Housing / RENTAL price eleasticity or downward pressure

[stacey]

Is anybody in the process or moving or just following the housing rental (or sales) market prices?
I hear prices went up crazily in the past couple or more years... and in several bits around these forums I see hints that prices were coming down a bit, or were at least flexible in negotiating, or would make the finding and securing of a condo a bit of an easier process, or at the very least the prices have stopped inexplicable going up...

In the US there are different kind of markets. Take some places in Florida or California where the prices went up crazily but are coming down, not as fast, not yet, but they are coming down clearly. Then you have your places like Manhattan, where prices did went up crazily, but, although now you see upwards resistance, prices still dont want to bulge, they do not go down no matter what. I'm not saying the wont, I hope they will. But there is such a limited supply, and demand is worldly, even now, yes even now, maybe a tiny bit less but nothing that would save you any money.

Now SG is similarly an island with limited supply, but as the economy suffers, you dont have the whole world eyeing the housing market for an opportunity to finally own a piece of it. How soon until we see 2006 (or 2005) level prices, or do you think prices will simply stabilize...

I wouldn't mind if they go down a bit. I hear from popular consensus that the housing/rental prices are way overpriced and overrated...

Still?

[durain]

whether price is up or down, if you need a roof over your head, you will just have to pay the going price - overrated or overpriced.

[stacey]

agreed...
but it seems i'll fare better coming in Feb09 than Oct08....

also different areas will come down more than others, just wondering if it will be the higher-ends or the condos vs houses, etc..

[durain]

but it seems i'll fare better coming in Feb09 than Oct08....

for the moment, yes. but no one knows what the future will bring. what if the new year resolution bring good fortune to the world's economy and property price goes up overnight?

[sundaymorningstaple]

Singapore's biggest asset is it's ability to turn on a dime. It's the flexibility that allows it to survive. That means that there is no real guessing what is going to happen from quarter to quarter. There is no telling what will happen between now and Feb. Or next month for that matter.....

[srman]

A good friend is in the real estate biz - orchard area is coming down fast, probably due to the exponential rise last year. I personally saw a 2700sqft apartment last week which was marked at 11k for last 3 months, now asking for 7k!! Expat inflows will slow down, and the new constructions will ad further downward pressure. Owners are hanging on in some areas like tanjong rhu, but for how long?

Give it a few months when the real fun begins!!

ps: I am a landlord as well as a tenant

[ScoobyDoes]

Singapore's biggest asset is it's ability to turn on a dime. It's the flexibility that allows it to survive. That means that there is no real guessing what is going to happen from quarter to quarter. There is no telling what will happen between now and Feb. Or next month for that matter.....

Having said that the "Decoupling" principle has been shown to not exist and given the ongoing, worsening problems in the US and Europe we can easily foresee Singapore going in the same direction, lagging the general trend.

Once we see the US and Europe hitting bottom we might consider soon hitting the bottom here also. The curve might not fall so fast here but the trend will likely be there....... we're currently digging in for the long haul.

[splat]

Here's what has happened in my condo. At the peak they were asking and getting 6k. Before the rise the properties here were going for just under 3k. At the peak there was never an empty unit, now there are lots. The asking price at them moment is around 4k. I know many who have negotiated 3.5k in the last few months. So the prices are coming down fast. The longer you can hold off for the better price you will get.
I rang an agent because I will be looking for a new apartment soon and he told me that out east the prices are holding firm. (I live out east and I know the prices are not holding firm!) So don't listen to their BS read the paper and search all the sites to see what the prices are. BTW this website is actually the best I have seen for being true to the current market prices. I have visited other websites that are either not updated or agents trying to make more off people who don't know what the real prices are.

What happened here is that they knocked down a lot of buildings at once - creating a shortage and now the buildings are near completion (many with more units than the original building had!) This is why I think the rental prices got so inflated.

If you are coming in Feb then I think you will find a place for a reasonable rent.

[zjules]

ha ha, just did a check on the website and theres 97 units advertised for rent in my block Theres construction sites for new condos in every direction and everyone wants out. Also, every single one is more than 1.5k more than i currently pay.. Not sure who is going to live in all these new places unless the prices come down quite abit still

[rainyday]

Guys,
I would like to pick ur brain.. I have posted in another forum for the same questions but so far no one reply.. so I tried my luck here again..

we used to work in spore but left about 10 years ago.. we still owned a tiny shoebox in holland area.. just that now we come back with 2 children ( 7 & 8) so we need a bigger place. we viewed a unit in a condo that I quite like. but knowing that the rental will come down in 1Q.. not knowing how much, may be 10% in 6 months time.. not sure if we should first stay in my tiny shoebox first and wait for the drop in 1Q.. or should i still go ahead with the rent.. currently the unit is asking for 5k+ in holland area ( about 2000sq feet).. was told by agent that such unit used to be 7k+.. again.. I have no feel.. anyone could help?

[stacey]

singapore REITS or real estate ETFs have fallen by much more than 10% recently, one would hope that rents would fall by more as well soon...
especially if they had gone up by 50% over the last year or two...
its only a matter of "pressure and time" that's all it takes.

[sundaymorningstaple]

stacey,

Normally I would tend to agree with "Pressure & Time" but this is Singapore. Things happen here that boggle the imagination. During the 2002-2003 SARS period rentals dried up and lots of owners sat around with empty units and refused to rent them out for less than "they" thought they were worth. Most of us here kinda just looked around in disbelief. Who in the hell would rather have a unit empty for a year or more rather than at least paying the mortage payments even if nothing else was earned. But they often do just that. Has absolutely no rhyme nor reason. After the SARS epidemic it left a lot of owner sitting in negative equity. They are only now catching up. With this recession, they will probably follow suit again. I watched it happen in 1985, 1997-98, 2003 and the odds of happening again? Probably 100%. They will drop a bit and then freeze, empty or not.

[rainyday]

sundaymorningstaple,

In that case, will you in an opinion that I just go ahead with the offer since it probably will not make much differences from now until end of 1Q?

[stacey]

mind boggling... i think i've seen it mentioned a few times already...

does this mean the owners are (super) rich enough that they dont see this as an income/cashflow investment. they rather save face and loose a lot of money than publicly admit they've lost a little by reducing prices?

these times are unprecedented though, at some point, most people run of of money, but i guess this goes back to my question whether all these owners landlords need not the money flow?

i would love to have a place so that I could sit on it unrented for a year and care less about it than being able to say I've held my prices steady!

[sundaymorningstaple]

Stacey,

It means their entire philosophy on investing is different than ours. Something I still have not figured out. One thing to think about is that most of these "landlords" also own an HDB flat that was bought at next to nothing years ago and when they started accumulating cash the invested but kept the HDB flat. They may have initially lived in the condo (not talking about brand new units at the moment) but when the prices started going ballistic way back in the late '80's it made 'cents' for them to move back into the HDB and rent out the Condo for big money.

Why they sit on an empty unit though is the problem I cannot, for the life of me, and every other expat who's been here for any length of time, understand the principle of leaving the unit empty. The only reason I can possible think of is the penchant of getting bad tenants who literally trash the place and the owners have to complete renovate the units at the end of the lease. If they rent at a value that either just covers their mortgage or even at an amount that is less than their monthly payments, at the end of the lease they also incur additional costs of having to completely renovate costing them sometimes a 5 digits amount. From that point of view it does make sense. A lot of this is because of the very liberal lending policies that were here up till recently (extremely low down payments)

Also to be considered is the way some renters abuse flats. (They are the minority - but you only need to be burned once or have somebody you know getting burned). It's sad but it happens.

Unlike a lot of places, the government here is extremely sharp and we have weathered most of the recessions in pretty good shape compared to other countries. Hopefully that will continue to happen. It is it's small size that allows it to rapidly change directions as the machinery is not too cumbersome to shift, unlike larger countries that also need a consensus and get tied up in the House & Senate forever while each and every state jockies for their chunk of pork. Here with a overwhelming majority from a benevolent (for the most part) government it's easy for them to rapidly change priorities to keep the country on a basically even keel.