Sunday, June 27, 2010

More evidence to show drop in price in the pipeline?

HOT from

June 28, 2010, 1.11 pm (Singapore time)

StanChart cuts S'pore property firms
SINGAPORE - Standard Chartered has downgraded its recommendations on Singapore property firms CapitaLand Ltd, City Developments Ltd and Keppel Land Ltd, citing lower launch prices in 2011 due to larger land supply.

'We expect an increase in the residential supply in the pipeline in 2011 mainly due to the record land supply the government has announced it will push out in the second half of 2010,' the bank said in a report.

In addition, it said it expects prices to enter a down-cycle if the government revises policies to increase public housing supply in the next six to 12 months.

It said it also forecasts launch prices to decline by 20 per cent in the mass market districts and 10 per cent in the prime districts in 2011.

Broker rating and target price:

CapitaLand, In-line, $3.95

City Developments, Underperform, $9.27

Keppel Land, Underperform, $3.35


This piece of fresh news has affirmed my views on the current property market. Property prices are indeed going towards the downcycle, if you have followed the chart from the URA website. If not, at least housing prices will stagnate.

Well, well, time to follow these steps.

1. Choose the district/area that you would like to buy your property.
2. Decide how many bedrooms you want.
3. Access weekly to check the transacted prices.
4. Get a reliable and trustworthy agent to update you. They have first hand news about the market sentiments.
5. Check with the bank for an in-principle approval of home loan.
6. Keep a record of your CPF statements, remember the minimum sum rule.
    If you do not know how to do the calculations, I am glad to be of serivce.
7. Build more cash in the war chest.
8. Wait patiently.


Buying craze has indeed slowed down

Published June 28, 2010 (Business Times)

68 units sold at Waterfront Gold
Two of 5 blocks, or 150 units, of Bedok Reservoir condo released last Friday


FRASERS Centrepoint and Far East Organization have sold 68 of the 150 units for sale at the Waterfront Gold condo fronting Bedok Reservoir as of yesterday.

These were units released by the developers last Friday.
The 99-year leasehold condo, which has a total 361 units, is priced at $950 psf on average.
Over 70 per cent of units sold were smallish apartments - one bedders, one bedroom with study units and two bedders.

Buyers were predominantly Singaporeans and there was a roughly equal split between those with HDB and private addresses. In absolute price terms, the cheapest unit sold was about $555,000, for a 581 square foot, one-bedder on the second level. Both penthouses released (about 2,000 sq ft each) were sold at an average price of about $1,025 psf or $2.1 million each.

While Waterfront Gold's sales seem tepid compared with launches earlier this year, Frasers Centrepoint Homes chief operating officer Cheang Kok Kheong said the outcome was 'within our expectation and quite remarkable given today's market sentiment'.

'We are testing the upper end of prices in the upgraders' market and because of the location and facilities, we are positioning Waterfront Gold as an upper-mid market condo rather than a mass-market product.

'For instance, we have a sky park with a dedicated express bubble lift and toilets in the development will have marble floors,' he added.

Mr Cheang also said the developers are offering two of the project's five blocks, or 150 units, as part of 'a deliberate attempt not to sell out the project'.

'We wish to sell progressively and keep the remaining three blocks until the location of the Bedok Reservoir Station on Downtown Line 3 is announced.'

Market watchers recall that during March/April, when home buying sentiment was stronger, developers used to achieve sales of about 300 units in the first weekend of a project's release.

Knight Frank managing director (residential services) Peter Ow attributed Waterfront Gold's sales result to a 'combination of challenging pricing and a slower market'.

Waterfront Gold is the third in a series of four condos that Frasers Centrepoint and Far East are developing on the former Waterfront View site.

Waterfront Waves was first released in January 2008 at an average price of about $750 psf, followed by the launch of Waterfront Key in July last year at $735 psf on average.

The developers have been raising prices in these two projects.

Waterfront Waves is now fully sold and the remaining 100-odd apartments at Waterfront Key are now selling at average prices of $850 psf for poolview units and $950 psf for reservoir-facing units.

Now for my comments:

The developers launch 150 units out of the 361 units that they have. What does this statement tell you?
Well, I see it that the developers have also seen a large dropped in the number of buyers. Anyway, why wait for the confirmation of the MRT station? Just launch all the units available and see the response.

Anyway, compared to March/April where selling 300 units can be easily achieved in the first weekend, but now? Only 68????

That's a 72% dropped in sales. What's more, most of the buyers are buying only the smaller units. What does this show again? No locals are interested to buy the bigger units to stay. So what do we do? Of course we target the bigger units.

Let's wait for more signals before we commit.

Have you started to build your war chest yet?

Friday, June 25, 2010

So is there a property bubble or isn't there?

Jun 26, 2010
Probably no property bubble here yet: MM

THERE is probably no bubble in Singapore's property market, Minister Mentor Lee Kuan Yew said yesterday.

The sharp price rises that have been seen are 'part of the total liquidity in the whole world system', said Mr Lee, noting that interest rates are low, and foreigners still see properties as affordable.
'Even if we cap our excess, people in Hong Kong, Indonesia, will say, compared to what I have to pay, Singapore is cheap, let's buy it,' he added.
'And apart from landed properties, they can buy into any condos.'
Mr Lee, who was speaking at a dinner hosted by the Association of Banks in Singapore, said that the Government is convinced that there is real underlying demand for residential property.
'So it's probably not a bubble yet,' he added.
Still, he pointed out that the Government has taken measures to address concerns relating to the market overheating, including releasing more land to developers and putting in place more stringent rules for buyers when borrowing from banks to finance property.
'More land is being released, to dampen the enthusiasm of everybody rushing for the latest release, and we've told the banks to be more prudent and have a higher downpayment,' said Mr Lee.
'These are the precautions we can take, but it does not stop the Indonesians or the Thais or the Malaysian Chinese or the Filipino Chinese from coming here and saying, 'Compared to what I have to pay in my country, this is cheap'.'
Mr Lee was responding to a question by a Standard Chartered banker who had asked about whether he was worried about property prices here.

Above is a part of the report extracted from The Straits Times on June 26, 2010.
MM uses the word PROBABLY, hence probably there is indeed a property bubble forming, but not big enough to burst yet? Nobody knows.

I agree the statement that he make in the middle and last part, "Compared to what I have to pay in my country, this is cheap." He mentioned this statement twice!
I have been noticing that the property prices in the neighbouring countries and that includes Hong Kong and China, that their property prices are much higher than our homeland.

So what happens when the housing prices, or the 'bubble' burst in those countries?

Singapore property prices will follow suit as the investors will go back to their country to buy the properties there. But where do they find the money? By selling the properties here.
This is another example of the simple theory of "Supply and Demand", the most important topic in economics.

As the number of people to buy properties are limited, the buying craze must stop somewhere, hence demand drops. Then it will come a day when those people who follow blindly to buy, will have to sell the properties at a loss. This will slowly translate to more supply over demand and hence prices must fall.

Meanwhile, let's continue to build our warchests.

Tuesday, June 22, 2010

Are property prices going to hold or ready to experience free fall?

22 June 2010
Two independent reports from straits times and commented on recent property sales showing signs of slowdown. This two reports were written only two weeks from the last news that developer sales slowed by almost 60%.

The straits times wrote:
Residential property sector takes a breather wrote:
Caveats lodged in May 2010 dropped 41%

These two reports once again gave us evidence that the number of buyers out there are exhausted by the recent sales since January. We must remember that the number of people buying properties are limited, hence the buying craze must stop somewhere.

Property agents are still saying that prices will not drop. What kind of sales tactic is this? It comes to show that these agents are only interested to push sales. They do not care if the buyers will profit after that. If they are so sure that the prices are going to go up further, why don't they buy a few units each?

Of all the property showflats that I have seen, I would only consider one that is of value. If you want to know which property and why, email me.

There is another one property that I am looking forward to the launch, that I feel also have value. I will update you once I have seen it.

Meanwhile, just build our war chests and wait patiently.

Wednesday, June 16, 2010

After building your warchest with cash and CPF monies, then what?

Just a month ago, on 19 May 2010, I wrote that it's time to get ready money to invest in property, or to upgrade to a higer value property. Today's business times and straits times reported that developers' sale of new units has slowed by almost 60%. It comes to show that supply of new units have excess over demands from the buyers.

Yesterday, an agent sms me to consider a $1.355 million 16th floor 3+1 unit 99 years unit in Kovan Residences. Upon receiving that sms, I checked the ura website for transacted prices and found that the units with similar sizes of 1760 sqft was sold only at about between $1.08 to $1.2 million. The asking price is about 20% or 30% above what was transacted about a year ago. That's ridiculous, isn't it?

Well, if you never forget what Mr Buffett said, "Be fearful when people are greedy and be greedy when people are fearful." I feel that this is the time when people are greedy. This "greed" started 5 months ago in January. This is the time to be more patient as before, and to gather all our ammunitions, i.e. $$$, so that we will be able to strike when people are fearful. This time should come soon, maybe by the end of this year.

There has been reports that smaller units were snapped up the very day it was launched. Don't these people have to really consider the direction and facing when buying properties? These may be the reasons:-
1. If I do not buy now, I will miss the boat.
2. Since everyone else is buying now, the price should be going up later.
3. It's still under construction, hence my monthly installment is peanuts.

It's right that one has to pay only a few hundreds of dollars monthly under the progressive payment scheme. For example, if an individual buys a $1.1 million property, the first three years of payment is about $350 to $900. Only upon TOP, the buyer will need to pay $2600. However, think twice, will I be able to pay the $2600 monthly after TOP?

Let's think about it. The properties under the deferred payment scheme a few years ago will get their TOP this year. Those properties were launch 2 to 3 years ago. That was the time when people just buy the properties without considering, because they have the mentality that I only to pay 5% cash, and 15% from CPF monies, and the rest after TOP. I am currently following a few properties that were on deferred payment scheme, and are going to TOP this year. I believe these properties will be the ones that will create panic selling towards the end of this year.

So what am I doing now? Just need building up my warchest and ammunitions and have the patience to wait for the right time to strike.