Calling Bluff On Real Estate
“Around 90 percent of the 130,000 foreigners that own
properties in Johor are Singaporeans, according to a June 3
report in the Straits Times newspaper.”
THAT IS 117,000 SINGAPOREANS ! And some probably own more than 1 !
The IMF says Norway has one of the biggest housing bubbles in the world with prices overvalued by about 40 per cent : FT
“Norwegian house prices have risen by 71 per cent since 2005, according to Statistics Norway, as the country’s increasing oil wealth has boosted economic growth and wages. The IMF said inflation-adjusted house prices rose by 6 per cent a year from 2010-12 while household disposable income advanced by 3.8 per cent from 2008-12, ahead of an average of 0.8 per cent in other western economies.”
“Norway has proposed tripling the risk weighting on mortgages for banks to 35 per cent, which would be the highest in the Nordic region. Banks such as DNB have warned that this would lead to higher loan costs. The Financial Services Authority has also lowered the non-binding limit on the loan-to-value ratio of mortgages to 85 per cent, making it difficult for some young people to get on the property ladder. ”
IMF better keep their mouth shut about Singapore.
Singapore’s loan to value ratio is 80%, I believe, for the first property, and 60% for the second, assuming the loan will not extend past the borrower’s age of 65 and the debt servicing ratio requirement is met.
So Jurong condos are going at SGD 1.6k psf and Tanah Merah is at $1.5k psf after discount.
Meanwhile in the US, a strange phenomenon is developing.
“SPDR S&P Homebuilder ETF (NYSEARCA:XHB) has lost over 12% of its value and the iShares Dow Jones US Home Construction ETF (NYSEARCA:ITB) has fared even worse, losing over 20% of its value in only three months?
It gets worse.
REITs, such as the Vanguard REIT ETF (NYSEARCA:VNQ) and the iShares FTSE Mortgage REIT (NYSEARCA:REM) are in a similar boat, down 20% over the same three months.”
And in Korea, a government push to stimulate the housing market, quite unlike the efforts of the Singapore and Hong Kong governments.
Seoul No Singapore as Korea Housing Bears Raise Rents: Mortgages
” Homebuyers “were horrified by their experience, leaving a
buzzword like house-poor and chilling sentiment on the property
market,” said Choi at Real Estate 114. “After the 2008 global
financial crisis, people have become more nervous about their
future income amid an uncertain economy. It’s hard to lure the
young, new demand into the buying market.””
Real estate investment is in our low interest rate culture and in our blood. We cannot help but be fascinated by it in land scarce countries like Singapore and Hong Kong. And we cannot tear ourselves away from that odd investment especially when we read inspiring headlines like these.
How Singapore Billionaire Peter Lim Makes Money Out Of Thin Air
To the credit of policy makers…TDSR will be instrumental in killing speculative activity:
Irony is Jurong & Tanah Merah hotbeds are being marketed as investment properties in view of their neighbouring developments
Even more irony is that it doesn’t take really very long to drive across the island on a good day.
It has always been a private joke to me that the market should differentiate the prices between Wheelock Place and Somerset or Dhoby Ghaut when it does not really take even more than 5-10 mins to walk between the 2 places.
So… who will the Iskandar owners sell their property to? Bigger fool out there? heh
“Asking prices for luxury homes in Geneva fell by an average of 9 percent to 14,829 francs per square meter since peaking in 2011, according to UBS. In the suburbs of Florissant and Malagnou, east of Geneva’s old town, the drop was 24 percent.” CHF14,829 psm = S$1,865 psf that means roughly half price vs Spore on like-with-like comparison. Switzerland has about 50,000 immigrants annually, many of them well to do, and I doubt the country has .
Unlike Spore, I doubt Switzerland has 69,000 private property units under construction and another 19,000 in planning stage. (Of course if one counts the HDB units incl Exec Condo, the numbers would be even higher.)
The residential real estate investors (those who are owners of more than one unit) in Asia, especially in HK and China, should seriously consider their options at this stage of the market cycle.
Sg prices look perilous high too.
I like to look at earnings multiples and we cannot be going at >10 years annual wage.
Our wages cannot be growing exponentially like they have been in the past decade.