I read with interest an article published today on Sunday Times, 22nd February 2009, Keen to cash in on mortgage sales? Quoting from the article,
… potential buyers are “coming in floods”, asking to be on her company’s list or calling about properties on offer. … but it is very difficult for us to strike a deal because the buyers are putting in very low offers. They want to go only for a killing…
looks like the current economic crisis have lured out these buyers, waiting to pounce on distressed fire sales. Though prices had came down recently from the peak, I do wonder whether these prices are reasonably cheap, even under a fire sale?
A picture tells a thousand words
A picture tells a thousand words, so 4 pictures should tell an even better story:
*2008′s GDP growth and GDP are taken from advance estimates.
src: The data for Singapore GDP comes from www.singstat.gov.sg; STI index from finance.yahoo.com; HDB resale price index from www.hdb.gov.sg; private property price index from www.ura.gov.sg
I compile 4 graphs into one above, trying my best to align them in the same time line I could. The graphs are, from top down, Singapore GDP and growth, STI index, HDB resale price index and private property price index.
Indicated on the graphs are 4 red lines, each indicating the 4 significant events affecting Singapore’s economy, namely Asia Financial Crisis, Dot Com bubble burst, September 11th terrorist attack in the US and SARS crisis.
From the graphs, I found the following:
- Property prices (both private & HDB) are much higher now than during each of the 4 crisis.
- GDP growth is badly hit during each of the 4 crisis and Singapore entered into recession (-ve growth) during 2 of the them, Asia financial crisis and SARS.
- V-shaped GDP growth recovery seems to mark the bottom of the property prices, around beginning of 1999 and during the period from 1Q02 to 1Q05.
- No conclusion to be drawn for relationship between property prices peak and GDP growth. Read more…
