Singapore Property Buyer forecast for 2010 and 2011

Singapore Property BUYER forecast for 2010 and 2011.

Recently the government has done the people a favour by releasing land and stopping the property prices from going out of hand.

We felt that the error was created in the first place because there was a squeeze in the HDB supply side. HDB was building massively inadequate supply for annual demand.

Although HDB can say that there is nobody queueing up for their BTO flats, but it could also be that the flats are priced too expensive due to benchmarking it to resale prices. Therefore if people cannot afford HDB flats, does it mean that there is no demand for it?

So the supply shortage in HDB is leading to a bottom up rise in prices of HDBs. This is pushing a wave of HDB upgrades into Private housing and condominium.

This demand is then pushing upwards and depleting supplies in the lower end of the private property segment (at least for this year 2010 and maybe next 2011) leading to massive demand for land. (Strangely so, as the supply in the pipeline is still some 60,000 units at at March 2010, equal to easily 6 to 7 years supply)

We can only speculate that perhaps it is because: -

1. Those supply of property in the pipeline is concentrated mainly amongst the big players.
2. Those supply of property in the pipeline is concentrated in certain districts or in certain price ranges, while demand is coming from the "MASS segment".

With increased demand for land due to HDB's miscalculation of demand by under-building, this leads to huge demand for land. Property developers seeing a possible opportunity may want to get in on the act by bidding for land.

Singapore government is happy to release land for sale
Singapore government is in turn happy, because it can be seen to be doing the public a favour by releasing land and cooling the market, whilst at the same time, the property developers are frantically meeting the land reserve price and starting a bidding war for land.

Our guess can only be that Property developers see this as a start of a price hike in land and therefore property prices. What this means is that if the Property developers bid and win at the early part of this property supply imbalance cycle, design and launch the properties quickly (say within 1 year), they can get out at the peak of the market or before the peak of the market. While during this time, the property prices are rising, so by the time they launch for sale, they could be sitting on massive profits.

But not all property developers will be lucky. Some smaller ones and those that mis-time their purchase can go bankrupt. While if again it is the big property developers who win, Singaporeans and Singapore property buyers will be unlucky. This is because with their holding power, they will then be able to continue to set new price benchmarks.

Will Singapore land supply catch up fast enough?

The supply of land will need around 2 to 4 years to be ready. So during this time, the property prices will continue to be squeezed from the mass market end all the way pushing up to the mass and mid market Private housing.

Singapore government and it's coffers are the major beneficiaries

So this time round, the Singapore government is the major beneficiary as it yet again was able to release land for sale at very high prices on the run up to the peak. And it is sparing no effort to sell much land to maximize land productivity.