The market is also in denial of the overwhelming supply in the pipeline. Naturally.
The question isn't if we have a property bubble. It's only a question of size. Hopefully we will end this with a ouch or a bump instead of tears.
If you are hedged, that is not a problem otherwise you might be over paying.
If possible growing cash flow faster than inflation is better than seeking asset appreciation. That's the theory. The practice is have pricing power and haven't we noticed that many businesses are regaining that? They disguise it as fairly passing on the cost to consumers. Another practical angle is to achieve pay jumps or promotions. This is for the majority of employees but the reality is only a few will enjoy this.
The caveat is that low interest rates like using blood thinners are not permanent. Definitely it will end far sooner than the tenure of property loans. But the market rarely worry about tomorrow when it is in party mode.
The problem is that these numbers do not hit a cord with Singaporeans. Mah Bow Tan has said for many years, prior to GE2011, that a flood of homes are coming too right? We're now in the middle of that flood but prices still go up and demand still seem insatiable.
ReplyDeleteAdditionally, the numbers per se don't mean much. Yes, 400k flats coming but most of these are already pre-sold right? All the public housing are. It seems ECs are hot sellers too. In other words, its barely meeting, or kinda meeting, today's demand.
We're never given the full demand / supply situation. Does it exist? Or is the Govt afraid to give the whole picture. Without the whole picture, people rely on anecdotal evidence to cut through the propaganda. And what they see is this - prices keep rising, there's perpetual queue for BTOs, ECs are snapped up. And they know that if they had heeded Mah Bow Tan's "don't worry" advise 3-4 years ago, they'd have missed the boat today. Do we blame them for feeling this way?