EdgeProp’s first consumer seminar this year draws 250-strong crowd
By Timothy Tay
/ EdgeProp Singapore |
SINGAPORE (EDGEPROP) - On Jan 11, more than 250 people attended EdgeProp Singapore’s first consumer seminar of the year. The event on Saturday was hosted with property developer SingHaiyi, and was held at their Parc Clematis show gallery off Clementi Avenue 3. The fully booked seminar featured two keynote speakers, Song Seng Wun, director of private banking at CIMB Singapore, and Kelvin Fong, executive director at PropNex Realty.
The seminar opened with Song presenting CIMB’s economic and market outlook for the year ahead, as well as the various risks and opportunities in the global markets. While the fear of a global recession has diminished compared to last year, investors are placing their faith in policy-makers to properly control the fiscal and monetary levers this year, the economist says.
“[In terms of global risk], most advanced markets are in a very late stage of a mature growth cycle which makes some market watchers nervous. They expect President Trump and his erratic behaviour might trigger a crisis of confidence that could result in a crash,” says Song.
He also observes that while overall risk remains elevated, some investors have adjusted their expectations. “People have gotten used to the risk and have adjusted their expectations even though the overall risk hasn’t disappeared,” he says.
CIMB economist Song Seng Wun shared the bank’s global macroeconomic outlook for 2020 (Pictures by: Albert Chua/The Edge Singapore)
The global interest rate environment has also been supportive of global growth. This follows interest rate cuts last year by central banks, the People’s Bank of China and the US Federal Reserve, says Song.
“The People’s Bank of China was the first to cut interest rates in 2019, and they were also the first to cut their rate this year. Their reserve requirement is about 10% and they are one of the few central bank’s that still have room [to adjust] their monetary policy. Others like the European Central Bank don’t have any more room to cut their interest rates,” he says.
However, he expects the Fed to further cut their interest rates one more time this year, adding, “our view is that the three interest rate cuts [in 2019] will be enough to stabilise the [US] economy, and perhaps one rate cut more might come before 1H2020 or end 1Q2020. We expect the bank to then hold for the next two years,” he says.
“The markets seem to assume that a recession isn’t imminent despite the unfolding and elevation of risk this year. Thus, global market sentiment continues to be very well supported, which I think points to a sense of irrational exuberance in the markets today,” says Song.
The event was hosted with property developer SingHaiyi, and was held at their Parc Clematis show gallery.
In Singapore, CIMB expects technology companies, data services and online service companies will continue to support local job growth creation. However Singapore’s local labour market will not be able to produce enough workers to fill the new technology-related jobs, especially given our ageing population, says Song.
On Singapore’s property market, CIMB notes there is ample housing supply in the medium term, and the government is expected to tone down the potential supply from government land tenders over the next three years. But overall demand is expected to be supported by a stable labour market and jobs growth. In addition, Singapore remains a safe haven to overseas buyers, and properties here remain attractive, the bank says.
The crowd of house-hunters and property investors at the seminar were also treated to a talk by Kelvin Fong, executive director of PropNex Realty, who shared his experiences as a property investor, real estate agent, and director of one of Singapore’s largest real estate agencies.
Some of the topics Fong covered included the difference between the resale market and the new launch market, as well as planning property investments in line with expected market cycles.
The EdgeProp Singapore team also set up a booth to promote subscriptions of The Edge magazine.
One of the challenges in the resale market is that owners must find a way to align their expected prices with the average resale price and move with it. “For example, to move from $1,000 psf to $1,200 psf, the lower price must clear first, then the average price can increase to $1,200 psf, and so on. If no one can sell at $1,200 psf, then everyone must sell at $1,000 psf,” says Fong.
But in the new launch market, the developer helps to raise the price of units in stages after each successive launch phase. “This is why buyers who purchase a unit during the initial sales phase tend to turn profits, because the developer helps to sell the following batches of units at higher prices. This gives some consumers a first mover advantage,” he says.
In addition, Fong says the property market is heavily influenced by the government’s property cooling measures, such as during July 2018 when the government tightened measures following a rapid increase in property prices from 2H2017 to 1H2018. “Government policy aims to keep property prices in Singapore stable, and I feel they made the right call in 2018 to tighten measures at the time. In Singapore, we should not allow property prices to climb too high because it would be unhealthy for the property market,” he says.
However, this means that the most recent property cycle only lasted about 15 months from 1H2017 to 2H2018. Fong says there is a high chance the government could ease measures in 2021 or 2022, which will increase the expected supply of future private housing as well as help to maintain stable prices.
“Many buyers make the mistake of letting their money sit idle. If your property isn’t helping you make money and it’s just sitting there, you are just wasting time,” says Fong, adding that “it is just a matter of making the effort to work out your investment plan and retirement goals. Eventually, you need to consider what kind of property you want to own by the time you retire,” he says.
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