There is an article in today's ST reporting that analysts from CIMB and Barclays Bank saying that they estimate that home prices may dip by 20% by end 2015.
I really wonder where they get these estimates from.
Remember not too long ago when the very same 'experts' predict that property prices will CRASH after the Xth cooling measures but it didn't materialise?
Also, I wonder how much mortgage loans do the above two banks have in their portfolio as opposed to the other 3 local banks.
If I am not wrong, it is not difficult to understand why they choose to release this set of news at this moment.
My own personal take on this. I have no doubt that overall residential property prices are stabilising or may dip a little over the next 6-12 months and beyond.
However, I am skeptical that the government will allow it to drop by so much. After all, the government collects a lot of stamp duties from transactions and it does not make sense to kill the golden goose.
Moreover, it is a very sensitive issue to cause such a drastic drop in asset prices with the next GE in 2016.
It is a fact that sales from new launches are indeed slowing as there are many more choices for buyers to consider today and a lot of buyers are price sensitive as they are fully aware of impending hike in interest rates and of course their budgets are affected by how much they can loan due to the TDSR (Total Debt Servicing Ratio) being enforced by financial institutions.
However, if one were to think about it. The impact is already in play today.
I did an analysis on the residential resale property prices and there are areas which are more resilient than the rest. What a lot of people fail to understand is that avg prices across Singapore may dip.
However, the term 'avg' means that some areas are seeing a rise in prices BUT more areas are seeing a softening of prices. Naturally, it will cause overall avg prices to dip.
But what people interpret it is that prices on the whole are dropping and their expectations are way below sellers' asking prices.
This is also causing a drop in transactions other than the TDSR framework.
My observations tell me that residential properties with strong fundamentals are always in demand and are resilient.
