We are in an interesting situation. All the headline economic numbers indicate the economy is taking a dive but property prices are not just holding up and instead heading towards record prices. The ample liquidity and low interest rate environment are big support factors. The fact is that the demand is quite genuine and this so called the investment can hardly be regarded as speculative.
The government’s cooling measures would have removed any froth as buyers can secure limited financing for investment properties. This compared to the go fays on the mid 1990s when banks went crazy and offered up to 110% financing (factoring in renovation packages). The latest population numbers shows that our population has gone up again to 5.3 million. Money is flowing in from the Western countries as well as our neighbours even with our low interest rates. All these factors are underpinning prices.
I am as wary as you when it comes to prices falling. I am not your typical raging bull. The fact is that people have nowhere to park their money. I have already received so many emails from cash rich students on where to park their money. They simply cannot find anything of value. The recent launch of Kovan Regency has surprised even the developers themselves. Over a thousand buyers for the 300 plus units triggered a balloting process. If I am the government, I will be looking at doing something now, more cooling measures may be forthcoming. With so many mass market homes ready in a couple of year’s time, too many are joining in and they may well be disappointed then.
I was looking to acquiring a piece of land in that region but I have backed off after crunching the numbers. They simply do not make sense to me. The recent QE3 has many more individuals joining the market as I predicted but I hope they do research on what they are buying. Eventually sense will prevail, and I sincerely hope they will be happy with their acquisitions.
Till my next blog, all the best and God Bless!