Many people in Singapore now start to believe that Property Prices in Singapore, "the only way is up"? Guess people forget there is Gravity, or for property, there is this thing called "Affordability Factor" (can people afford to pay for the house?) which will limit the how high property prices can go.
In the 80s, the Japanese also thought property prices in Japan can only go up. I remember reading that the price to buy one house in Tokyo can be enough to buy all the houses in California in 1989...
Note: Prices were highest in Tokyo's Ginza district in 1989, with choice properties fetching over 30 million yen (approximately $215,000 US dollars) per square meter ($20,000 per square foot). Prices were only marginally less in other large business districts of Tokyo. By 2004, prime "A" property in Tokyo's financial districts had slumped to less than 1 percent of its peak, and Tokyo's residential homes were less than a tenth of their peak, but still managed to be listed as the most expensive in the world until being surpassed in the late 2000s by Moscow and other cities.
After bubble burst in 1989, after 23 years, now in year 2012, prices still about 40% lower than 1989. In the 2000s, the Americans thought that property prices can only go up, they even have 100% financing for sub-prime borrowers (ie. borrowers with not enough income, or bad credit record), before property prices started falling in year 2007 and after 5 years, property prices continue to fall in year 2012...The Chinese thought property prices can only go up, many businessmen borrowed all the money they can borrow to speculate in property, when property prices started falling in Mid 2011, some of these businessmen run for their lives, becos their creditors do not just hang "pig's head" but would literally chop off their heads (debtors' heads)...
So is it true that property prices in Singapore can only go up? Pray that we are the ONLY exception if you just bought a property at current prices. In my opinion, the Next Global Financial Crisis may happen this year or next year...exactly when? Nobody knows, only God knows.
We can't prevent the Crisis from happening, but we can Prepare ourselves Financially to ensure we survive or even Thrive in the Crisis and become Richer after the Crisis. On the other hand, most people who are unprepared might see half or more of their Wealth wiped out in the coming Crisis.
actually, if you think about it, it is very stupid of me to say anything negative about Property, becos 1 of the 3 businesses I own is http://www.HousingLoanSG.com
- more people buy properties, more business for me and more profits for me. The problem is I'm someone who will not say something for my own interests, I just speak "straight from my heart", problem is sometimes it is too straight and blunt.
Tuesday, Jun 05, 2012
The Business Times
An island for a condo
By Joyce Hooi
ONE man's Chery QQ is another man's Porsche Boxster Black Edition - if the Porsche man were shopping for a car in the United States, that is.
Comparisons of property, however, had more nuanced results. Trying to buy something with the budget of a resale HDB flat can be a geographical lesson in economic hardship.
How much a resale flat here is worth elsewhere
While it is possible to get a villa with the median price of a four-room flat, the villas tend to be in Portugal, Greece and Spain - countries on the receiving end of eurowoes. Getting a villa in Italy that was more luxury than lean-to was impossible - for now, anyway.
A five-room flat in Bukit Batok might get you a mansion in Georgia, U
S - but you would have to buy it from someone who could not afford to keep it. Georgia was ranked fourth in the foreclosure stakes in February. Then, five years after the subprime crisis, one in every 331 households in Georgia filed for foreclosure.
Bargain hunters looking for a second home with a whirlpool and hardwood floors should note that Nevada has the highest foreclosure rate. It also has the highest unemployment rate - 11.7 per cent as of April.
European property might be even cheaper in coming months. "There are few signs to boost the confidence of European householders," Knight Frank's Kate Everett-Allen noted in a report.
When private housing is considered, fantasy locations overseas start looking more upmarket. A private apartment with the median size of 743 square feet at S$966,000 from this year's first quarter buys an island in the Caribbean more than 500 times larger, with two houses thrown in.
City life, however, is more of a squeeze. In London, the same amount fetches 390 square feet - much smaller than the shoebox apartments CapitaLand CEO Liew Mun Leong called "inhuman" last week.
City-on-city, buyers for prime property here have it easier. At end-2011, a Knight Frank report found that prices of prime residential property here grew 29 per cent from 2007, compared to a 60 per cent increase in Hong Kong and a 96 per cent jump in Shanghai.
The price of everything and the value of nothing
Singapore tends to find itself on most-expensive city lists because of housing and transport. Food, however, which has the highest weightage in the consumer price index after housing, fares better.
Numeo, a website that collates data on global prices, ranked Singapore 35th out of 90 countries in its restaurant price index - above Puerto Rico and Latvia.
With a score of 65.1, eating in Singapore is about 35 per cent cheaper than in New York City with a score of 100. In comparison, the most expensive country in which to dine, Norway, has a score of 150.23.
Other things, like taxes, are not in price indices, but are important. Singapore has among the world's lowest individual income tax rates, ranging from 3.5 to 20 per cent.
Cars and gasoline in the US are a penny a pound, but its tax rate ranges from 15 to 35 per cent.
The goods and services tax (GST) rate - at 7 per cent - pales in comparison to the UK's value added tax rate of 20 per cent. In Greece, where a villa can be picked up on the cheap, the VAT is a crippling 23 per cent.
Interestingly enough, Singapore is one of the cheapest countries in which to buy the new iPad. The cheapest model went for US$526.85 at the online Apple store last month. Buyers in Europe had to pay at least US$600. For most, this will have to be consolation enough if house and horsepower remain out of reach.
This article was first published in The Business Times.