condon price to drop by 50% if interest rate reaches to 5%?

[double dip]

I am betting on the double dip in 2010 or 2011.

I am wondering if the interest rate come up to 5% in spore, would condo prices come down by 50%?

any thoughts?

[the smart money]

the smart money is backing a double dip. This upswing is purely driven by stimulus money.

The only way to fund the next dip will be via higher interest rates.
This will be devastating for Singapore property which is artifically high due to low rates. Its as if they learnt nothing.

[Blaze]

The property here is on the up. This is Monaco of Asia. It can only go up.

The IR's will fly in 88.000 foreign talents first class and provide them condo accomodation. At the same time, 88 condos will en-bloc and all the units in the market will be snapped up. Everything here is on the up.

Oh btw, I am not an agent, not even a local. I am just sitting on the sidelines with no vested interest whatsoever.

[not difficult]

Assume people borrow as much as they can afford to pay now. Initially capital repayments are almost zero so ignore them.

Assume banks charge a 1% spread, rates now 1%ish so pay 2%. Rates go to 5% so you pay 6%, your repayments just tripled.  Remember you borrowed as much as you could afford as every lemming knows "its on the up".

Prices just dropped 67%.

Ok highly simplistic but numbers aren't far off. Rate increases here of even 1 or 2 % would be devastating.

[was is]

The property here is on the up. This is Monaco of Asia. It can only go up.

The IR's will fly in 88.000 foreign talents first class and provide them condo accomodation. At the same time, 88 condos will en-bloc and all the units in the market will be snapped up. Everything here is on the up.

Oh btw, I am not an agent, not even a local. I am just sitting on the sidelines with no vested interest whatsoever.

The power has shifted to asia now and you just cant accept that you are going home soon back to your boresville burb to watch the old fogies go for their evening stroll.
What was vulcan phrase...Paradigm Shift....yes that was it.
If you cant stand the heat, get out of the kitchen.

Its on the up.  Drink it up bozo..!

[Blaze]

Just kidding.

But seriously. Has the double dip already begun?

A dip in most areas

SINGAPORE - Private property sales last month fell to the second lowest level this year on the back of a seasonal slowdown and the impact of the Government's anti-speculation measures. Still, the upmarket central region saw increased property sales with more launches and higher demand.

Last month, a total of 811 new private homes were sold, down from 1,143 and 1,805 units in September and August respectively. This marks the third straight month of decline since record sales of 2,772 units was recorded in July and is also the first time since January that private home sales have dipped below 1,000 units.

Analysts generally expect prices to hold steady as the market moves into its traditional quiet phase towards the end of the year.

But Chesterton Suntec's Mr Tan expects more sales toward the end of this year as the Government will be reinstating the Confirmed List on the Government Land Sales programme in the first half of next year.

"I think for developers they recognise that there is this small window of opportunity to push out the units," he said.

"With more launches, hopefully there will be competition and prices may come down gradually."

[To Blaze]

The answer lies in the article you posted. I wonder why, the higher end properties sales increased.

[Blaze]

Thank you for this valuable contribution Mr agent.

What I was looking for is what will happen in the future? Generally speaking when the sales volumes decline it will reflect in lower prices later. We all know prices shot up before any real economy improvement.

[To Blaze]

No need to call anyone posting contrary to your postings agents. Very preducial.

The future is as I have said, it lies in your own posting of the article you have posted. If you cannot see it, then that's your personal problem.

I would like to talk to you more to explore your thought processes..

[Shoebox wins]

This is because all the launches recently are the "high end " ones in "prime" districts offering mickey mouse studio/2 bedderunits. The PSF might seem high - but actual quantum very low. 250 sq ft x $1500psf is only $375k right? There is no launch outside the central region - so obviously most of the sales this month is in the "high end" district. These newspaper reports are just silly - the sales are in the high end because MOST of the launches are in the end districts - and the high end areas have more affordable in absolute quantum because they are shoe boxed sized units

The answer lies in the article you posted. I wonder why, the higher end properties sales increased.

[interesting...]

Just stumbled across this forum and the opinions seem quite polarized.  As an expat living in Singapore on and off for the last 8 years, I think the common mistake made by most on this board is that the property market here will respond logically in the short term. 

The reality is, even when rates were at 4% (compared to 1.5%) today, condo prices in Orchard were still close to $2000 per sq.ft.  Vacancy today is no different than the average for the last 15 years, so if employment grows in 2010 alongside population, then sentiment alone will push rents up at least 5-10%.  This is just how it works here, logical or not...

On the pricing side, the government has done a good job talking down the mass market, but this has been a bottom up recovery and the high end is only now just starting to move.  The government could care less if luxury prices go up another 15-20% to 2007 levels next year, so long as the mass market stays where it is.  Which it should, considering rents are well supported and yields at current prices remain at or better than 10 year averages.  Remembering that most senior members of government are also personally vested in higher end properties, and we have yet another reason to realize that the price level is much more likely to move higher before any talk of rising interest rates becomes a reality . After all, with 12% unemployment in the US, does anyone really think the Fed gives a rat`s ass about asset bubbles elsewhere in the world....Rates in the US will stay low until AT LEAST the third quarter of next year, regardless of all the misguided hype and articles speculating that it could be sooner.

In any case, my personal view is prices are much stickier on the way down than up.  Even in the worst case scenario, it would be at least 2 years before there is even a remote chance that we will revisit the lows of March and April this year.  At current prices, the risk to the downside is much greater in the low end of the market, but even here it is only a slight risk as there is an alarming shortage of new building in the HDB market, not to mention extremely strong rental demand in the HDB and low end condo sector. 

On the other side of the coin, the high end is completely liquidity driven, so rents don`t mean squat and most things that are selling for $2300-2500 PSF today were selling for $2800-3000 PSF in 2007, so it will be 6-12 months before this gap narrows and we can really start debating whether it will drop again...I can think of at least 4 plots of land in Ardmore, Anguilla, Cairnhill, etc. where developers have significant holding power and will NEVER launch below $3,500 PSF.  The supply of what we call 'the best of the best' projects in Singapore is still ridiculously low in the ultra luxury niche and there is more than enough foreign influx in the next 12 months to support these prices.

[High End?]

I suspect more shoebox units to come next year. In Singapore a 300sq ft home at $2000psf costing merely $600k is considered high end, while a 1600 spacious home at $750psf, costing $1.2 million is considered "mass market". Interesting definition . No wonder everyone is rushing to buy the mickey mouse houses since it elevates one to "high end" even though most are cheaper than HDB flats. Novena, Newton and River Valley has gone down the shoebox route. Orchard Road might go in that direction as well - PSF may seem high but very misleading as these "high end" condos now attract a cheap crowd as your neighbour. There's not point comparing to 2007 prices because these are bubbly prices to begin with. Most of the new launch at the prime district by developers have already priced in all future potential already, leaving very little upside for the investor. If any, reading Citigroup's report, the mass market and the high end (excluding mickey mouse units as they distort the market) will converge further.

[missed point]

The definition of mass market is anything less than either $1.5 million or $2 million.  Shoebox units do not count.  I agree with the idea that the high end (ie. $2+ million to upwards of $10 million) has at least another 15-20% upside left.  Novena, Newton, East Coast, and River Valley are not really included in this definition.  I am more specifically referring to the top 5% of projects in Orchard, as well as the CBD and GCB markets. 

On a separate note, 2007 was hardly a bubble in Singapore.  A bubble collapses under its own weight, whereas the market in Singapore was poised for even higher prices were it not for the global financial crisis.  Remember, it had been languishing for close to 10 years at below market levels.  Had it been a bubble, we would have seen a lot more of a) vacancy and b) distressed or forced sales.  Instead we simply saw the majority of sellers demonstrate signfiicant holding power and not bothering to liquidate.  If the worst crisis in the last 80 years only created a small sliver of distress in Singapore for a few months, then I think it's safe to say that prices are going to hold up pretty well in the next few years...

I suspect more shoebox units to come next year. In Singapore a 300sq ft home at $2000psf costing merely $600k is considered high end, while a 1600 spacious home at $750psf, costing $1.2 million is considered "mass market". Interesting definition . No wonder everyone is rushing to buy the mickey mouse houses since it elevates one to "high end" even though most are cheaper than HDB flats. Novena, Newton and River Valley has gone down the shoebox route. Orchard Road might go in that direction as well - PSF may seem high but very misleading as these "high end" condos now attract a cheap crowd as your neighbour. There's not point comparing to 2007 prices because these are bubbly prices to begin with. Most of the new launch at the prime district by developers have already priced in all future potential already, leaving very little upside for the investor. If any, reading Citigroup's report, the mass market and the high end (excluding mickey mouse units as they distort the market) will converge further.

[To Blaze]

Just too funny..... you even managed to snag that troll "was is"

[other sites]

You should find the local investment *** where landlords get together to exchange notes.

The bravado is not quite you will hear from this *** trolls.