Property Must Crash (see graph)


URA has released the Q3 2008 flash estimate of the price index for private residential property. It showed a decline of 1.8% – the first decline in 4 years.

[Update 24 Oct: URA has released the full Q3 statistics – private residential property prices registered a decline of 2.4%, a bigger decline than what the flash estimate showed.]

Chances are property prices are going to decline for many more quarters.

After a spectacular 2007, Singapore (and probably the rest of the world) has swiftly entered into recession. A minister has warned of job losses. Banks have stopped hiring and a couple have even started retrenching staff. Retail has slowed and the media is now talking about how people can tighten their belts in these bad times.

Notably, property developers are scrambling to launch as many projects as possible before prices plunge further. (BT, Oct 18, 2008)

My prediction 7 months ago failed to come true. I stand corrected. But as experts say, past performance (i.e. my past performance) is not indicative of future results. 🙂

So let me try again.

The following image shows the URA price index graph (blue) superimposed over the Straits Times Index graph (pink). The scales of both graphs have been adjusted such that their time axes match.

Interestingly, by adjusting the vertical scales and without breaking either graph, the peaks and bottoms of both graphs are able to meet at the same levels, with property exhibiting a lag of about 1 to 2 quarters.

URA property price index against STI stock index

Evidently, property has a long way down to catch up with the stock market crash.

I say, condos will be much more affordable in 6 to 12 months’ time. Maybe about 20% to 40% cheaper?


About Author


  1. if the increase in number of ads on the classifieds are any good indicators to go by, the market is now supply heavy.

    a further study into the buyers makeup for the last few years will reveal some distrubing findings. it doesnt take a rocket scientist to figure out that foreigners have been the net buyers.

    translate the global crisis which is unfolding from the US to Euro to Asia, it is not unreasonable to expect a decrease in demand for Sg properties.

    how long before the market can pick up? noone really knows. if any does, do some thinking. nothing is for free.

  2. this time it's different on

    I disagree that property prices will crash. This time it’s different. We now have the F1 and YOG and are building the IRs and MBFC. Our banks are well capitalized. Our government is competent. MM Lee even said we’re in a GOLDEN PERIOD!
    Prices may go down, but definitely not crash.
    And don’t forget that land is scarce in Singapore.
    This time it’s different.

  3. i think that it is overly optimistic to believe that prices will not go down at least another 15 to 20% (does this not constitute a crash?)

    golden period? singapore is officially in a recession. if i’m not wrong, we are the only developed economy to officially make that announcement. MM lee’s statement was made a year ago, before the markets started to tumble. agree that the projects you mentioned will be positive for the country in the long run and will boost the economy, but this is more for the long term health of the country and will hardly spruce up demand for property (apart from making land even more scarce perhaps? but again…long term!)

    i worry about how the removal of the deferred payment scheme is going to impact prices. we could have a falling knife. why? property prices have clearly been slowing and have already come off on a QoQ basis. IF prices come off further in 2009, those who bought their apts at the peak of the boom may witness a sharp fall in the value of their properties fall even as they have to return the remaining 80% of their mortgage payments. 3 issues from here:

    1) with borrowing limits super tight, it will be extremely hard to borrow the money. additionally, are banks willing to lend out more money than the collateral that they will receive is worth (i.e. the condo which is now 30% cheaper)?

    2) ok, if owners can’t come up with the money, now what? they rush to sell their units. but no one is going to be buying because a) no loans available b) the guys who have the ability to pay higher % of cash are probably going to wait for further falls (and maybe their money is down the drain in the stock market anyway)

    3) what about the new supply that is about to come out?

    on a yoy basis, prices are still high. so, it is possible owners are going to begin letting go of their units soon.

    by the way, i am bearish on the market…

  4. same ol' same ol' on

    to this time it’s different,

    if you examine all the past bubbles when they’re developing and bursting very soon with hindsight, a lot of participants of the bubbles always says: this time it’s different. 🙂

    i guess we humans doesn’t change much since the 1600s. 🙂

    no offense,just stating some facts.

  5. To same ol’ same ol’:

    I had a little chuckle and grinned to myself as well when I saw those four words >> this time it’s different

  6. Beware, housing crash indeed is coming and will be fully felt in 1 year time.

    – already, distressed sales from buyers losing their shirts in stock markets, FX markets are starting to appear.

    – People talk about Casinos developments like a magic pill. who will visit these casinos once it is built, when ppl have already lost their jobs? maybe hardcore gamblers do.

    – Current demand of housing is coming from influx of foreigners employed in the service cyclical industries (retail, banking) When economy goes down the toilet, they will packing back homes. Rental will come tumbling down soon.

    – defered payment scheme has led many to enter into property transactions without a thought that they will eventually for a bank loans. Up to 80% of new condo purchases for past few years (until SG gov prohibit this) are bought via this scheme.
    Many of these do not eventually qualify for a bank loan and will be panic to get out of the market to get losses as soon as condo prices drop by 10-15%.

    – increased participation of leveraged players (i.e. hedge funds) in Singapore real estate. A massive de-leveraging process is taking place around the world, as liquidity is died. No more funding, no more credit. Banks are scared of lending out especially to real estate investments(or rather speculations) as they repaired their balance sheet, and also inter-bank cost of funding is high. Once these leveraged players collapse in next few months, you will expect distressed sales coming up soon

    Previous banking crisis last around 2-3years, so get out of the property market if you can now.
    Conserve the cash and invest when it reach bottom when there is blood on the street (i.e. distressed sellers dominating 40-50% of sales in mkt)

  7. this time it's really different on

    Here’s proof: Blue chips are now selling at half price. You find me a property that’s selling at half price. Can’t find? Because this time it’s different.

  8. property being relatively illiquid is lagged – it reacts slower to market conditions.

    and being a big ticket item, u would be mortified to find your house worth 50% within a few months. hence its not a fair comparison to gauge property with property stocks. however, there is a good correlation between the prices of the two.

    property market is going to be hit. the question is by how much and if.

  9. you are a property agent or have vested interest please do not mislead those looking for advice.

    just look at it logically. how many singaporeans can own more than 1 property? almost 70% owns a HDB. 30% might be owning private. how many have spare cash to buy a second property? let alone 2,3,4 or 5? and judgin by the black October that have many and how much wealth at least in paper terms have been wiped out? looking at the real economy, how are the businesses doing?

    im not pouring cold water neither am i postulating a massive selloff scenario. everyone has their right to their own beliefs but being stubbornly entrenched in ones dream and desperate hopes is dangerous let alone sprouting it as worthless advice.

  10. yeap, property prices shld drop like a stone under gravity.
    Look at the sail condo apartments (next to one raffles quay) just out in market, rental is around sgd3300/mth for studio. Even at current depressed price of $1800psfx600=1080000, the yield is around 3.6%.
    psf used to be around $2200-2500 just earlier this yr.
    there are many sail condo apartments waiting to be rented out, but not many are biting… as expats are not coming to singapore anymore …

  11. Basically there is no reason to buy at current prices because when you weigh the pros and cons, you will realise that there is zero chance of prices appreicating and 100% chance of prices falling. Fall by how much is the question? With the extent of the global crisis, STI having fallen by 60%, supply from DPS buyers, pullback of expats, I would say at least 20%, realistically 40%

    In any case, why buy now when ther is no upside and lots of downside.

    However, it will take a bit of lag time on a combination of the below

    1) When banks start to pressure those marginal cases

    2) When current tenancies expire and renewed at much lower rates

    3) When job retrenchment gathers steam and wages get cut for those still having jobs

  12. The extrapolation from 98′(100) shows a trendline adhering to annualised increase of 1.038%, the URA aggregated property index needs an adjustment of a 29% decline to bring it back to this long term trendline. Since this is the biggest pile-up of * since 1930s, I am betting a fall beyond that.

  13. i believe property will still go down.But it will not be as bad as what all of you will not go down as much as will recover before sept 2009.All of us must look at the good sight , and everything will go well.ya,look at all the positive sight.

  14. Of course,property prices MUST come down so that it can be readjusted to its real and correct ,honest pricing !!! Last year,manipulated false hyper inflation property prices sent tsunami waves to every property owner to jack up his property to super high unrealistic price tag on his property !!!!Ridiculously high,making Singapore one of the most expensive city in the world !!!WHO LOSE OUT IN THE END ?? Borrowing hugh sum of money from banks to invest and to speculate is a sign of great irresponsibility unto oneself !! CUT ACCORDING TO THE CLOTH YOU HAVE !!!Now with global meltdown and sudden recession looming over our heads,it is a lesson well learnt !!!DONT TAKE TO OFFENSE !!! IT IS A LESSON TO ALL OF US– BUY ONLY WHAT WE CAN AFFORD !!!

  15. I like those words Betty used…

    Cut according to the cloth u have~~

    Buy only what we can afford~~

    But in these days, who will ever spare a thought to think before they commit???

  16. ..more than 50%, this is reciprocal effect of the over 100% sharp rise over last 2 years.

    Bought 2yrs back, unrealised profit – assuming he lucky and still as rich, they form the support level of 50% drop.

    Bought 1-2yr back, unrelised profit – assuminng he not broke for overspending on a a i535, they form support tier of 25% price fall. Sadly, many bought at debit or balloon repayment, now is about time to pay the balloon part of mortgage – they will sell with looking for good price.

    Bought 0-1yr back, unrealised profit – assuming they didn’t strike lottery ,they will be panicky seller. They will happily cushion 10%-20% price fall, as they have the notion of wrong timing. However, there’s sub-group that were rich before they bought, they will hold. But, they didn’t matter, the group that sell panic is enough to pull off an avalanche.

    Didn’t buy anything but accumulate cash – aha.. good for you, wait for the highly probable 50% drop level. And, don’t be influenced by agent – they are not economist, do your own judgement.

    My take, of course 50% in 9mths time (2 quarters of consecutive negative company financial reports).

  17. Don’t like that leh. Agents need transactions to survive- can’t blame us for being pushy. Past months are like ghost months. Sellers still dreaming and buyers not biting. Agents are starving. The one saying he’s making 40k a mth in last week sunday times is probably bluffing… U know, like mlm uplines, we agnets need to bluff in order for sellers and buyers to have confidence in us, and oso to scare away competition. but all said, i may give up soon… Maybe be a teacher.

  18. agent, looks like you concur, but have to bluff a little to get by, we understand, but you use to make 20k/mth, time to burn the woods you collected. my advise to you (just for you) – stay! because you are honest of your predicament, and buyers are looking for agents that tell the market, and not bluff them into buying. On the other hand, you will need to do the same to the seller, tell them the truth, don’t just take the selling contract, and hunt for ignorant buyers. So, of course, I think you are a good agent (if you are really a propoerty agent).

  19. Pingback: Property Transactions Crashed (see graph), Agents Go Hungry | - Your Salary in Singapore

  20. Pingback: Expect the Worst Recession in Singapore History and Property Will Crash | - Your Salary in Singapore

  21. For the last time, having Formula 1 or a casino does not make Singapore immune to the world economic situation. Further, Singapore being an “island” does NOT mean that property prices will ALWAYS go up.

    When will people stop listening to the drivel pumped out by the Straits Times and most of the uneducated property agents

    Turn on your TV or read any decent paper – Singapore should remember that “no (man) country is an island”

    A car race and a casino will not save you!

  22. Just need an advice,as i was purchased a resale HDB flat on Nov’08,i was wondering whether the price may go down?.
    Thanks in advance,

  23. I think extreme views are not the way to go here. Yes, property prices are likely to go down but the use of the word “crash” is too extreme. It’s probably more pertinent to talk about the extent (or “how much”) that prices would fall. And even then, we need to be able to clearly analyze private property prices for condo and landed houses differently. Generally, all the talk about falling private property prices are with reference to private condos – those in prime areas (the so-called luxury condos) are likely to be the hardest hit as they are more prone to speculation and investment (and as such, their prices are quite highly inflated) while those in the non-prime areas (suburban condos) are affected to a lesser extent as they are mostly purchased for personal stay (assuming that they were not bought at exhorbitant prices in the first place). At the end of the day, everything – from property to stocks to cars – is subjected to the logic of economics…demand and supply…willing buyer and willing seller… If a seller has holding power, the seller will not sell if the price is not right – all things being equal, home owners are likely to have holding power more than speculators…this is the reason why the luxury condos are hardest hit…the speculators who cannot hold will sell their units at a much lower price… On the other hand, home owners of suburban condos do not have to lower their asking price (if they are in no hurry to sell). With the above in mind, we still have to factor in the age of the property, whether it is leasehold or freehold, the condition, etc.

    With regards to private landed homes, the prices are less volatile as most have been purchased for personal stay. To be sure, their prices would also be affected by falling private condo prices as well but because of the element of land, landed private homes would not fall as drastically (especially given the scarcity of land in Sg). Again, with the above in mind, we still have to consider if the landed property is leasehold or freehold – just like leasehold condo, leasehold landed is likely to lose value over time although the rate of depreciation might not be as high as that of leasehold condo.

    Sadowner – For public housing, there’s a little bit more stability because it’s controlled by the government. However, HDB flats are also subjected to economics – demand and supply…the reason why when private property prices have been decreasing but public property prices have been increasing is because demand for HDB (mass market housing) has been sustained at a high level. As long as there are buyers who are willing to pay a high price for HDB (which is still lower than private property condos), HDB prices will remain high. Nonetheless, newspaper reports have indicated that HDB prices might be on the way down in the sense that COVs are decreasing. But this is compensated to a certain extent by higher valuations…to a certain extent only because valuations are increasing at a marginal rate and the drop in COVs are more substantial. IMHO, HDB prices will only see a drastic fall in prices IF private condos prices fall so drastically that they now become more affordable for the mass market…in this case, demand will shift from HDB to private condos….prices for HDB will drop…and ironically, prices for private condos will then go up… The question is, will this happen (a question of IF or WHEN).

  24. Pingback: Property Prices Has Crashed (see graph) | - Your Salary in Singapore

  25. Pingback: Property Prices Have Crashed (see graph) - Page 2 - Forums

  26. I believe the market will inch up a bit more and when the music stops, a lot of positive folks will be caught with their pants down

  27. The billion dollar question is – WHEN will the music stop? A lot of the folks here thought that property prices would come tumbling down in 2008/09. But did it happen? Not really…Sure it did go down a bit…for a while…but then later, it shot up til what it is today…one word, CRAZY..

  28. I guess whatever “prediction” anyone can come up with regarding when (and how much, for that matter) the bubble will burst and subsequently, the economy taking a hit as a result, can never be fully accurate, if at all. We can prepare but we can never be too sure.

    Yes, property prices in Sg is getting ridiculous. I wonder how our future generations will be able to afford them unless everyone gets a pay raise across the board.

  29. Poor “Scala” buyers…conned by the property hype and developers. They will have a hard time to speculate on this purchase.

    A property bubble is not about supply & demand i.e. there was plenty of demand in the US before the sub-prime crisis. A bubble is about what people can afford vs. property prices. Like “Observer” wrote: there is a big difference between what people earn and the property prices…

  30. The challenge is that our country is obsessed with ever increasing asset prices. As a result, they’ve turned our living shelter into a speculative vehicle for fiat money.

    Home prices need to clear at a level where those who want to buy can. I know it’s not correct, but I extrapolate from my position and I would buy if prices eventually reached a level that is sensible. Until then, I continue to rent.

  31. Pingback: Property Crash Coming? (See Graph) | - Your Salary in Singapore

  32. Pingback: Expect the Worst Recession in Singapore History and Property Will Crash - Page 3 - Forums

Leave A Reply