Wednesday, April 11, 2007

Hot property market

The property market is hot, especially for the high end properties.

Even a listed large book distributor have decided to invest their cash and borrow money the bank to invest in properties, in the hope of cashing in on the hot market.

Is this wise?

During 1996, when property prices went up to high levels, many people jumped to invest in the market. Subsequently, the prices dropped. A recent survey showed that most of the prices today for these properties are still far below the prices during 1996.

Lesson: The sharp increase in prices apply only to new properties. If you are not able to sell the property to another buyer, while the market is very hot, you will be stuck with a high price property that may not recover your cost, after 10 years.
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2 comments:

Thomas Phua's Blog said...

People never learn, also heard many went to jump (commit suicide).

The word is still prudence. Live within means.

One of my client staying HDB without over committing, can proudly say, he can afford a meal in a restaurant without pain, but not those who are caught.

- Thomas Phua

April 11, 2007 9:56 AM
Khiat Han Hwee Adrian said...

* Properties had created many millionaires in the past.
* The rise this time round is more from International Buyers and less from Locals.
* It allow high gearing and profit is possible within short term

However, the higher end market is indeed at speculative price. When more new condo are built, and the market cools down, the current group of buyers may find themselves not able to sell at a price which is well above their buying price.

The risk is too high for the returns that is possible.

April 11, 2007 7:19 PM

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