S'pore residential market is world's hottest this year

Straits Times reported this article today.



---
Dec 24, 2007

S'pore residential market is world's hottest this year
By Nicholas Fang

SINGAPORE'S booming housing market is the world's hottest this year, with local home prices recording the fastest increase.

Residential property prices in the Republic surged 24.3 per cent, after adjustments for inflation, ahead of other bullish markets such as Shanghai in China and Bulgaria, said property investment research house Global Property Guide.

In a report published online, the firm said Singapore's strong performance, like those of Japan and South Korea, was due to robust economic growth.

The survey was compiled using the latest official data from 42 countries, though other statistics were used for a few markets, such as Japan and the Philippines, where such figures were not available.

The latest Urban Redevelopment Authority (URA) numbers used in the survey show that Singapore home prices registered a 27.6 per cent annual jump at the end of September, significantly higher than the 7.6 per cent posted a year ago.

This nominal, non-inflation adjusted figure was below the 30.6 per cent recorded by Bulgaria in September and the 27.9 per cent recorded by Shanghai in October.

But in real terms, after adjustments for low inflation of only 2.66 per cent, the Republic leapfrogged these two markets to reach the top spot, said the report.

Singapore's strong showing underscored a more general recovery in Asia, where several markets gained momentum in the first three quarters of the year.

Global Property said this reflected, to some extent, continued recovery from the 1997 Asian financial crisis.

In contrast, the United States housing market crashed due to the sub-prime mortgage crisis, while high interest rates were behind the slowdown in European house prices.

'In Europe, most countries registered unimpressive year-on-year house price changes in 2007, aside from Norway and Estonia,' the report said.

Looking to the year ahead, Global Property said property prices in much of Asia are still undervalued compared with pre-Asian crisis levels, despite strong increases this year.
It expects potential improvement in rentals in Singapore.

'We believe gross rental yields are now too low, at 2 to 3 per cent.

'Nevertheless, Singapore is attracting and admitting more foreign-born workers - which is positive for prices,' it said.

Elsewhere in the region, Global Property also recommended Cambodia, Thailand, Japan, Australia and New Zealand to property investors.

It, however, cautioned against investing in Europe, apart from a handful of Eastern European states, because of high valuations after a long period of price appreciation.

In the Middle East, it found Egypt attractive for its high rental yields and low taxes, but warned of a possible oversupply in Dubai as more properties come on stream over the next two years.

---

I'm living in hottest residential market in the world!

Retire at 40: Here's how

Here's an article I read from MSN Money (think it's contributed by The Simple Dollar) about how to retire at 40 through working hard and invest on Indexes, starting from age 20!

--

It's simple, but hard. Take 20% of your gross income every month, invest it in a balanced index fund and leave it there, then retire 20 years later with enough for a lifetime. Do you have what it takes?

A young, forward-thinking man wrote and asked this simple question:

Right now, I'm 20 years old. I am willing to take a large percentage off the top of my salary for the rest of my working life in order to be able to retire very young and live off of the proceeds of my investments and do volunteer work. How many years would I have to work if I saved 20% of my income?

He went on to name a number of other specifics about his situation, but they're really not important. If you were to take 20% of your annual income starting at age 20 and put it in a fund following the S&P 500 Index ($INX), that fund continued to grow at the long-term historical rate (12%) and you received a 4% raise each year, you could walk away from your job and live off the interest at age 41 matching your current salary -- or quit at 43 and be able to give yourself a 4% "raise" each year from the interest, which is probably the better plan because it combats inflation.

Raise the amount to 25% and you're done at age 38 and able to live in perpetuity at age 40.
Obviously, some people are going to balk at this and state that it "can't" be done. The truth is that it can be done if you have the willingness to live below your means and authentically behave as if 20% of your total salary doesn't exist.

It is challenging, don't get me wrong. Let's take the case of someone who makes about $60,000 a year. He brings home a paycheck every month in the amount of $3,200. In order to save 20% of his whole annual salary ($12,000), he would have to be willing to immediately take $1,000 of that take-home paycheck every month, put it straight into an investment and not touch it at all. This takes an amount of financial fortitude and will power that, quite honestly, most Americans don't have.

--

In fact, when we put our money into the index (whether it is S&P 500 or Straits Time Index for Singapore), it's safer since putting your money into any stock. Reason is simple (but not that obvious):

1. Many people think that stock is risky, so investing in index may be in the same league.
2. Index doesn't rise everyday, just like stocks.
3. Index doesn't even rise every year, just like stocks.
4. But, the not-so-obvious fact about Index is that it tracks the best-performing stocks in a certain category. There will be new performing stocks added to the index and lousy performing ones removed from the index every now and then.
5. You can safely assume that over time the index will rise in value. But you must be thinking how long will the index will confirm rise?
6. Index rises 10% (for STI) and 12% (for SPX) on average every year. But, it is only the average; sometime the indexs do fall on a yearly basis (due to economic recession or correction, 9-11 kinda' incidents, Iraq war, dot-com burst etc etc).
7. But through research, over 5 years, putting your hard-earned money into the Index will confirm generate the guaranteed returns for you!
8. And over 10 years, you can SAFELY get back the compounded average returns (for 10 years) on your money.
9. If we put it in mathematically terms, money + 10 years' compounded 10% to 12% per annum = 2.5x to 3x your money.

If you compare with putting your money in your savings account, think again! With a measly 0.25% per annum, you money will only grow less than 30% (almost 10x slower)!