Private property prices... Up or Down?

[Mercury1]

Cheers mate 

Not much of a problem, but you need to find a dedicated agent that does short n long term rentals for you. The difficult part is usually managing short terms, whereby you get bookings from airbnb n need the agent to check in n check out for guests. When you get into the hang of getting bookings n passing on to the agent to manage, it is super lucrative. You can achieve 10% rental yield just renting out your unit for less than a year (an sgd100k unit can rent sgd60-80 daily rate). I am only keen on beachfront properties in Thailand, but that is all I will share. My best advice is if you are really keen on Thailand, buy leftover units from completed projects and make sure you check booking.com n airbnb to see what is the rental potential of the project or that area. Always buy where there is a hot demand for that area in terms of tourism n expat living, never never be enticed by how scenic the view is for the condo when the condo is in a location that hardly any tourist wants to go or expat wants to stay.

 

[Mercs]

Worried about interest rate hike?

 

http://www.businesstimes.com.sg/banking-finance/dbs-and-uob-in-home-loan-war-with-zero-per-cent-spread

DBS and UOB in home loan war with zero per cent spread

Feb 28, 2017

 

 

http://news.asiaone.com/news/business/ocbc-joins-home-loans-war-among-local-banks

OCBC joins home loans war among local banks

Mar 7, 2017

 

OCBC's latest offer works out to 0.7 per cent for the first year, 0.65 per cent for the second year, 0.60 per cent for the third year and 0.55 per cent for the fourth. After that, the rates are 1.55 per cent a year.

 

These rates are comparable to deals offered by DBS Bank and United Overseas Bank a week ago, when the other two lenders launched zero-spread fixed-deposit home loan rate packages with effective rates as low as 0.6 per cent a year.

[Invigorated]

Buying now vs a year later, u still take the interest rate hit. Unless your housing loan package is 20 year fixed rate.

 

Frankly the recent house loan war suggest to me that the banks also feel that the interest rate is going to go up soon. Else they got nothing to do meh? Zero spread....

 

I am not saying people go bankrupt when interest rate goes up by 1%. I am saying the housing price will deflate with rising interest rates just like it was blown up with historical Low rates.

 

I mean if housing loans are at 4% how much will u borrow for a 4K/ month rental? Max is 1 million right if u intend to make some money. If interest rate is 2%? How much will you borrow? If interest rate is 1%, 0.5% or 0%????

Just to correct, the zero spread is for before top. After that the rate still applies. As mercs has linked, ocbc has also jumped into the fray.

 

Why they do it is open to interpretation, your suggestion may be right but it can be just a promo they are launching to test market too right, or to increase their clientele base? We can't just narrow it to a potential interest rate hike. There are 0% balance transfers too from DBS and anz to attract a bigger clientele base.

 

I don't think they got nothing to do. those aunties at NTUC giving free samples also got something to do.

 

I wouldn't agree that housing prices were blown up with historically low rates. Rates were very low last year and the year before but prices fell and market was largely quite stagnant. There's more than just interest rates at play. I think CMs play a bigger role.

 

If today govt remove absd by a big margin, Interest rate goes up by 2-3% also people will buy no?

 

Yes you are also right that if interest rate is at 4%, you won't borrow that much though and you possibly borrow more at 0-1%. That makes sense. But the potential rate hikes are like 25 basis points. So how long do u think u have to wait to get to 3-4% and see the property market tank? Do u think the govt will sit by the side and watch it tank while that happens then?

[Showster]

Singapore Average Overnight Interest Rate:

http://www.tradingeconomics.com/singapore/interest-rate

 

1996-1997, interest rate was at 4% but housing prices had continued to soar.

 

2006-2007, interest rate was about 2 to 3+%, but prices had also continued to go up.

 

2013-2017, interest rate never exceeded 1%, most of the time near 0.2%, but index fell by 11+%.

 

What do these tell us?

 

 

Buying now vs a year later, u still take the interest rate hit. Unless your housing loan package is 20 year fixed rate.

Frankly the recent house loan war suggest to me that the banks also feel that the interest rate is going to go up soon. Else they got nothing to do meh? Zero spread....

I am not saying people go bankrupt when interest rate goes up by 1%. I am saying the housing price will deflate with rising interest rates just like it was blown up with historical Low rates.

I mean if housing loans are at 4% how much will u borrow for a 4K/ month rental? Max is 1 million right if u intend to make some money. If interest rate is 2%? How much will you borrow? If interest rate is 1%, 0.5% or 0%????

 

[Invigorated]

Singapore Average Overnight Interest Rate:

http://www.tradingeconomics.com/singapore/interest-rate

 

1996-1997, interest rate was at 4% but housing prices had continued to soar.

 

2006-2007, interest rate was about 2 to 3+%, but prices had also continued to go up.

 

2013-2017, interest rate never exceeded 1%, most of the time near 0.2%, but index fell by 11+%.

 

What do these tell us?

Precisely my sentiments.

 

When interest rates were low in 2009, property prices still fell due to macroeconomic factors.

[Throttle2]

I also walk the talk :) why u never praise me?

 

I never buy

 

[Throttle2]

Precisely my sentiments.

 

When interest rates were low in 2009, property prices still fell due to macroeconomic factors.

For those years highlighted, there are clear overlaps,

Just look a bit down the road and you will know that rates were low to tackle the fundamental economic issues. Properties is not leading indicator of Rates. Rather Rates is leading indicator of properties.

Thats becos zrates impact the whole economic, not just properties.

I am not saying that properties dont also impact Rates. It does, just a lesser extend becos it is still part of the economy.

 

And becos rates were kept low, properties did not crumble. It still dropped of course (NOW THEN FOLKS ADMIT, heheeehe) as i have correctly forecasted that the peak was mid 2013

[Superjonjon]

Congrats Bro

 

You Walk the Talk

 

Talk the Walk 

HAha....thanks!

Didnt feel like paying over 120K to the government for nothing. I rather give to them in other forms like COE, at least i get a PDF. hahaha

[Showster]

Then can explain how come

 

1997 to 1998: interest rate went up briefly to 10%, fell to 0%, went up to 6%, then went down to 0%, then went up to 4% then 0%, then settled at between 0-2+% but property index remains controlled and subdued (flattish for about a decade) from 1997?

 

Again reiterate here. Price drop only for some segments and due to the way the indices are calculated - we have no way of formulating a new index but certain segments actually have not experienced more than 2-3% change over the period. The ones I have at hand actually increased over the period of "drop".

 

Increasing rates are usually associated with a roaring economy. I do hope the economy continues to do better than 2-3%. We will mostly be glad for the interest rate movements when and if they really come, but certain groups of people will grow more and more bitter, and that is what some of us may wish to avert here.

 

For those years highlighted, there are clear overlaps,
Just look a bit down the road and you will know that rates were low to tackle the fundamental economic issues. Properties is not leading indicator of Rates. Rather Rates is leading indicator of properties.
Thats becos zrates impact the whole economic, not just properties.
I am not saying that properties dont also impact Rates. It does, just a lesser extend becos it is still part of the economy.

And becos rates were kept low, properties did not crumble. It still dropped of course (NOW THEN FOLKS ADMIT, heheeehe) as i have correctly forecasted that the peak was mid 2013

[Throttle2]

Then can explain how come

 

1997 to 1998: interest rate went up briefly to 10%, fell to 0%, went up to 6%, then went down to 0%, then went up to 4% then 0%, then settled at between 0-2+% but property index remains controlled and subdued (flattish for about a decade) from 1997?

 

Again reiterate here. Price drop only for some segments and due to the way the indices are calculated - we have no way of formulating a new index but certain segments actually have not experienced more than 2-3% change over the period. The ones I have at hand actually increased over the period of "drop".

 

Increasing rates are usually associated with a roaring economy. I do hope the economy continues to do better than 2-3%. We will mostly be glad for the interest rate movements when and if they really come, but certain groups of people will grow more and more bitter, and that is what some of us may wish to avert here.

 

You are sounding quite bitter.

Dont lah. Make so much money already.

So educated and knowledgeable too.

Envy envy.

 

All the best, wish you prosperity.

No need to reply me.

Thank you

Sincerely

 

[Showster]

Thanks for your reply Sir.

 

Nope, I am not bitter, so far so good (till a bit worried).

 

I wish you all the best also. If rates go up, saver's interest rates will go up too.

 

Win-win!

 

 

You are sounding quite bitter.
Dont lah. Make so much money already.
So educated and knowledgeable too.
Envy envy.

All the best, wish you prosperity.
No need to reply me.
Thank you
Sincerely

[Wind30]

Precisely my sentiments.

 

When interest rates were low in 2009, property prices still fell due to macroeconomic factors.

 

I never say property price and interest rate must go up together at the same time. They are correlated but one is leading and the other is lagging. There is always a gap in time when they are moving in opposite.

 

2009 is very recent and I still can remember what happens then. From 2009-2017, any person will tell you the run up in Singapore property prices is due to the extremely low interest rates and the resulting fall is due to the fact that the prices are already very high and priced in the low interest rate and the many CMs introduced. 

 

I don't think anyone will argue with the above. The past is pretty clear cut, its the future that is murky.

 

Previously, the question everyone is asking is if the interest rate will go back up. Then it is when the interest rate will go back up. Now more people is asking what happen when the interest rate goes back up.

 

My plan is to wait to see if Fed rise interest rates in March. If not, I will seriously start to look to buy. If they rise interest, then I sit back and watch the show until end of the year. I feel no way the prices will go up with Fed is rising rates every other quarter. I even have a good chance to avoid paying ABSD in the future if the CM get rolled back.

HAha....thanks!

Didnt feel like paying over 120K to the government for nothing. I rather give to them in other forms like COE, at least i get a PDF. hahaha

Btw you mentioned you paid 1k psf for a recently TOP unit. Mind saying how much was it launched for? I assumed u got a good big discount

[Superjonjon]

 

I never say property price and interest rate must go up together at the same time. They are correlated but one is leading and the other is lagging. There is always a gap in time when they are moving in opposite.

 

2009 is very recent and I still can remember what happens then. From 2009-2017, any person will tell you the run up in Singapore property prices is due to the extremely low interest rates and the resulting fall is due to the fact that the prices are already very high and priced in the low interest rate and the many CMs introduced. 

 

I don't think anyone will argue with the above. The past is pretty clear cut, its the future that is murky.

 

Previously, the question everyone is asking is if the interest rate will go back up. Then it is when the interest rate will go back up. Now more people is asking what happen when the interest rate goes back up.

 

My plan is to wait to see if Fed rise interest rates in March. If not, I will seriously start to look to buy. If they rise interest, then I sit back and watch the show until end of the year. I feel no way the prices will go up with Fed is rising rates every other quarter. I even have a good chance to avoid paying ABSD in the future if the CM get rolled back.

Btw you mentioned you paid 1k psf for a recently TOP unit. Mind saying how much was it launched for? I assumed u got a good big discount

 

I guess that it was launched at about $1,600+ psf based on caveats lodged, highest was $1,757 for the 1 bedroom back in Mid 2013.

[Throttle2]

I guess that it was launched at about $1,600+ psf based on caveats lodged, highest was $1,757 for the 1 bedroom back in Mid 2013.

And you got it for $1000psf?

 

Wooohooo

[Showster]

I guess that it was launched at about $1,600+ psf based on caveats lodged, highest was $1,757 for the 1 bedroom back in Mid 2013.

That's why we praise you for action. Will praise you again later.

 

Best time to act, find something you like and need at price you feel comfy and go.

 

No need to wait for interest change nonsense. Those who can wait for interest change can wait for the next change and the next change. Three years later still waiting.

Edited March 9, 2017 by Showster

[SuPerBoRed]

Then can explain how come

 

1997 to 1998: interest rate went up briefly to 10%, fell to 0%, went up to 6%, then went down to 0%, then went up to 4% then 0%, then settled at between 0-2+% but property index remains controlled and subdued (flattish for about a decade) from 1997?

 

Again reiterate here. Price drop only for some segments and due to the way the indices are calculated - we have no way of formulating a new index but certain segments actually have not experienced more than 2-3% change over the period. The ones I have at hand actually increased over the period of "drop".

 

Increasing rates are usually associated with a roaring economy. I do hope the economy continues to do better than 2-3%. We will mostly be glad for the interest rate movements when and if they really come, but certain groups of people will grow more and more bitter, and that is what some of us may wish to avert here.

 

errm..  Prior to 97~98... property prices where already correcting downwards..  coupled with asian financial crisis.. our fx rates fluctuated due to correlations with neighbouring countries and usd and hence interbank rates also fluctuated wildly...  causing prices to drop even further.. 

 

i dont remember the following 10yrs as flattish.. but rather.. a rebound till SARS.. subsequent drop till recovery 06~07

 

interests rates are essentially costs of borrowing... which is still a supply and demand curve... 

 

ie... roaring economy = high demand 

       cut of cheap funding = low supply    both result in rise in interest rates...   

 

we are going to experience the latter soon... but... i have been saying that for the past 2yrs... so.. heck what do i know? 

 

Edited March 9, 2017 by SuPerBoRed

[Superjonjon]

And you got it for $1000psf?

 

Wooohooo

[Showster]

errm.. Prior to 97~98... property prices where already correcting downwards.. coupled with asian financial crisis.. our fx rates fluctuated due to correlations with neighbouring countries and usd and hence interbank rates also fluctuated wildly... causing prices to drop even further..

 

i dont remember the following 10yrs as flattish.. but rather.. a rebound till SARS.. subsequent drop till recovery 06~07

 

interests rates are essentially costs of borrowing... which is still a supply and demand curve...

 

ie... roaring economy = high demand

cut of cheap funding = low supply both result in rise in interest rates...

 

we are going to experience the latter soon... but... i have been saying that for the past 2yrs... so.. heck what do i know?

 

Bro, what you are summarising is that essentially there are many factors at play and not interest rate.

 

If interest rate goes up in the midst of roaring economy, people will "bet" even more highly to double drive up prices.

 

If that happens, I will lead the call to sell in strength. Buyers definitely Chui in those environment!