Only 10% more to go to reach Kubes prediction. And 2008 hasnt ended yet

[Almost There]

If this statement is any close to truth, then Kubes has won his bet!
'If you wanted to close a condo sale today, you'd expect the price to be around 20-30 per cent lower than last year's peak.'

Private property prices, rents fall
URA's private-home price index down 2.4% in Q3; industrial property prices, rents make gains

By KALPANA RASHIWALA

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OFFICIAL data released yesterday confirmed that the private property market has started sliding backwards, while analysts tried to work out how much of its recent gains it would eventually give up.

 
Price and rental indices for private homes, offices and shops fell in Q3 over the preceding quarter - for the first time since the market bottomed in 2004. Industrial property prices and rents still managed to register quarter-on-quarter gains in Q3, albeit at a slower pace than the increases reported in Q2.

Urban Redevelopment Authority's (URA) price index for private homes declined 2.4 per cent in Q3 over the preceding quarter, more pronounced than the 1.8 per cent drop indicated in a flash estimate earlier this month.

The Q3 private-home price index is still 8.3 per cent higher than a year ago, leading some analysts such as JPMorgan's Chris Gee to say the official price indices are lagging market expectations. 'If you wanted to close a condo sale today, you'd expect the price to be around 20-30 per cent lower than last year's peak.'

Between the trough in Q1 2004 and the peak in Q2 this year, URA's price indices appreciated 68 per cent for offices, 58 per cent for private homes and 39 per cent for shop space. The question is how much of these gains will be surrendered during this downcycle and how long the slump will last.

 
'This property slump will be much worse than the one during the Asian financial crisis; this time, we have a global crisis. We still don't know what the entire suite of knock-on effects will be...'

A property industry veteran

The optimistic view is that about half the gains could be lost in a downcycle lasting until end-2009.

Some pessimists suggest the downturn will drag for around two to three years, and see prices easing back to the previous trough, that is, all the gains will be lost. 'Although the Singapore economy is much broader-based today than a few years ago, financial services was a key driver of recent economic growth and had a disproportionate impact on the high-end residential and prime office markets. So if the financial industry tanks, the impact will be greater on these two property segments,' said an analyst with a US bank.

A property industry veteran said: 'This property slump will be much worse than the one during the Asian financial crisis; this time, we have a global crisis. We still don't know what the entire suite of knock-on effects will be. Right now, it's consumers lacking confidence. Failures may come from many other sources, some of which will be unexpected. The downtrend has begun and is not expected to reverse any time soon.'

URA's data showed that developers sold 1,558 private homes in Q3, up 2.2 per cent from 1,525 units in Q2. The 3,845 private homes developers sold in the first nine months of this year are about a quarter of the 14,811 units they sold for the whole of last year.

A property analyst pointed out that an even more alarming trend was the decline in resale transactions of private homes, which have slipped from a high of 7,776 units in Q2 2007 to 1,974 units in Q3 this year.

'Resale transactions are sometimes seen as a proxy for the level of genuine demand, whereas the primary market tends to attract more investment/speculative demand and the subsale market is an even more direct proxy for the level of speculation,' the property analyst from the US bank said.

The number of private-home subsales islandwide fell 10.8 per cent quarter on quarter to 462 in Q3. Subsales accounted for 11.6 per cent of total private housing transactions in Q3, down from a 12 per cent share in Q2.

In the Core Central Region, subsales made up 24.1 per cent of total transactions in Q3, an increase from a 22 per cent share in Q3. The rising subsale share in the region was on the back of a 29 per cent drop in developer sales in Q3.

Meanwhile, URA's Q3 price indices for non-landed private homes fell 2.7 per cent quarter on quarter in Core Central Region, 2.4 per cent in Rest of Central Region and 1.5 per cent in Outside Central Region (OCR).

The official price indices for office and shop space declined 3.9 per cent and 0.3 per cent respectively in Q3. The all-industrial property price index rose 0.9 per cent.

The public housing market continued to buzz, with Housing & Development Board's resale flat price index rising 4.2 per cent quarter on quarter in Q3.

Colliers International director Tay Huey Ying said that developers' sales failing to keep pace with launches led to a surge in the stock of launched but unsold private homes in uncompleted projects to 3,570 units in Q3, almost 30 per cent higher than Q2's 2,755 units and more than double the recent low of 1,658 units in Q2 2007.

Knight Frank director Nicholas Mak expects the decline in private home prices and rentals to persist. 'With the slowdown in the private residential market, it is anticipated that developers could sell between 4,900 and 5,400 units in 2008, which would be only about one-third of the primary market sales last year,' he added.

[Kubes.SG]

Thanks for sharing this article.   Just to let you know, my forecast is "at least a 20% decline".

I am bracing myself for plenty of attacks and criticism on the semantics of my simple forecast:   Is it based on URA the PPI metric, is it median selling price, is it high, mid or low floors; is new launches or resales; what is prime (9, 10, 11); is it psf or total value;  is it asking price or sales transaction price; is it the start of Dec07 or the end of Apr 09; what is the base currency; on and on and on with the excuses and distortions.

Take this as another forecast.

[give up]

Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition.  Tedious repetition. 

[Vulcanl]

Give up,

It increasingly appears that Kubes was/is right.  He is entitled to tedious repetition given all the flak he's taken here.

[no she isn't]

She is invested in AUD, she lost a ton.

[Kubes.SG]

My base currency is AUD.  So my NW has increased given non-AUD investments despite some of the declines globally.  So gained some, but not a ton.

[Don't be silly]

If this statement is any close to truth, then Kubes has won his bet!
'If you wanted to close a condo sale today, you'd expect the price to be around 20-30 per cent lower than last year's peak.'

Private property prices, rents fall
URA's private-home price index down 2.4% in Q3; industrial property prices, rents make gains

By KALPANA RASHIWALA

   Email this article
   Print article
   Feedback
OFFICIAL data released yesterday confirmed that the private property market has started sliding backwards, while analysts tried to work out how much of its recent gains it would eventually give up.

 
Price and rental indices for private homes, offices and shops fell in Q3 over the preceding quarter - for the first time since the market bottomed in 2004. Industrial property prices and rents still managed to register quarter-on-quarter gains in Q3, albeit at a slower pace than the increases reported in Q2.

Urban Redevelopment Authority's (URA) price index for private homes declined 2.4 per cent in Q3 over the preceding quarter, more pronounced than the 1.8 per cent drop indicated in a flash estimate earlier this month.

The Q3 private-home price index is still 8.3 per cent higher than a year ago, leading some analysts such as JPMorgan's Chris Gee to say the official price indices are lagging market expectations. 'If you wanted to close a condo sale today, you'd expect the price to be around 20-30 per cent lower than last year's peak.'

Between the trough in Q1 2004 and the peak in Q2 this year, URA's price indices appreciated 68 per cent for offices, 58 per cent for private homes and 39 per cent for shop space. The question is how much of these gains will be surrendered during this downcycle and how long the slump will last.

 
'This property slump will be much worse than the one during the Asian financial crisis; this time, we have a global crisis. We still don't know what the entire suite of knock-on effects will be...'

A property industry veteran

The optimistic view is that about half the gains could be lost in a downcycle lasting until end-2009.

Some pessimists suggest the downturn will drag for around two to three years, and see prices easing back to the previous trough, that is, all the gains will be lost. 'Although the Singapore economy is much broader-based today than a few years ago, financial services was a key driver of recent economic growth and had a disproportionate impact on the high-end residential and prime office markets. So if the financial industry tanks, the impact will be greater on these two property segments,' said an analyst with a US bank.

A property industry veteran said: 'This property slump will be much worse than the one during the Asian financial crisis; this time, we have a global crisis. We still don't know what the entire suite of knock-on effects will be. Right now, it's consumers lacking confidence. Failures may come from many other sources, some of which will be unexpected. The downtrend has begun and is not expected to reverse any time soon.'

URA's data showed that developers sold 1,558 private homes in Q3, up 2.2 per cent from 1,525 units in Q2. The 3,845 private homes developers sold in the first nine months of this year are about a quarter of the 14,811 units they sold for the whole of last year.

A property analyst pointed out that an even more alarming trend was the decline in resale transactions of private homes, which have slipped from a high of 7,776 units in Q2 2007 to 1,974 units in Q3 this year.

'Resale transactions are sometimes seen as a proxy for the level of genuine demand, whereas the primary market tends to attract more investment/speculative demand and the subsale market is an even more direct proxy for the level of speculation,' the property analyst from the US bank said.

The number of private-home subsales islandwide fell 10.8 per cent quarter on quarter to 462 in Q3. Subsales accounted for 11.6 per cent of total private housing transactions in Q3, down from a 12 per cent share in Q2.

In the Core Central Region, subsales made up 24.1 per cent of total transactions in Q3, an increase from a 22 per cent share in Q3. The rising subsale share in the region was on the back of a 29 per cent drop in developer sales in Q3.

Meanwhile, URA's Q3 price indices for non-landed private homes fell 2.7 per cent quarter on quarter in Core Central Region, 2.4 per cent in Rest of Central Region and 1.5 per cent in Outside Central Region (OCR).

The official price indices for office and shop space declined 3.9 per cent and 0.3 per cent respectively in Q3. The all-industrial property price index rose 0.9 per cent.

The public housing market continued to buzz, with Housing & Development Board's resale flat price index rising 4.2 per cent quarter on quarter in Q3.

Colliers International director Tay Huey Ying said that developers' sales failing to keep pace with launches led to a surge in the stock of launched but unsold private homes in uncompleted projects to 3,570 units in Q3, almost 30 per cent higher than Q2's 2,755 units and more than double the recent low of 1,658 units in Q2 2007.

Knight Frank director Nicholas Mak expects the decline in private home prices and rentals to persist. 'With the slowdown in the private residential market, it is anticipated that developers could sell between 4,900 and 5,400 units in 2008, which would be only about one-third of the primary market sales last year,' he added.

Don;t be silly. How many are willing to sell at 20-30% discount. There might be many eventually if the crisis drags on for 1-2 years but based on URA's median figures THER IS NO WAY Kubes prediction of 20% by April will be reached. We are not talking about isolated cases but across teh board declines of 20-30%. By Apr 09 of course not. Maybe it will if 50% of you guys return home including Kubes.

[Kubes.SG]

Don;t be silly. How many are willing to sell at 20-30% discount. There might be many eventually if the crisis drags on for 1-2 years but based on URA's median figures THER IS NO WAY Kubes prediction of 20% by April will be reached. We are not talking about isolated cases but across teh board declines of 20-30%. By Apr 09 of course not. Maybe it will if 50% of you guys return home including Kubes.

Give us your precise prediction of the what prime property prices will do in Singapore.  You have mine.


BTW:  Lets be accurate, the URA PPI that is heavily reported is NOT a median figure.  It is a weird Uniquely Singaporean manipulated 4-year moving average of property prices.  It is well regarded by the press, property industry and academics as being virtually useless for tracking actual current market price movements (whether going up or down).

[musicality17]

Don;t be silly. How many are willing to sell at 20-30% discount. There might be many eventually if the crisis drags on for 1-2 years but based on URA's median figures THER IS NO WAY Kubes prediction of 20% by April will be reached. We are not talking about isolated cases but across teh board declines of 20-30%. By Apr 09 of course not. Maybe it will if 50% of you guys return home including Kubes.

Give us your precise prediction of the what prime property prices will do in Singapore.  You have mine.


BTW:  Lets be accurate, the URA PPI that is heavily reported is NOT a median figure.  It is a weird Uniquely Singaporean manipulated 4-year moving average of property prices.  It is well regarded by the press, property industry and academics as being virtually useless for tracking actual current market price movements (whether going up or down).

To KubesSG

THe PPI is not manipulated.  In fact, it is easily understood.  And it is not a 4 moving average of prices.  The WEIGHTS are a moving average, but the PRICES are not.  The prices are current. 

[BT confirms Kubes]

Read it in the paper (today's BT).

Let me repeat again (and I am not Kubes) - we havent even reached the end of 2008 and prices have softened by a quarter already.

Luxury condo prices come off their peaks
(SINGAPORE) Prices for some luxury and high-end projects launched in 2006 and 2007 have come off their peaks by up to about 26 per cent, anecdotal evidence shows.

[BoardAdmin2]

I've always wondered about the unemployment Data as well, that said, i've always thought the international standard is pretty soft as well.

[really clear]

THe PPI is not manipulated.  In fact, it is easily understood.  And it is not a 4 moving average of prices.  The WEIGHTS are a moving average, but the PRICES are not.  The prices are current.

Well thats really cleared that up ...NOT 

[Blind]

Read it in the paper (today's BT).

Let me repeat again (and I am not Kubes) - we havent even reached the end of 2008 and prices have softened by a quarter already.

Luxury condo prices come off their peaks
(SINGAPORE) Prices for some luxury and high-end projects launched in 2006 and 2007 have come off their peaks by up to about 26 per cent, anecdotal evidence shows.

That was reported for only 2-3 projects. Read again. NOT ACROSS THE BOARD and NOT THE MEDIAN. Wake up.

[musicality17]

THe PPI is not manipulated.  In fact, it is easily understood.  And it is not a 4 moving average of prices.  The WEIGHTS are a moving average, but the PRICES are not.  The prices are current.

Well thats really cleared that up ...NOT 

I have posted a reply on this some time ago, but it got deleted. The basic equation goes something like this :

Price Index = W1*P1 + W2*P2 +W3*P3 + ..... + Wn*Pn.

For example, the weights (W) are computed using 12 quarter moving averages.  The prices (P) used are those for the current period (ie in this case Q3 2008). 

Below is an excerpt from URA.  By the way, Singapore is not the only country using this approach (Canada and HK use it as well).  So, anyone suggesting this is unique to Singapore is showing up his ignorance.


27 MARCH 2000

REBASING OF URA’S PRIVATE PROPERTY PRICE INDEX

INTRODUCTION

This press release is to provide information on the rebasing of the private property price index (PPPI) by the Urban Redevelopment Authority (URA) using a moving average (MA) base.
EXISTING PPPI

The PPPI is compiled and published by URA quarterly to monitor the price movements of private property in Singapore. The PPPI includes sub-indices for different property types in different localities (i.e. planning regions).
The Laspeyres method is used to compute the existing PPPI. This means that the weights assigned to the various property types in each locality are based on the mix of properties transacted in a fixed year called the base year (see Appendix 1 for more details).
As the market structure changes gradually over time, the PPPI needs to be rebased every 5-10 years so that the weights assigned to the various sub-indices are reflective of the current market structure (Table 1 shows how the private property market structure has changed from 1990 to 1999).
The last rebasing exercise was conducted in 1992, when the base year was changed from 1985 to 1990 (i.e. the weights were re-computed based on the market structure in 1990 instead of 1985).
Table 1: Private Property Market Structure (1990-1999)



 1990
 1999
 
RESIDENTIAL
 100.0%
 100.0%
 
Detached
 13.3%
 9.5%
 
Semi-Detached
 11.8%
 9.6%
 
Terrace
 17.9%
 13.0%
 
Apartment
 18.1%
 17.4%
 
Condominium
 38.8%
 50.5%
 



 1990
 1999
 
COMMERCIAL
 100.0%
 100.0%
 
Shops
 52.4%
 39.5%
 
Office
 47.6%
 60.5%
 
INDUSTRIAL
 100.0%
 100.0%
 
Factory
 86.2%
 64.1%
 
Warehouse
 13.8%
 35.9%
 

MOVING AVERAGE METHOD

To present a more accurate picture at all times instead of only during the years close to the rebasing exercises, URA will use the moving average (MA) method to compute the weights assigned to the various sub-indices. Instead of computing the weights based on the transactions in a particular year, the weights will be computed based on the moving average mix of transactions over the last 12 quarters. The caveats lodged after Sale and Purchase (S&P) agreements are signed are used to compute the weights in the MA PPPI.
The MA method is also used by developed countries such as Hongkong, UK and Canada for computing their housing price indices.
The weights in URA’s PPPI will be updated quarterly so that they are as current as possible. Based on URA’s study, the weights derived from a 12-quarter MA period will not be prone to short-term market structure changes and yet be adequately reflective of the current market structure.
 

[leverage]

Hey Musicallity17, apart from giving people a sense that property market is doing well, not well, do you reckon there is any worth in such an index? does it really tell you can buy or sell that property you have been eyeing?

maybe it is useful for policy makers but the numbers it is generating really does seem pretty dislodged from the reality that is the local classifieds. 

the low volume i am sure is skewing statistics, but would what was a $10 million property sold now for $5 million skew the stats upwards, despite it being, for all intent and purpose a 50% drop?hypothetical of course