Here are my views about investing in properties at the present time.
If you are eligible for a new HDB flat, it is an attractive investment. You may qualify for some Government grant as well.
I know of someone who bought a 5 room HDB flat next to Redhill MRT station for $380,000 (including renovation) recently. A private property in the same locality would cost $1 million.
The new HDB flats are built to a high standard. They are almost as good as a private property.
I hesitate to invest in private property at the current high price. It may not be sustainable over the next few years. It reminds me of the situation in 1996.
Why people invest in property because they still hallucinate they can make a few hundred percent like in the old days.Today property investing is the worst investment and is as volatile as equities. Young people stretch
ReplyDeletetheir CPF and have high gearing in the hope to make a pile. It's frightening after the sub-prime debacles and it may happen here if
the enbloc craze gets out of control.
The lenders are now bracing for the days if they should come and are now are looking for some kind of mortgage insurance to hedge against
credit defaults.
But with few measures just tabled in parliament to indirectly check the enbloc situation it looks like it is nipped in the bud. It may not be like 1996 but it allows the market to gradually grow at manageable pace. Inflation moves in tandem with property price.Inflation is now at 2%
Property stocks are also falling amid news of pending En Bloc ammendment.
ReplyDeleteWonder when will the sub prime turmoil be gone.
BTW, anyone have any idea what does it mean by "Carry Trades Unwind"?
Regards
Loh Hon Chun
Many sophisticated investors borrow Japanese Yen and then convert it to other currencies to invest in equities etc. They do this as the interest rate of Yen is very low compared with the other currencies. Now that there is a liquidity crunch, many of these investors quickly redeem their investments and change it back into Yen, thus causing the yen to rise. This in turn cause other investors to do the same in order to protect their assets. So when these Carry trades unwind, it means that Japanese Yen would rise and liquidity tightens thus equities prices would fall.
ReplyDeleteHope this helps.