Thursday, December 8, 2011

Private property prices may fall 30% in 2012

The title looks like the same with our previous article named Private property prices may fall 30% 2012 onwards where we have written that Standard Chartered analysts expects the residential rents as well as private property prices in mass market to fall 30% over the next three years as supply ramps up amid falling demand. But since the surprise move of new property cooling measures of yesterday, Standard Chartered updated their forecast. Now they expect 30 per cent fall in the next year alone.

CIMB Research analysts were less bearish and they have predicted a 15 to 20 per cent fall in the prices over the next 12 months of 2012. The move of yesterday, mainly targetting foreign investors has introduced 10 per cent additional stamp duty tax on private property transactions by non-residential foreigners whose share in property market has been increasing in the last few years even in so-called mass market private residential property market.

See also Singapore private property sales fell sharply in December 2011.

Although Singaporeans and Singapore PRs are not effected directly, they may hold back their purchasing appetite with the expectation of price fall from a peak even higher than the peak of bubble times of 2007. Many investors who bought home recently, both foreigner and Singaporean, will also be affected fro the last property cooling measures.

Near zero interest rates originating from USA, Europe and China is flowing through the financial system for a while and it was building up a dangerous property bubble in Asia like Singapore, Hong Kong and China. The only healthy way to heal the situation is to let interest rates to go where they should have been but Keynesian brainwashed governments and bureaucrats in USA, Europe and China will probably do not let this happen for a while. These measures, directly targeting foreign and corporate investors, show that Singapore Government expects more stimulus effort in these countries which would flow to Singapore property market as foreign investment to property.

To keep the balance will be difficult. Many people who cannot afford a plain, flat home because of many others turning housing into "investment" play ground will be pleased with 30 per cent price drop (what the hell is $1 M mass market condo any way?) But those others invested in property, especially the ones did it at the peak will have hard time to cope with such a price drop. But since the current prices are supported by printed money any way, some may say it would be better it crash from here than it crash from even higher prices.

What will be the impact on foreign buyers? Especially the Chinese who are increasingly buying property here in Singapore Property guru is running a poll asking "With the recent property measures in place, will we see less foreigners buying property in Singapore?". 48 per cent thinks that they will start looking at other destinations while 28 per cent thinks that 10% stamp duty is a small price to pay and foreigners will continue to buy.

See also Singapore private property sales fell sharply in December 2011.

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