Sunday, December 16, 2012

Bear coming in 2013..

Top 10 reasons why Singapore property market is heading to a Super Prime Mortgage Crisis induced price crash in 2013 to 2018.
No.10: Negative REAL interest rates:  bank deposit rate at negative 4% real rate  FORCE Singaporeans into buying properties to hedge for housing inflation.

No.9: No long term fixed mortgage rates: Just like those adjustable interest only loans during Subprime crisis, current low SG local interest rates are trapping the buyers of today into false sense of mortgage affordability. If interest rates go up by just 1%, it represents 100% increase over current first year rate of 1%!!!!

No.8: The genuine demand side for SG properties has no further potential to the upside:  Casinos, Resorts, Influx of FTs, QE 1 -3, Tax haven for the top 1%, all those elements have ALREADY been fully priced into the current market. If just only one element falls away, the domino effect will start.

No.7: Strong oversupply of new properties: particularly new mid range condo units at fringe areas, will be coming online with the next 5 years. All sold at record high prices, record low interests and record speculative demand. When all those TOP periods coming due, there will be not enough tenants to be found.

No.6: Falling nominal rents: In today’s rental market in SG, rents for brand new condo units are highly negotiable. Under the pressure of looming mortgage repayments, all the freshly minted landlord will have very little negotiation power to fill their new investment properties.

This is from a blog I picked up from hardwarezone. .. sounds pretty convincing don't you think? :)
But of course, always read with a pinch of salt and whether vested interest or conflict of interest is present. Form your own conclusion. But i do agree everything in singapore (the stock market , coe and property ) all feel quite toppish.. I have been in the Australia stock market, now looking at Shanghai Stock Index ETF and other  H-shares and also the Australian property market in Syndey and Brisbane.


Anonymous said...

Hi Wealth Journey,

Don't scare me leh... my property speculator friend told me the opposite... that property in Singapore will not crash because the developers will hold inventory rather than release it cheap (it happened before, they held inventory for 10 years!!!)

So what should we do now... buy or don't buy...

Decisions decisions decisions...

Dilemma now siah...


Wealth Journey said...

LOL. I don't have a crystal ball, i was just sharing what a HNW (If he's believable, he should be worth >usd$10mil) was sharing.

Of coz.. i did add in he's got a vested interest in his GC investment. That's why he made judgement call singapore is toppish and GC is better opportunity.

Uh.. buy or don't buy is your own situation. If you already got a few properties, are you in a hurry? If you dont have property, then this situation is more scary.

Actually.. whether developer can hold their excess units is their problem. The problem is more of whether your fellow investors can hold their units when the time comes..

Some say govt will control price to be gradual appreciation and won't let it crash coz govt not stupid and crash singapore will die..

Then..can someone explain how it happens in 1997 and 2009?? ..hehe. Sentiments override everything.. power of the masses..

Infi said...

So if i am 35 and thinking of buying a resale nxt year what should i do?

Wealth Journey said...


buying a resale means HDB?
Well, let's pray hard since MND did says there are exploring options for singles to buy new BTO right?

Probably if we pray hard enough, next year the singles will be able to buy a brand new BTO! :)

Infi said...

I see. so I wait for the MND news to come out first?

Jay said...

Hello WJ,

Thank you for your blog and sharing your thoughts. I only recently discovered your blog and read through past posts. And while a lot is not applicable to me, I do like a lot of your thinking (e.g. I loved your call to action for CNY 2012, this had been my sentiment back then as well..)

As for what to do in 2013, I was also thinking about entering China market via SSE EFT's. Have dipped my toes into the water just in time for the first 10-15%, but now wondering to take some profits and wait for retreat, to get back in 'for real'. But I will also stay invested in SGD market, but probably need to be more selective as to which stocks to keep.

Aussie property seems to be as expensive as the Singaporean one, but I might be wrong..


Wealth Journey said...

Hi Jay,

Thanks for visiting. Good on ya to get in for the 10-15% SSE rally. If you need to trade in and out, it's your own decision. I'm not really adept at doing trading. In fact, I failed miserably. Hope to learn more about trading and brush up on my TA skills for the year ahead.

For me, I am doing incremental add-in to China SSE via 2823.HK (China A-50). But this is a synthetic ETF. If you need something with physical replication, then this might be worth a look ,the CSOP China A-50 RQFII ETF. It invests directly in China's SSE stocks in Shanghai. So you have option of RMB or HKD denomination. In hk, it is listed under for hkd and as for rmb. The liquidity for these two are very low, I don't know why. Maybe people have not warm up to this newly launched ETFs or they are just more confident with ishares vs a china mgmt company. For HK and China shares, I invest directly thru HK Exchange and willing to take the forex risk.

Yup. You may be right about aussie property. Though relatively, I find singapore properties more expensive.

Jay said...

Yes, I'm not a trader either, in the sense of in-out all the time. But I do like to find a good moment to buy in, as well as protect gains with stop losses that I update regularly. I like AK's philosophy of using FA to identify what to buy, and TA to identify when to buy it. Only that my level of sophistication is much less.. more like having a gut feeling from looking at the 1-year stock chart..

As for the China ETF's, I use the 2823 as well mainly. One other option if you want physical replication is China AMC ETF's, they are 3188 (HKD) and 83188 (RMB). They seem to be actively traded. I dont know China AMC but have been told by a Chinese banker that they are very well respected in China (if you take this as a qualifying sign.. ;-). Eventually I think I want to diversify my China exposure with several instruments incl. A50, SSE, H-shares etc.. What scares me a little is the high share of banks in all these indices. While I'm positive on China overall I do believe they will get their own little financial crisis over the coming 5 years or so..

hbushnel2013 said...

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