In my opinion

How I wish I have a crystal ball to gaze into the future!

It seemed that: for now, rental price has been holding on for quite some time. Has it dipped? No, the rental may not have fetched a higher premium than before but neither has it come down yet to effect a loss. And owners are still making a tidy profit out of it. Never mind about the low figures reflecting new take-up rate of new condos etc (though that is important!). To me, that meant a more cautious buyer. And the figures do reflect an improvement, though the volume is thin.

And it’s this for now: just as long as the rental price doesn’t come down, the sales price would be kept there at that level for quite some time to come. Owners are not in dire need to sell their units fast, they can always rent them out. Another thing to consider: inflation. We are suffering from the highest inflation rate ever in history. Everything seems to have increased in price. Basic commodities like oil, metals, water, transportation….. they have all increased in price. Why should that not cascade down to the consumers looking for a place to stay? I say it would, and the price of housing would only increased upwards. Hence I believe, it is still far from crashing. It won’t make sense for developers to absorb the rising cost anyway. And besides, we do have a lot of foreigners coming to tiny Singapore to stay.

Thinking on another parallel plane: we are already half a year into the sub-prime issue, we may not have seen the worst but the international communities seemed committed into keeping a lid on the problem. Suppose that works, the fall in demand in stocks pricing will be more or less controlled. The problem contained, and in another half a year’s time, we should see the world economy in full swing again. Suppose it doesn’t, then the impact will be felt: companies will want to downsize due to their huge losses. Then a lot of people would be out of jobs. A pandemonium of sorts. Price at that stage due to the low demand will come down – no point over-pricing as no one can buy them. But for people who have been living in check and carefully maintaining their finances, they should be able to find grossly under-priced treasures. Especially mistakes made by property speculators who cannot cover the monthly instalments. They have no choice but to sell their property away fast.

But either way, it’s the astute investor that can come out win-win in either situation. Its going to be a buy again in the second scenario. Or at best, a re-financing at the cheaper bank rates- no loss, just that one had better made sure the property is occupied and covered by rental. Another few years on, the properties can then be re-sold at a much much higher price. Not a loss!

I am more inclined to believe in this: tiny Singapore is only that big. How many areas do we actually have for buildings to come on year in and year out? Plus we are really not interested in out-lying areas but the ones that command the most premium. And that is something that is not easily supplied.

I keep my fingers crossed that the sub-prime doesn’t hit us badly. Then again, let’s suppose it did hit us badly, I want to be prepared for it.