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Two words: Caveat emptor... From ST Forum: http://www.straitstimes.com/STForum/Story/...ory_815411.html Beware of property cycles Published on Jun 27, 2012 IT WORRIES me that home sales in the suburban sector, in particular, are continuing their run-up even now ('Home hunters still in buying mood'; yesterday). My concern is that the average working middle-class buyer is jumping into the market now after missing out on the bull run that has been going on since 2006, with a brief respite in 2008. Many cannot afford the full cost of the properties and therefore go for new launches, where they pay only a small deposit. Many are not trained in financial investment and economics, and their late entry may put their finances in peril. Being from the capital management industry, I wish to point out to these late investors that much institutional (smart) money has long left the real estate markets in Singapore and Asia. The price indices of real estate in Seoul, Hong Kong, Beijing and Shanghai have peaked simultaneously. International capital has flowed out of the Bric (Brazil, Russia, India and China) emerging markets since early this year, causing their currencies to fall almost 12 per cent on average. Market risks have been increasing since the beginning of the euro credit crunch late last year. I hope those who are buying properties for speculative investments or for their own use will consider these developments. They should understand that markets rise and fall regardless of how benign interest rate cycles seem to be. To safeguard genuine home buyers, the Government should implement more measures limiting foreigners to buying only new high-rise properties from developers that can be resold only to Singaporeans. A similar policy has enabled Australia to escape most of the property bubbles affecting much of the world. If bubbles are absent, Singaporeans will be less tempted to buy reactively and follow the undesirably hard-to-reverse boom-bust cycles. Ed Cheong

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