Singaporeans just have this obsession about “investing” in property.

In January this year, Singapore government has already pushed hard to curb property speculation.  Unfortunately, the public never got the message and property prices continued shooting up.

Until mid of the year, new minister Khaw Boon Wan has publicly expressed his “worries about property buyers”. He wrote In his blog, “I must keep an eye on the medium term for possible pitfalls. Sharp property price increases cannot go on forever. Gravity cannot be wished away. … Those who borrow to go into properties thinking that prices will continue to rise, will be thrown into financial hardship should prices drop and banks start calling.

Even with the DBSS Saga, it seems that the public still cannot resist the temptation of “healthy market” illusion created by “experts”. Just look at the chart of Private Property Index (PPI) and HDB Property Index.

Don’t fool yourself that property prices are only driven up by foreign demands and for luxurious projects.

Are you saying  that the foreigners are also the culprits behind the sharp rise of HDB prices (blue line)? Are you saying that, after global financial crisis, with high unemployment rates and euro debt crisis, the property prices rose because of supply and demand? Have you noticed that the current property price index is far higher than where it was in 2008 peak?

Since beginning of the year, many of my clients have talked about buying a second property for “investment”.  Some only dare to buy fixed deposits but yet are willing to risk millions into one single property. Some received a windfall from their first property bought in 2009 (just because they got married and needed to buy one, how lucky!) and believe the only way of property price is to go up.

Thanks to the public media who untiringly features “successful investors” who, although always lost money in stock market, have made fortunes with their faith in properties.  This is most ironical to me because it is not rocket science to see the strong correlation (price moves in tandem) between property price and stock market and economy.

If indeed that curbing foreign speculators from buying Singapore property works, it should be more devastating news for recent property buyers.  Foreign buyers are well informed and professional, the fall is always as fast and furious as when it rises.

About the Author

Ivan Guan is the author of the popular book "FIRE Your Retirement". He is an independent financial adviser with more than a decade of knowledge and experience in providing financial advisory services to both individuals and businesses. He specializes in investment planning and portfolio management for early retirement. His blog provides practical financial tips, strategies and resources to help people achieve financial freedom. Follow his Telegram Channel to join the FIRE community.
The views and opinions expressed in this article are those of the author. This does not reflect the official position of any agency, organization, employer or company. Refer to full disclaimers here.

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