Is the property market really ‘coming back’?

I just came back from Singapore. It is still as clean and as efficient as ever. Roads, MRT and even the airport. During this trip, my colleague bought me good local coffee with customisation of Gao Siew Dai. (it means thick and less sweet). The price per cup ranges from S$1.20 to S$1.60 Surprisingly though, the S$1.20 one is more aromatic and nice! Haha. If we use the local coffee as a benchmark, my Singaporean colleagues are enjoying a cheaper cup. A typical cup of coffee in Malaysia is usually RM2 already, if not RM2.20 I am not using the exchange rate because they earn in S$ and spend in S$, just like us. Economy rice wise, the price is also cheaper. 3 dishes plus rice would typically be around S$5 while the ones I had in KL is around RM6 or higher. If this is the case, why is Singapore always ranked as one of the most expensive cities in the world then? Well, these surveys would typically include the price of properties too. Plus it is usually calculated in US$ which meant that once the price of the local coffee is converted, then the price of the cup of coffee in Malaysia is now nearly 3 times cheaper than in Singapore. Within the calculation would be property prices which is the biggest component within all these calculations.

Speaking about property, it has not been great for the Singaporean property market but this is likely be ending, even if cooling measures are unlikely to be lifted so soon. Does this mean the market is NOT going to recover and start going upwards? An article in business times.com.sg seems to provide more signs that the institutional investors are looking at the property market’s recovery. The most important data compiled by Real Capital Analytics and Knight Frank Research shows that the number of outbound investment deals dwindled to 34 in the first half of 2017. The figure was 144 for last year, and 503 in 2015. (In brief, it was saying that local (Singapore) funds now favour buying within Singapore as compared to buying externally. 34 vs 144 is crazily clear and the year before was even 503. ) In terms value, it was S$6.7 billion for 1st half 2017, from S$14.6 billion last year and S$37.7 billion in 2015. Total transactions for the private property market is growing tremendously too. Do refer to the full article here. 

The article also shared the many land deals, especially those from out of Singapore. It quoted some from China and Malaysia and many of these bids were very positive. Looking at Singapore as a barometer of confidence, would this also mean that the Malaysian property market is about to have a rebound? I just answered a good friend the other day. I told him that due to the affordability factor, it is harder for property prices to jump. For RM300,000 to jump to RM500,000 within a few years is by far easier for RM500,000 to now jump say 30 percent higher. There are just not many Malaysians who can afford a RM600,000 home loan plus having the money to renovate and buy electrical goods. I am guessing that these renovations and electrical goods would easily be another RM100,000 which would usually be cash or credit cards. So, I personally think we need a bit more time to catch up. Plus there are now so many new affordable units being offered even if they are usually 850 sq ft or lower. Good time for potential buyers though. Happy viewing.

written on 20 July 2017

Next suggested article:  Using bad debts to buy good debts?

 

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