Risk & Returns
It is basic finance that says that risk is tied to returns and that the market factors in the risk by offering greater potential returns, such that the overall yield is the same.
However, when you look at property prices in the recent few years, especially HDB flats, you will have to wonder if this bit of theory has indeed broken down. HDB flats are one of the safest investments in Singapore, since they hardly ever depreciate. The market is also a controlled one, with lots of rules and regulations placed on any transactions. According to that, yields should be low. However, Singaporeans seem to be causing their own problems by speculating in these properties, resulting in them escalating in prices.
Is it influenced by the prices of new Build-to-Order projects like the Pinnacle @ Duxton? Or even the price of private property in the area? Surely an old HDB resale flat (30 years old) cannot be appreciating so drastically, especially if wages have not been growing much over the past few years. Really think that people are just going crazy...
However, when you look at property prices in the recent few years, especially HDB flats, you will have to wonder if this bit of theory has indeed broken down. HDB flats are one of the safest investments in Singapore, since they hardly ever depreciate. The market is also a controlled one, with lots of rules and regulations placed on any transactions. According to that, yields should be low. However, Singaporeans seem to be causing their own problems by speculating in these properties, resulting in them escalating in prices.
Is it influenced by the prices of new Build-to-Order projects like the Pinnacle @ Duxton? Or even the price of private property in the area? Surely an old HDB resale flat (30 years old) cannot be appreciating so drastically, especially if wages have not been growing much over the past few years. Really think that people are just going crazy...