Singapore Property Market

Yesterday, in the Straits Times, an article appeared discussing a new report by "Citi" that is saying the over supply reported by others will not happen. Basically, I would caution anyone reading these reports by using a simple test before deciding to buy after such a huge increase.

I think most economist agree that a gradual, modest increase over a longer period of time is welcomed over a brief, record-breaking increase in sale prices. When prices rise faster than the majority can afford, I see a time to be prudent in making "buying" decisions. No one really wants Singapore market to go down but the reports are not being kind. This recent report is just the first one to go easy and they use numbers to back up their claims. How the actual buyers ares feeling about the market is just as important as the number you may produce. Much like in Las Vegas, the amount of buyers are slowing and dwindling. Though I heard the same in Las Vegas before the downward slide, "Singapore is different and they can handle a loss" I believe the signs are there to be wary.

In the report by Citi, they sited that not all project will be built as previously projected. There was a potential of 30,000 units coming onto the market by 2010. Citi's report now says that only 60% will be release onto the market. Because developers have decided to hold back project is a sign that the market is not very strong. Buyers see it as well because new release are not as quickly taken up. Citi's projections include a 20 to 30% loss in value. Others have projected higher losses in the Singapore property market. The average investor that came in with their recent en bloc gains will not weather a 20-30 % or more drop. This is why I say go back to basics before you buy and take all projections into your purchase.

Going back to the basic evaluation of the property is key. Location, Location, Location is often heard but does the novice buyer really take this to heart. A novice buyer being one who has made only a few transaction like his own home and maybe one or two investments. During the run up and eventual peak in both Singapore and Las Vegas, We saw a doubling and tripling of the amount of investors in the market. The market by sheer force took care of those investors with little knowledge. What is really scary is that I run into investors here that are just getting into the market. They heard that a friend of a friend made a lot of money by buying a unit. Sorry to say that that time has come and gone as quickly as it shot up to it's peak.

First, You must see the location of any property you're considering buying so while you are looking at the model, or showflat, Go and see where the unit will be located. Check for what is happen there. Check local shopping during the day and night and weekends. Are commercial business moving into the area as well. Are the restaurants full or empty? Also check traffic flow.
I know of unit here in Singapore that is near little India that may become a traffic nightmare for it's residents. It is adding a second entry point and exit point but on the weekend these streets are packed with pedestrians. Thank goodness for a the MRT.

Second, evaluate the rest of your criteria with regards to the purchase. These items include price, future growth, current trends, Rate of return, and anything else you can think of. During a peaking market, these areas overrode many decisions but now that the market is in Plateau stage, some of these gains may disappear.

My final thoughts are if you have a property that you need to sell then unload it as quickly as possible at a very attractive price. Better to lose 10% now then wait to see who's projections will be right in the future. If you can't sell then get a renter in there at the best and longest lease as possible. Because when even 60% of 30,000 units come onto the rental pool that will force down the rents.