An article dated 14 August 2009 entitled “Property scene not too frothy: CDL” caught my attention and I thought the writer might have been just kidding.
City Developments (CDL) Chairman Kwek Leng Beng said in that particular article there was no over-enthusiasm in the property market scene. However, buyers everywhere are cashing or trying to cash in quickly from buy-and-sell transactions in just a few months. Just this past week, I saw five cases in point in the landed property scene wherein buyers who bought parcels of land over the past couple of months are selling the same properties at 20 to 30 percent more than the original purchase price. That’s fast-earned buck – really fast.
For instance, a buyer who acquired a small detached housing unit located in Duchess Avenue amounting to $5 million is selling that very same house to the tune of $6 million after merely a couple of weeks. Another buyer spent $6.8 million for a larger detached house in Dyson Road. Now, after only three months, he is looking to sell it for $9.8 million.
I can’t pinpoint what the exact reason for this trend when our economy is still on the road to recovery but not yet truly there. However, it seems like much is abuzz nowadays in the property market. Maybe transactions like those will get noticed by the Inland Revenue Authority of Singapore as regards capital tax gains. Whether buyers will agree to such high “retail prices” is dependent on whether they are stricken with panic buying due to concerns of fast-increasing prices in spite the downturn. I wonder where the fundamentals are to support such high upsurge in prices in only a few months.
Thus, it felt good that a report published last Monday entitled “Mass-market home prices at 2007 peak” written by an RBS analyst appeared to be more objective and had more sense. Perhaps it can help Singaporean buyers be more sensible and not jump right in when the water is too hot to handle. The bad upshot of this current trend will be runaway asset inflation. When that happens, Singapore will lose its competitive edge yet again.