare markets where there is ample liquidity in the market. The
liquidity is not evenly spread out.
What this means is that, the lower end of the condominium market is
supported by affordability and pricing while towards the Mid-luxury and
luxury segment, it is supported more by sentiment and investment yields.
Are Developers taking this chance to clear stock?
“Developer sales of new private homes in June hit 1,825 units - topping the
previous peak of 1,723 units homes sold in August 2007 at the property
market peak.” (Source: The Business Times, http://business.asiaone.com/Business
/My%2BMoney/Property/Story/A1Story20090716-155174.html)
There is still ample property supply in the pipeline, developers are using this
opportunity to try to clear as much stock as possible.
Is this the lowest point?
Some market analysts are positive that the market has reached it’s lowest
point while some pointed out that external demand is still not picking up fast
enough. There is indication that the Singapore government is doing all it can
to stimulate the Singapore economy. Just in January 2009 alone, M1 money
supply increased by 6 billion dollars to around 82 billion dollars.
Singapore Dishonest Property Agents are again active
The market is red hot, some property agents are again touting En-BLOC as
bait. The 2nd more common trick is. It's near the MRT, got rental potential.
This appeals to greed in property buyers. These dishonest property
agents are also trying to raise the prices at the last minute even after prices
have been agreed with the property buyer. Be careful not to let greed dictate
your decisions, talk to many agents, not just 1 or 2 and cross correlate their
stories.
BE CAREFUL OF SUB-SALE ACTIVITIES
And also be careful of sub-sale activities. If you are seller, you must also be
careful and keep tabs on the market. Agents are making this change to press the seller and sell them low and re-sell to you at
high prices.
How to avoid this?
The best is to also post your own advertisements on a free property listing site such as ours at
(http://www.PropertyBUYER.com.sg), it's totally free. When buyers come in, you can also
try to establish the market price and not simply belief what the agent tells
you.
How Dishonest Property Agent trick the Property Buyers
They typically try to create a sense of urgency. They may arrange for group
viewings to create the impression that a property is HOT. These are just
some of the many ways in which they cheat.
Then they agree on lower prices and then once you agree on the prices,
then they raise the prices. They claim that the seller wants to raise rates.
COMMON REASONS FOR CHANGING SELLING PRICE: -
• The seller really changed their minds and raised the price. (Not so
common)
• The agent hasn’t yet met the Seller’s asking price that you agreed with
the agent.
o The agent tries a lower price to tempt you so as to know
your BASELINE price.
o Then the agent tells you a story about the seller wanting
more to try and get you to raise prices.
• The agent pushes for a higher price than what the seller wants. Tells the
seller he will try to maximize prices for the seller.
o In fact, the agent already got you to bite. Then he/she goes to
the seller and ask for more commission, because you agree to
higher prices.
• The agent pushes you for a higher price. For example Seller wants
$900,000, agent asks you for $980,000. Then Agent asks his friend to
buy from owner at $900,000 and immediately re-sell to you at $980,000.
The agent makes $80,000 just like that.
What we at www.PropertyBUYER.com.sg think on recent developments?
We still maintain a cautious outlook. Despite all the huff and puff,
Singapore’s unemployment rate is expected to get worst in 2009.
The
resident population employment is at 4.8% in Mar 2009 and getting higher
while the overall unemployment is 3.3% in Mar 2009.
(Source: Singstat.gov.sg)
While the Unemployment is going to hit different segments of the property
market in different magnitude, when we have an unemployment rate hitting
4.8% (for residents. Meaning Singaporeans + PR) and looking to get worst
at least in 1 or 2 quarters. We cannot be so sure it will not impact on the
general market.
Even expatriates and other non residents, they are not spared from the
recession with the unemployment rate of 3.3% in Mar 2009 and steeply
rising.
External Demand – Via US Economy
Singapore's external demand is still unstable at best. Many of Singapore’s
exports go to the USA. And US consumers make up 70% of the US
economic consumption.
Even while US Federal Reserve bank of New york's Timothy Geithner has
indicated that the US is out of the Financial crisis, but unemployment figures
are still high. Jobless rates are about 9.5% in June 2009, an increase of 7.2
million from Dec 2007.
(Source: Bureau of labour statistics, USA.)
The US unemployment is still looking to breach the 10% mark. This means
that until the US unemployment rate recovers, Singapore’s exports are
not going to see drastic recovery.
Will China replace US as the economic locomotive of the world?
The China (2008 estimated) GDP figures in USD (by CIA factbook) is
US$4.222 trillion. This is in contrast to the (2008 estimated) US GDP figures
of US$14.33 Trillion. The US consumers make up US$10.031 trillion of the
US GDP. The Chinese consumers meanwhile makes up less than half of
China’s GDP of US$4.222 Trillion.
Even while China is producing headlines after headlines of robust GDP
growth, China’s consumption is not going to pull us out of recession as it is
small compared to the overall global trade. Moreover, most of China’s GDP
is still export oriented, and exported to the USA.
According to Bureau of labour statistics (http://www.bls.gov/news.release
/empsit.nr0.htm)
“The number of unemployed persons (14.7 million) and the unemployment
rate (9.5 percent) were little changed in June. Since the start of the
recession in December 2007, the number of unemployed persons has increas-
ed by 7.2 million, and the unemployment rate has risen by 4.6 percentage
points.”
According to BEA, http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm
The economy is still somewhat in the doldrums.
GDP in Q1, 2009 is still decreasing although at a slower rate.
“Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 5.5 percent in the first quarter of 2009, (that is, from the fourth quarter to the first quarter), according to final estimates released by the
Bureau of Economic Analysis. In the fourth quarter, real GDP decreased 6.3 percent.” (Source: Bureau of Economic Analysis)
However Personal consumption is increasing again.
Personal consumption is running down the inventory stock. But production is
still not increasing yet and therefore it has not yet contributed to GDP
growth.
“The real change in private inventories subtracted 2.20 percentage points from the first-quarter
change in real GDP, after subtracting 0.11 percentage point from the fourth-quarter change. Private
businesses decreased inventories $87.1 billion in the first quarter, following a decrease of $25.8 billion
in the fourth quarter and a decrease of $29.6 billion in the third.”
(Source: Bureau of Economic Analysis, USA)
This run down in inventory level is led by reduced production (Less GDP
output) and a slight increase in personal consumption.
“Real personal consumption expenditures increased 1.4 percent in the first
quarter, in contrast to a decrease of 4.3 percent in the fourth. Real
nonresidential fixed investment decreased 37.3 percent, compared with a decrease of 21.7 percent. Nonresidential structures decreased 42.9 percent, compared with a decrease of 9.4 percent. Equipment and software decreased 33.7 percent, compared with a
decrease of 28.1 percent. Real residential fixed investment decreased 38.8 percent, compared with a decrease of 22.8 percent."
(Source: Bureau of Economic Analysis, USA)
BANKS MUST DO IT RIGHT THIS TIME ROUND!!!
This month the banks are so busy that they hardly have time to entertain
Approval-in-principle. The banks are responding mostly if you have an
Option to purchase before they will process your applications.
While we understand the reasons because the market is booming and banks
are over-stretched due to staffing reasons.
But by reducing rates and then forcing the home buyers into buying first and
then getting the loan later has started to create upward price pressures.
If they lend indiscriminately when the market picks up, then the banks will be
accomplices in creating another property bubble.
This bubble is going to come haunt all of us again.
So this time, we urge all banks to act responsibly and not add fuel to fire.
Though we are still really doubtful that this is it.
Redundancy is still accelerating
WORST SCENARIO
In case this is not yet the turning point, then many people would be caught
buying into expensive property developer launches. When the market reality
sets in, banks will again over-react with some banks freezing lending
completely choking off the market. This is when home buyers get hurt again.
WHAT DO WE RECOMMEND FOR SINGAPORE PROPERTY INVESTOR?
We have no opinion about buying or not buying. People buy properties for
various reasons. There are good deals in all cycles of the property market as
well as bad deals.
Exercise your own caution and decide what fits your finances the best.
The economy is still not out of the woods, job vacancies are still dropping.
Those retrenched are still not finding work fast enough.
Singapore Unemployment Rate by Age and Education
(Source: Singstat)
Singapore Job Vacancies have dropped
This means that those who lost their jobs will take longer to find another job.
(Source: Singstat)
You can only get tricked or cheated if you become greedy. If you can control
your emotions and exercise best judgement, you will be able to protect
yourself. In case you want to refinance your home loan, or get home loan,
you can come to us.
ABOUT US Contact us
Tel: 6100 - 0608 sms: 9782 - 8606
Email: loans@propertyBUYER.com.sg
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