Tuesday, December 01, 2015

Rental for high end condos have fallen sharply

Two years ago, a participant at my financial planning talk asked - "Mr. Tan. You advised us not to buy property at the current high price. But, it is also very expensive to pay rental. Surely it is better to buy property now, to avoid the high rental"?

My reply was - "You pay a high rental for one year at a time. It may not stay at a high level for many years. When you buy a property at a high price, you will be stuck with this price for the next 30 years".

A property agent told me that the rental for high end condos have fallen by 40% during the past two years. The property prices have not corrected to this extent, but it will probably come within the next two years.

There is a large over supply of new properties that will come into the market within the next two years. This may cause the property prices to correct sharply downwards. An increase in interest rate will help to trigger this fall..

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