(01-07-2013, 12:14 PM)Devil Wrote: [ -> ]how is singapore household debt to GDP at 279%?
Singapore 2012 GDP is 345 billion
I take singapore household debt to be 2013 Q1 Liability under household balance sheet, which is 267 billion
the ratio i got is 0.77
Search me...
This figure was quoted everywhere in internet but no one has the source of information except that we know it comes from UBS and must be correct..haha.
Maybe we hide the loans under the bed?
Assuming that UBS is correct, the debt is 2.79x the GDP = 962 billion
There are about 1 million households in Singapore and therefore each household owes $962,000??
If we take department of statistics figure which is 267 billion
The debt per household is $267,000 which looks more plausible.
So, how does UBS come out the number???
The perception of perpetually low mortgage rates, increasing population and ever increasing property prices is what fueled the property boom in Sg. However, the risks are increasing for multiple home owners in Sg once interest rates starts to spike and as housing and rental demand starts to taper.
I like to use the word taper as this what Ben Bernake used in his speech in June. After so much money printing by the Feds, cheap money has flooded the markets with so much liquidity that the emerging markets and junk bond markets' bonds yield had declined considerably as investors hunt for reasonable returns. It's very likely that QE tapering will happen by next year (and possibly this year) whether the US economy improves or not as the Feds is now very worried about cheap money inflated asset bubble. That's why Ben had sounded off a warning to the markets to prick any asset bubbles that had gone out of hand.
And the stock market, especially the lower yielding stocks, REITs and bonds are sold off ferociously by 10-30% upon the mentioning of the tapering news. So we should expect QE3 to end by next year and Sg banks to slowly raising interest rates by Q3 or Q4 this year. As banks will only make money when interest rate risks are expected. Banks lose money if they are caught by unexpected interest rate rises. So I'm expecting the Sg banks to start raising interest rates by this quarter, possibly by 0.2-0.3%, and 0.5% by 2014.
In my opinion, the risks for a decline in property prices far outweigh the rental income and capital gain potential due to interest rates risks. The monthly installment for a 1.5M property, assuming 20% down payment at 1.25% mortgage rate over 30 years work out to about $4k per month. If interest rates goes up to 2.5%, it will increased to $4.4k per month. If rates goes up to the more realistic level of 2.5%, the home owner have to pay $4.7k per month. Asking a tenant to pay more than $4.5k rental for a mass market condo is already quite a challenge in today's market, not including the monthly maintenance fee that had been climbing for new condos. Hence the current rental yield for newly purchased property is pathetically low. And the property investor might even be incurring losses every month from 2014 onwards. And we have not even factor in the possibility of rental rates declining, which already has been happening since Q1 2013 as more supply come online.
To me, an investment in a condo in Sg at current prices is simply not a sound decision. And with QE tapering coming to an end by next year, the timing cannot be more right for MAS to step out and implement the new measures to protect the general public.
(01-07-2013, 12:14 PM)Devil Wrote: [ -> ]how is singapore household debt to GDP at 279%?
The devil is in the denominator:
UBS Wrote:Singapore's household debt - total consumer loans of Domestic Banking Units - stood at 279 per cent of the total gross domestic product in the first quarter of this year, up from 177 per cent in the corresponding quarter in 2007.
sounds about right, rental yields are what drives property prices. When there is a decoupling of this relationship the chance to revert back to the mean is very high.
the pain will be felt when interest rates suddenly spike up, many who are already in will be hoping it does not happen. But with each passing day the chance of interest rate spike is growing
The recent scare should be taken as a warning.
Do not trust the " TRUSTS "
unless of course, if they are grossly undervalued
(01-07-2013, 01:40 PM)lanoitar Wrote: [ -> ] (01-07-2013, 12:14 PM)Devil Wrote: [ -> ]how is singapore household debt to GDP at 279%?
The devil is in the denominator:
UBS Wrote:Singapore's household debt - total consumer loans of Domestic Banking Units - stood at 279 per cent of the total gross domestic product in the first quarter of this year, up from 177 per cent in the corresponding quarter in 2007.
I read that and I thought so.
But, got people use a quarter of the annual GDP and measure it against total debt meh??
At least, must normalize to one year mah.
I know 279% is more newsworthy than 77% but who uses a quarter of GDP to calculate ratio???
But, me no accountant nor investment analyst nor investment adviser... so maybe this is the norm in investment world?
(01-07-2013, 12:14 PM)Devil Wrote: [ -> ]how is singapore household debt to GDP at 279%?
Singapore 2012 GDP is 345 billion
I take singapore household debt to be 2013 Q1 Liability under household balance sheet, which is 267 billion
the ratio i got is 0.77
You are sharp. You took the data straight from the source while people like me assume that if the source is from UBS, it must be true. Felt like a fool to conduct analysis based on faulty data.
UBS Wrote:Singapore's household debt - total consumer loans of Domestic Banking Units - stood at 279 per cent of the total gross domestic product in the first quarter of this year, up from 177 per cent in the corresponding quarter in 2007.
Thanks. Another sharper fellow.
279pct sounds more exciting than 77pct. Of course UBS could have spiced it further by claiming its 837pct of monthly gdp...
(01-07-2013, 02:20 PM)hyom Wrote: [ -> ] (01-07-2013, 12:14 PM)Devil Wrote: [ -> ]how is singapore household debt to GDP at 279%?
Singapore 2012 GDP is 345 billion
I take singapore household debt to be 2013 Q1 Liability under household balance sheet, which is 267 billion
the ratio i got is 0.77
You are sharp. You took the data straight from the source while people like me assume that if the source is from UBS, it must be true. Felt like a fool to conduct analysis based on faulty data.
UBS Wrote:Singapore's household debt - total consumer loans of Domestic Banking Units - stood at 279 per cent of the total gross domestic product in the first quarter of this year, up from 177 per cent in the corresponding quarter in 2007.
Thanks. Another sharper fellow.
What UBS probably did is to divide the total household debt accumulated up to the point in Q1 2013 (not the household debt incurred in Q1 2013 alone), by the total GDP of 2012. The numerator is a cumulated number and the denominator is the total GDP for 2012. The numerator will be a more leading indicator and the denominator more lagging if my asumption is correct. Otherwise, UBS could have worked out the trailing 12 months total GDP. I don's see anything significant difference in working out the household debt either way unless we see a big difference in Q1 2012 vs Q1 2013 GDP.
Increasing household debt just mean that more debts are added than paid off. By now, the ratio has most likely exceeded 280% (if 279% was correct) as 3 months had already passed.
(01-07-2013, 02:24 PM)godjira1 Wrote: [ -> ]279pct sounds more exciting than 77pct. Of course UBS could have spiced it further by claiming its 837pct of monthly gdp...
I think we should exaggerate it further by dividing over the daily or hourly GDP.
I heard this Kelvin guy at a UBS talk, quoting this figure a few weeks back. I thought to myself, this cannot be! I went home that day and double check it against MAS and Sing figures. This guy is not a serious analyst! Then again, UBS is not known to provide ground breaking or outstanding research....
Not a serious analyst getting some serious pay check. Hmmm, and to think the serious analysis done here are free! Can we bill the contributed time to UBS?