Wednesday, May 8, 2013

The Perfect Storm is brewing!

I honestly believe that property investors who invest in the residential sector now will be facing the perfect storm in year 2015. By then a combination of very interesting ingredients will lead to many crying if they make the wrong investment decision.

The first is the fact that I expect Western economies to recover by 3rd quarter 2014 and interest rates will move north as years of money printing will have to lead to a fearsome old fiend in the form of inflation. The lack of economic activity has tamed this to some extent but by the amount of money printing cannot be sustained. When interest costs increases the holding costs of properties, quite a few of the owners without the strong holding power will be forced to sell. 

The second is the fact that government cooling measures in the form of seller’s stamp duty would have expired for many buyers by then.  Thus if anything untoward happens economically, such events will send many investors to the door at the same time. With everyone rushing out of the door at the same time, I’m really scared.

The third is the fact that a lot of new supply will be ready by then. The number of projects being completed by then is quite astounding. And with the government policy of restricting foreigners from working in Singapore by clamping down on the numbers of work permits, S passes and employment passes, the option of renting out becomes not available. Too many homes chasing too few residents. Think about it.

Minister Khaw Boon Wan recently warned people that they have to take into account higher interest rates when investing in real estate. The government is concerned as they have an election by then in 2015/2016. If the real estate market tumbles, they will be very concerned, as many will be very angry at the authorities. Well, at least you cannot claim that they did not try to warn you.

On a side note, I’m very happy that my personal issues have been resolved. I feel vindicated at the baseless allegations thrown at me. I thank God who gave me strength and encouragement to face the challenge. He is amazing as he showed me the way clearing my name. I must thank all your encouraging messages that kept me going, I am indebted to you.

Till the next post, God Bless!

Your Friend
Andy Ong