CNBC produced a slideshow on The World’s Hottest Real Estate Markets and I was not surprised Singapore made the top 10 list.
Call me biased if you want but I really believe the property market is overextended. There are signs of euphoria and history has taught us again and again, what goes up must come down. The masses are always wrong when it comes to investment. The winners will be those who are selling the properties, and not the buyers.
I have summarised CNBC’s findings in the table below.
|Rank||Country||5 year price growth||Price per Square Foot (USD)(from globalpropertyguide.com)|
Singapore’s median monthly gross income in 2011 was S$2,925. Assuming a typical Singaporean couple is buying a property, their combined income will be S$5,850.
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And they do not loan more than 35% of their income (assuming they have no other debts), they can afford a monthly installment of S$2,047.
If they took a 30 years loan at 1.5% interest, they can borrow up to S$593,272 (80% of property price) to buy a S$741,590 property.
No, this buying power would not get them a studio at Katong Regency for $1m, or a 2 bedroom at Sky Habitat for $1.1m, or a studio at The Tennery for $860k.
Looking at the recently transacted property prices, the couple can only afford properties like a 883 sq ft Textile Centre unit at $680,000; or a 474 sq ft R66 unit at $715,000.
We need to do a reality check to keep our sanity.