The Singapore Property Downcycle Is Here

Previously I covered why I thought property prices were going to come down in the next few years.

Over the weekend, my dad shared his own analysis of the current situation. Here's one man who's been through at least 2 full cycles already and should be pretty well placed to see the highs and lows before they happen. He had been been previously talking about the downward trend arriving shortly, and this time around he was fairly certain it has begun.

We are at the beginning of the downward trend after the high's of early 2013. From here on, all the property measures the gahmen had earlier imposed will exhibit its combined impact. From the TDSR, stamp duties, property curbs, foreigner curbs, MOPs, increased housing development and other related factors, it will all contribute to the first gradual downfall of prices in 2014.

One thing that struck me was that he said that property investors were akin to cattle. There was a herd mentality to investing in property at all times. When times are good, the whole market will dive in and drive prices up, but once the market turns the dark corner, the whole market simply disappears. Soon there will be hardly anymore buyers and infinite sellers. People will just be unable to let go of their property. And the downward spiral begins.

The firm advice is that while the market is still fairly liquid (already the drying out signs are there) right now, one should sell or cash in on all the investment properties they have except for the one they live in. For unless they are prepared to wait for the next cycle to cash out, or sit tight and collect dwindling rental yields, once the tsunami hits, there will be no exit (or at least a very painful one).

Here's the kicker. When are all the buyers really going to disappear? Your guess is as good as mine. But I do suspect that 2014 will be the year we will see it, as more and more units come out into the market, more and more units exceed their MOP limits, and less and less foreigners come here to live. Add to that macro factors like the US Fed tapering, interest rates heading upwards, regional instability.

Be safe out there.