TODAY: Property expert says prices may collapse by up to 50 per cent in the next year or two

30, 40, 50% drop?! That sounds a little preposterous and plucked from the sky...but who am I to argue with an expert.
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Property expert says prices may collapse by up to 50 per cent in the next year or two

by Ephraim Seow Siew Lee | Sep 17

The dizzying rise in property prices here is not sustainable and the market may be heading for a hard landing in one to two years' time.

When that happens, property values may fall by as much as 50 per cent, according to an expert at a real estate forum yesterday.

Property experts speaking at the National University of Singapore's Institute of Real Estate Studies Forum said that excess liquidity in the market is the main factor that has been driving up property prices recently.

This liquidity may originate from prudent savings during the financial crisis, gains from the stock market run-up last year and foreign funds flowing here in search of better returns in Asian and emerging markets.

Mr Beat Lenherr, global chief strategist of LGT Capital Management, said: "I think that the money is finding a way around specific pointed measures and the money is just going to all the segments, micro-markets or micro-sectors."

Mr Lenherr also reckoned that the recent rally is not well supported and has been too fast, paving for a harder fall.

"If you look at the developments over the last four years, you clearly see elements of exaggerations where it doesn't make sense to buy in terms of rental yields or expected capital gains," Mr Lenherr added.

As such, he said property prices may "collapse by 30, 40 or 50 per cent" in the next one to two years.

Other speakers at the forum also said that the Singapore Government is still holding back on several other drastic measures such as the capital gains tax, which could dampen the property market abruptly if introduced.

They said the Government has so far been successful in building good neighbourhoods and community in its housing policies beyond controlling prices.

"I think the local market has been kept quite steady. I think the Government can indeed take pride in being able to making available affordable housing to more than 70 or 85 per cent of the masses," said Professor Bernard Yeung, Dean of NUS Business School.