Hello Kenneth!
The question that you have posed is a very valid and common concern that both own stay and investors alike wonder upon.
I shall answer your question in 2 parts:
Firstly, on the high property prices..
There are concerns that property prices are at an all time high, whereby properties are now deemed to be "expensive". My question is, "expensive" in relation to what? The property market behaves in a localised manner, meaning to say that local characteristics shape how prices move and are determined, however, the impact on property prices are global. This aspect meaning that world money does not have political borders, and flows freely from country to country, many a time, ending up in real estate as a form of "banking".
As such, when you look at the global context of real estate, in relation to global cities like Beijing, Shanghai, Mumbai, HongKong, you will find that property prices are easily 20-30% lower than them!
If the effects of globalisation are anything to go by, the convergence effect will see property prices in these big cities move closer together, thus, impling an upside of easily the same for Singapore!
On property as an investment tool:
Firstly, property behaves very differently from any other investment tool, for starters, it is the only asset whereby you can buy using leveraging.
Meaning that $5 will buy you $25 worth of property, whereas $5 will buy you $5 of any other asset. Thus any gains in psf terms on property is multiplied 5 times that other assets do not enjoy.
On a parting thought, results always speak louder than theories.. have a look at the top billionaires in the world, you'll find that 3/4 of them are either in the real estate business, or are the founders of tech giants. I've yet to find one that got THAT rich trading REITS, ETFs or dividend funds.
Food for thought!
Let me know if you'd like to further this conversation.
Your Singapore Condo Specialist Team,
Mervin Tang
Senior Marketing Associates
Developer's Appointed Agency
Huttons Real Estate Group
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(+65) 9184 0208
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