Source : Business Times - 18 Jul 2008
I AGREE with Michael French’s letter (BT, July 17) that your original article ‘Prices of Good Class Bungalows still going up, but volume falls’ (BT, July 14) is misleading and flawed. The opening line of the article reads: ‘The volume of transactions of good class bungalows (GCBs) may have fallen along with other property sectors but values have not.’ As Mr French correctly points out, the GCB market peaked in the summer of 2007, along with prime condominium prices in districts 9 and 10.
The fact that GCB land prices have fallen is not a good omen for the overall market for two reasons:
1. House prices are no more than a proxy for land prices. When land prices fall, house prices follow in short order, and
2. The turning of prices in the GCB market has proved to be the top of the property market cycle in each of the last two cycles. The fundamentals this time around are no different than in the past.
Gerry Ball, Singapore
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