Is this the End? Singapore Property Going Down?

Singapore property prices are headed down. Since I arrived in Jan 08, I saw signs that indicated that the market had gone through the same steep climb that the US market had gone through. Singapore developers sold whole projects within hours of launching. Buyers were on fire and sellers were salivating.

For the past few years Singapore property market mirrored the market increase the US experienced in all its' major cities during 2003 to 2006. Here the real climb began at the end of 2005 and continued until end of 2007.

When I arrived in January 2008, I spoke to several agents who would tell me that the Singapore market could never be affected by a downturn in the US. Well, eleven months passed and two declining quarterly reports later, we finally get the following report from the Straits Times. Read and please comment:

Source: Straits Times
Nov 27, 2008

Mah sees softening of property prices
Future movements will depend on how industry adjusts to conditions
By Michelle Tay

PROPERTY prices will inevitably soften and demand will weaken amid slower economic growth, National Development Minister Mah Bow Tan said yesterday.
Private housing prices fell 2.4 per cent in the third quarter, and further price movements will 'depend on the severity of the economic slowdown'.
Mr Mah was speaking at the 49th anniversary dinner of the Real Estate Developers' Association of Singapore (Redas) at the Shangri-La Hotel.
He said future price movements will also depend on the 'ability of the industry to make adjustments in response to the changes in economic conditions'.
Meanwhile, Mr Simon Cheong, Redas president and chief executive of upscale residential developer SC Global Developments, said he expects construction prices to ease off with the trend of falling oil prices and easing inflation.
'Current pressure on construction services (will) begin to moderate once the lag in demand kicks in with a slowdown in new commitments by developers,' he said.
Mr Mah also addressed recent moves by Redas to present market analysts with other sources of market data after they had drawn bearish conclusions about the industry recently.
Redas had said the analysts' findings were based on official numbers from the Urban Redevelopment Authority (URA), which they felt are too general. Reports said the industry body met property analysts from local and foreign research firms two weeks ago to advise them that URA data may not give an accurate picture of specific sections of the market.
Mr Mah said the Government has a vital role in guarding against 'irrational market behaviour, such as excessive speculation, that is not in sync with economic fundamentals', to ensure the long-term stability and smooth functioning of the property market.
Mr Cheong agreed: 'The market is at best currently fragile and nervous. Market stability is important to prevent a widespread decimation of asset values...Redas will do its best to work closely with the Government to provide timely market feedback to facilitate a timely and effective response that the property market needs.'
But there are limits to what the Government can and should do, said Mr Mah. For one thing, it cannot work against market forces and try to prop up property prices artificially.
Mr Mah explained: 'Such efforts are not sustainable and will not be beneficial to the health of the property market in the long run. Any measure seen to be knee-jerk or excessive might even weigh market sentiment down further...It is in our interest to ensure that the property prices move in line with economic fundamentals as it affects home ownership, asset values, retirement savings and other sectors of the economy.'
But Mr Cheong said: 'Only with confidence will demand return to the market.' He advised Redas members to 'take this opportunity to do our house cleaning, improve our product and get ready for the next upturn'.
'Pricing alone does not lead to sales volume. Sentiment and confidence lead to sales volume.'
michtay@sph.com.sg
ON GUARD
'We cannot work against market forces and try to prop up property prices artificially...It is in our interest to ensure that the property prices move in line with economic fundamentals as it affects home ownership, asset values, retirement savings and other sectors of the economy.'
Minister Mah Bow Tan

Finally, Singapore May See The Problems it....

On Thursday, July 24th, An article was publish in a local paper called Today. (Goto http://www.todayonline.com/pdf_main.asp?pubdate=20080724 ) The title of the article was "Oversupply Worse than Expected?" by Colin Tan.   Colin is head of research at Chesterton International .  And by far the bravest person to write anything about the possible Bubble in Singapore. 

I have been in Singapore since Jan 08 and I saw many of the same signs that my recent home of Las Vegas had shown.  Relatively quite prices and growth with the occasional twitch of something new would get hearts racing a bit.  Then all of a sudden, Boom, Bang and a Pop!!!, the lines started to form at builders.  They started to say they were sold out and had to make more.  People started to hear stories of their friend who just sold their home 10k above what they had asked for because two buyers came at the same time.  In rapid succession the lines double then triple and so did the asking price.  I once look at a home in the Southwest part of Las Vegas that was small with no yard.  They were asking $95 psf (per sq ft).  I thought it was high but during the Frenzy that same home went to $225 psf.  With current loans parameters, I could no longer buy a home.  Thank goodness the Banks thought of new inventive ways to lend money. (this is sarcasm for those who don't know me)

Singapore went through this same period but by my calculation and divinations, their wave started about a year and a half to two years after Las Vegas.  So what am I trying to say.....( dramatic pause insert music from your own memories)... "Singapore's Bubble is Coming".  I spoke to many agents here that all say the Singapore is different and I hope they are right.  But now I have some support.  Thank you Colin Tan.  How far will it drop?  We can only guess at this point, but all the signs are there.  I have seen the problems that arose in many areas of Las Vegas.  I can only hope there won't be the same carnage here in Singapore.

Too Sick To Move?

I just can't believe my luck some times.

The last few days have been a blur. It would be happy to say that I spent the last few days doing last minute shopping for my loved ones. Or maybe I had clients that came into town that made a big purchase. I could even be satisfied with being able to go to a Christmas party here or there. But as the picture shows, I have been in bed with the flu.


The positives of sitting in bed and watching television could be lauded by most couch potatoes but with the fact that there is just a few short days left before our move and several hundred things to get done before we leave, I did not have time for this at all. For those who don't know, Jenny and I are moving to Singapore. I have told a lot of people and I get a blank stares only about half the time. You know the kind of look that someone gives you when they think you're joking or maybe they are waiting for me to add a big --NOT at the end of my announcement. The other half tend to say" that is great I'd love to visit CHINA!!!!" aargh!!! I then tend to stare at them with the blank look, longing for the NOT joke to happen. It never comes though. Most friends are happy with the opportunity that it poses. They are encouraging for the risk that we are taking. Of course there are some friends who are worried that we are making the biggest mistake of our lives. But we agree that there really isn't a mistake that can't be overcome unless it is one that ends your life. Okay on that happy note-- back to being sick.


The best thing about being sick is getting better and of course the loving care that came from my family during my down time. I could not have asked for any more attention. But besides getting attention and rest, I was able to talk about my blog with Jenny. With her suggestions, I have decided to not only talk about investing in Singapore and Las Vegas but I am also going to use this forum to describe the details of a move for an expatriate. First hand knowledge is always the best.

So as my head clears, I will post more items to describe how this major move is taking shape and how it is affecting everyone involved. Until then-- Have a Blessed Christmas.

Phipps International -Ron Phipps is a Licensed Realtor in Las Vegas, NV and a Certified International Property Specialist.