Bottom in Singapore Housing still Far Off
The modus operandi of a slowdown as evident in the US and UK is as follows:
Equity Markets Collapse - Real Economy Slowdown (evident in drop in corporate profits) - Spike in Unemployment - Drop in Real Estate prices.
In Singapore, I think we are still in the second phase (real economy slowdown). The next shoe to drop is the employment rate. The Singapore government is pulling out all stops to prevent the unemployment rate from increasing. It remains to be seen if the measures work. Expect to see Singapore's unemployment rate to at least match that in the 2002 - 2004 slowdown.
The adjustments to real estate prices will follow but these adjustments will take time to work through. Real estate prices are usually 'sticky' primarily due to the fact that price discovery is usually delayed and information is not as readily available as exhibited in the equity markets. In addition, expectations of market participants in the real estate market are managed by estate agents who has every incentive to push prices up. Globally investors now have a slew of properties to chose from - London and New York property prices have dropped significantly (approx > 40% at SGD prices) - can Singapore still attract these investors?
3 comments:
Statistics can be manipulated...
What's the point of keeping unemployment rate down when the job replacements are inferior?
Yes, a ex-white collar worker earning S$5k is re-employed but now only earns S$1.2k as some menial worker...
Is he better off even as the gahmen sings how well it has managed to keep jobless rate from rising?
Hello Xtrocious,
For many in the US and the UK, jobs in the past will not come back.
Mortgage brokers who used to be earning in excess of 100K are now working as teaching assistants earning less than 30K a year.
This is a new business reality that no one can escape. A new business reality marked by paying down debts and taking on less risk.
I believe the same is happening in Singapore. In the current climate, it is a bonus just to be able to hold on to your job.
Best,
Eaststopper
and many employers are taking this opportunity to reduce their cost and hire cheap labour..8(
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