The Dream is Over

[Wide Awake]

For those dreamers who got enthused by one weekend's worth of decent sales, wake up.

Today's Biz Times:
Varying pace of sales at recently released projects

Most private homes register slower sales at the weekend.

.....the Livia in Pasir Ris had chalked up relatively strong sales ...at an average of $650 psf
...But sales were slower for most other recently released projects....
...commenting on the varying pace of sales, a developer said it is not unusual for transactions to taper off after the first weekend or two weekends of a launch, after initial demand has expressed itself and choice units are taken up....

..."Once a developer has sold at least 30-40 per cent of units in a project, it may be slightly more comfortable with cash flow. It may then be prepared to sell the rest of the project at a slower pace if it can achieve higher prices."

...A more worrying reason could simply be that demand has dropped...

...."People ask themselves: With all the global economic uncertainty, do I really need to buy a new home now?"...
------------------

Cold cold shower.....raining on your parade.....eat your heart out

[Very resilient market]

80% of units launched snapped up is a big deal in current market conditions. There were 3000 people who flocked to Livia. So all the attention was focused there for last weekend. Buyers do not make a decision within one weekend on what to buy.

The suburban market will finally play an important role in making the overall URA price index look positive.

[HaHaHa]

So now you talking about resilience based on the number of visitors to a show flat in a way far out place!

Next you will be saying the property market will be standing up because the number of visitors to the beaches in Sentosa swelled over a weekend, thereby showing inherent demand for apartments in Harbourfront!

Thats about how logical your argument is sounding.

[maybe neither]

I don't see why the property market must continue to go up wildly or down wildly here, this seems to be the prevailing expectation due to past experiences. The property market here has only just recovered back to where it was prior to the Asian crisis. Likewise the S$ has also recovered back to where it was pre-crisis. Even if values were inflated by some margin back in 1997, surely the fundamentals have caught up by now, even with the uncertainties on the horizon.

What should happen henceforth is prices level off, stabilize and a more "sane" level of appreciation averaging 2% or less per quarter is maintained, like most parts of the world. Rampant speculation in property, either to the upside or downside is not particularly healthy for an economy and this is why they are trying to engineer more stability into the system.

[yes, but]

I don't see why the property market must continue to go up wildly or down wildly here, this seems to be the prevailing expectation due to past experiences. The property market here has only just recovered back to where it was prior to the Asian crisis. Likewise the S$ has also recovered back to where it was pre-crisis. Even if values were inflated by some margin back in 1997, surely the fundamentals have caught up by now, even with the uncertainties on the horizon.

What should happen henceforth is prices level off, stabilize and a more "sane" level of appreciation averaging 2% or less per quarter is maintained, like most parts of the world. Rampant speculation in property, either to the upside or downside is not particularly healthy for an economy and this is why they are trying to engineer more stability into the system.

Private property is a small proportion of places.  This massively increases price volatility.  Fact is in 97 places were 60% overvalued (according to the Govt).  They are also overvalued now due to a 70%-100% increase in last two years.

Look at in terms of affordability as well, they are overpriced.  Expat deals are thinner on the ground as well so companies supporting the entire condo market also no longer works.  You used to have a few expats in back office and major revenue generators in front, now it is hundreds of processing people in the back, they need somewhere to live but they don't get housing deals.  Additionally most banks here will have significantly lower profits than two years ago, doesn't make a lot of sense really.

Lastly property stocks are >30% off their peak, go figure.

On the upside they are building two casinos, that will obviously offset everything else......

[Premature]

So now you talking about resilience based on the number of visitors to a show flat in a way far out place!

Next you will be saying the property market will be standing up because the number of visitors to the beaches in Sentosa swelled over a weekend, thereby showing inherent demand for apartments in Harbourfront!

Thats about how logical your argument is sounding.

Your excitement over falling prices is premature. Get excited only when the URA figures start showing a decline.

[Ha Ha Ha Ha]

I don't see why the property market must continue to go up wildly or down wildly here, this seems to be the prevailing expectation due to past experiences. The property market here has only just recovered back to where it was prior to the Asian crisis. Likewise the S$ has also recovered back to where it was pre-crisis. Even if values were inflated by some margin back in 1997, surely the fundamentals have caught up by now, even with the uncertainties on the horizon.

What should happen henceforth is prices level off, stabilize and a more "sane" level of appreciation averaging 2% or less per quarter is maintained, like most parts of the world. Rampant speculation in property, either to the upside or downside is not particularly healthy for an economy and this is why they are trying to engineer more stability into the system.

Private property is a small proportion of places.  This massively increases price volatility.  Fact is in 97 places were 60% overvalued (according to the Govt).  They are also overvalued now due to a 70%-100% increase in last two years.

Look at in terms of affordability as well, they are overpriced.  Expat deals are thinner on the ground as well so companies supporting the entire condo market also no longer works.  You used to have a few expats in back office and major revenue generators in front, now it is hundreds of processing people in the back, they need somewhere to live but they don't get housing deals.  Additionally most banks here will have significantly lower profits than two years ago, doesn't make a lot of sense really.

Lastly property stocks are >30% off their peak, go figure.

On the upside they are building two casinos, that will obviously offset everything else......

The increasing trend of expats not getting housingdeals is nothing new. This started a few years ago even before the rents started incresing dramatically.

Are you saying that 30% decline in stock price should equate to 30% decline in physical property prices?

[yes but]

I don't see why the property market must continue to go up wildly or down wildly here, this seems to be the prevailing expectation due to past experiences. The property market here has only just recovered back to where it was prior to the Asian crisis. Likewise the S$ has also recovered back to where it was pre-crisis. Even if values were inflated by some margin back in 1997, surely the fundamentals have caught up by now, even with the uncertainties on the horizon.

What should happen henceforth is prices level off, stabilize and a more "sane" level of appreciation averaging 2% or less per quarter is maintained, like most parts of the world. Rampant speculation in property, either to the upside or downside is not particularly healthy for an economy and this is why they are trying to engineer more stability into the system.

Private property is a small proportion of places.  This massively increases price volatility.  Fact is in 97 places were 60% overvalued (according to the Govt).  They are also overvalued now due to a 70%-100% increase in last two years.

Look at in terms of affordability as well, they are overpriced.  Expat deals are thinner on the ground as well so companies supporting the entire condo market also no longer works.  You used to have a few expats in back office and major revenue generators in front, now it is hundreds of processing people in the back, they need somewhere to live but they don't get housing deals.  Additionally most banks here will have significantly lower profits than two years ago, doesn't make a lot of sense really.

Lastly property stocks are >30% off their peak, go figure.

On the upside they are building two casinos, that will obviously offset everything else......

The increasing trend of expats not getting housingdeals is nothing new. This started a few years ago even before the rents started incresing dramatically.

Are you saying that 30% decline in stock price should equate to 30% decline in physical property prices?

This is true.  However there are a number of things to think about.  The decrease in housing allowances and the rise in housing costs doesn't make a lot of sense intuitively does it?  Couple this with lower revenues in finance generally over the last two years and lower bonuses.

Nevertheless there were more employees who had to live somewhere (junior people sharing a lot from what I can see, maybe support mid-market to an extent) coupled with a supply crunch.  The latter is over and the former has slowed.  If Singapore becomes uncompetitive the former can easily be reversed, having processing staff away from the revenue generation does have a cost associated with it.  If that happened there would be a big problem.  In any case a lot of banks are now reaching their target headcount.

Additionally while you may realise that I'm not convinced everyone does, expat = fat housing allowance = ability to pay whatever asked.  This is no longer true, it is increasingly hard to move people here due to cost (and schools), the condo market pricing makes no sense for the majority who pay themselves.

Second, while stock price is hardly a perfect indicator of housing it is not unrelated.  The stocks mentioned are building companies, their value is certainly related to expected future revenues.  They started rising about a year to 18 months before house prices.  You would expect some lag due to greater efficiency in the stock market and liquidity.  You then have to ask why they have given a lot of gains back.  They are still well above 04/05 levels but below end 06.  If you use this as an indicator of housing prices (and like I said this isn't perfect but is related) you would not expect prices to drop to previous levels but a 20%-30% fall would not be out of the park.

I appreciate I am concentrating on banking employees here and there are other factors but I see very few factors to cause optimism for housing prices here and a whole number to cause a fall.

[aaaaaaa]

I don't see why the property market must continue to go up wildly or down wildly here, this seems to be the prevailing expectation due to past experiences. The property market here has only just recovered back to where it was prior to the Asian crisis. Likewise the S$ has also recovered back to where it was pre-crisis. Even if values were inflated by some margin back in 1997, surely the fundamentals have caught up by now, even with the uncertainties on the horizon.

What should happen henceforth is prices level off, stabilize and a more "sane" level of appreciation averaging 2% or less per quarter is maintained, like most parts of the world. Rampant speculation in property, either to the upside or downside is not particularly healthy for an economy and this is why they are trying to engineer more stability into the system.

Private property is a small proportion of places.  This massively increases price volatility.  Fact is in 97 places were 60% overvalued (according to the Govt).  They are also overvalued now due to a 70%-100% increase in last two years.

Look at in terms of affordability as well, they are overpriced.  Expat deals are thinner on the ground as well so companies supporting the entire condo market also no longer works.  You used to have a few expats in back office and major revenue generators in front, now it is hundreds of processing people in the back, they need somewhere to live but they don't get housing deals.  Additionally most banks here will have significantly lower profits than two years ago, doesn't make a lot of sense really.

Lastly property stocks are >30% off their peak, go figure.

On the upside they are building two casinos, that will obviously offset everything else......

The increasing trend of expats not getting housingdeals is nothing new. This started a few years ago even before the rents started incresing dramatically.

Are you saying that 30% decline in stock price should equate to 30% decline in physical property prices?

This is true.  However there are a number of things to think about.  The decrease in housing allowances and the rise in housing costs doesn't make a lot of sense intuitively does it?  Couple this with lower revenues in finance generally over the last two years and lower bonuses.

Nevertheless there were more employees who had to live somewhere (junior people sharing a lot from what I can see, maybe support mid-market to an extent) coupled with a supply crunch.  The latter is over and the former has slowed.  If Singapore becomes uncompetitive the former can easily be reversed, having processing staff away from the revenue generation does have a cost associated with it.  If that happened there would be a big problem.  In any case a lot of banks are now reaching their target headcount.

Additionally while you may realise that I'm not convinced everyone does, expat = fat housing allowance = ability to pay whatever asked.  This is no longer true, it is increasingly hard to move people here due to cost (and schools), the condo market pricing makes no sense for the majority who pay themselves.

Second, while stock price is hardly a perfect indicator of housing it is not unrelated.  The stocks mentioned are building companies, their value is certainly related to expected future revenues.  They started rising about a year to 18 months before house prices.  You would expect some lag due to greater efficiency in the stock market and liquidity.  You then have to ask why they have given a lot of gains back.  They are still well above 04/05 levels but below end 06.  If you use this as an indicator of housing prices (and like I said this isn't perfect but is related) you would not expect prices to drop to previous levels but a 20%-30% fall would not be out of the park.

I appreciate I am concentrating on banking employees here and there are other factors but I see very few factors to cause optimism for housing prices here and a whole number to cause a fall.

Housing prices will definitely fall but but how much and which segment will be the worst affected is going to be difficult to predict. It might be that the 20-30% declines may take place in the very small segment of the property market - prime areas (owned by people for wome losing 20-30% might not be a bid deal)  while the majority of folks will not even realise that there was a price correction.

[yes but]

Personally I see it differently.

The upper prime market that was supported by expat deals continues to be, senior management still get them.  It is the middle management layer where it is more of an issue.  I'm not talking mass market out in the extremes for HDB upgraders here but 2, 3 & some 4 bed places in the ~1000 - 1,500 psf sale price (e.g. condos 5k-12k per month range).  These are the sort of places companies previously paid for and now don't and the type of people who occupied them can't afford out of their salary.

Anyway, all speculation and we'll see.

[aaaaaa]

Personally I see it differently.

The upper prime market that was supported by expat deals continues to be, senior management still get them.  It is the middle management layer where it is more of an issue.  I'm not talking mass market out in the extremes for HDB upgraders here but 2, 3 & some 4 bed places in the ~1000 - 1,500 psf sale price (e.g. condos 5k-12k per month range).  These are the sort of places companies previously paid for and now don't and the type of people who occupied them can't afford out of their salary.

Anyway, all speculation and we'll see.

Most of the new supply coming onstream over the next 2-3 years is in prime areas. In fact the only clear evidence of prices falling is from prime areas. I am expecting the high end to be  worst hit.

[yes but]

Personally I see it differently.

The upper prime market that was supported by expat deals continues to be, senior management still get them.  It is the middle management layer where it is more of an issue.  I'm not talking mass market out in the extremes for HDB upgraders here but 2, 3 & some 4 bed places in the ~1000 - 1,500 psf sale price (e.g. condos 5k-12k per month range).  These are the sort of places companies previously paid for and now don't and the type of people who occupied them can't afford out of their salary.

Anyway, all speculation and we'll see.

Most of the new supply coming onstream over the next 2-3 years is in prime areas. In fact the only clear evidence of prices falling is from prime areas. I am expecting the high end to be  worst hit.

Ok, so different factors in different sectors.  Upper end has downward pressure due to increased supply and static demand (number of top execs here isn't going up a lot).

Next sector will have downward pressure due to middle management housing disappearing.  While people aren't getting new housing deals at this level there are plenty here who came 2-4 years ago on them where they will get localised (4 or 5 years is typical for housing deals).  They may choose to leave (and get replaced by people on local contracts), stay and downgrade or stay and bite the bullet, there will be some of each.  Nevertheless, pressure is down.

Entry sector could have positive pressure due to the above downgrading and HDB upgraders.

Points to losses in mid and upper tier and possibly up in lower tier so overall a reduction in differential.  This would make sense as the range of prices is currently crazy, Singapore is a small place.

[borings]

Obviously, things are going to rise and fall. If it doesnt rise and fall, and fall and rise, then life would be so boring.

[you would know]

Obviously, things are going to rise and fall. If it doesnt rise and fall, and fall and rise, then life would be so boring.

Obviously.