Monday, May 16, 2011

Property market post elections.

Hi Guys. The election fever is over and many of you have asked me if there is impact on the property markets. This election has been described as a water -shed event, which is partly true. The opposition has made inroads but for them to threaten the ruling party, they are a long way off.

Government measures will play a role in the property market but as I have always reiterated, the biggest key will still be the interest rate environment. India has tried to increase interest rates and they have invited a fresh wave of money which ironically threatens to trigger off inflation.

The governments of Asia are serious about tackling inflation. In order to do that, they have to raise interest rates to lower demand. In the world environment that we are in, Asia is in a very unique situation. The US and Europe seems to able spluttering along at best. All eyes are on Asia for returns and higher interest rates will invite more liquidity and thus, more money chasing after too few goods, and therefore inflation.

We are in a no-win situation until the Western nations recover to a certain extent. Asian governments have gone to great extent to prevent a speculative property bubble and so far the results have been mixed at best. In Singapore, the increase in prices have been reined in as some of the most stringent policies in the world have been implemented in Singapore.

We are still seeing great interest especially in commercial properties. Quality commercial properties are expected to boom in the coming 2 to 3 quarters. Mark my words. So there, don’t say I did not advise you in advance.

Till my next entry, God Bless!

Your Friend,
Andy Ong