It's interesting you started with 1970, since that was the decade where interest rates led by the US Federal Reserve were at an all time high before they fell to a historic low over the next 40+ years.
Given the fact that interest rates reflect the cost of money which has been steadily declining to an absolute low over the last 40 years, how much remaining upside is there, really? It is already a bonus if interest rates do not climb at all in the current environment.
The news over the decades about fundamental factors and challenges are a decoy. Looking underneath at the hard numbers is a lot more useful.
Another factor is demographics. In the 70s, the baby boomers were on average in their 20s and 30s. Move forward 40+ years later and this same group of people are retiring or have retired. It is no secret that this segment of the population is the mover and shaker for the rest of us by sheer volume. They shape most spending and investing trends, not Gen X, Gen Y and the millennials.
Therefore the solution for aspiring and existing property investors is to pray and campaign extremely hard that the government will increase the population to 10 million. There is no other alternative.
There is minimal capital appreciation when you are holding investment properties at rock bottom interest rates - unless we go into negative territory. As interest rates decline, there is a greater flow of capital within the economy, or 'flow' so to speak, which powers asset prices higher. If you want to flip with a margin of safety, do it when rates are high and the market signals that rates will move lower.
The key then is to examine the 'spread' so to speak, between nominal interest rates and real interest rates.
With the factors mentioned above, especially demographics, real interest rates are unlikely to match those of the decades prior in light of an aging demography globally.
Translation: Properties would not crash much, but neither will we see the outsized returns of the past that easily, especially since Singapore has moved from developing to developed status.
It is natural to think that the asset class you made the bulk of your wealth from will be evergreen. However, I think we need to question those assumptions from time to time to examine if they still hold true in an ever changing environment through a longer time perspective.
if you guys have time, go thru' the straits time or whatever old newspaper articles about property. Best if you can read thru 1970, 1980, 1990, 2000, 2010.
Read the sentiments and views of unaffordability issues, sustainable growth issue, GDP cannot go up further issue, aging population, declining birthrate. You will discover every era, there is the same issue and every era, the price rises higher than the previous peak.
The gist of it is this : If you believe in inflation, you will have to accept prices will rise to keep up with inflation. (why is there inflation? Look at the money growth/printing). How does prices rises up with inflation? thru' income inflation. USA was a developed nation, Australia was a developed nation earlier than Singapore. They have vast land enough for their population. But did that stop the prices from rising? Why is it not stopping? Look at your basic necessities, did they stay stagnant? Why?
Of course, like I mentioned, property investing is more of the cycle investing. Don't hold for the expectation of 5yrs. Hold it for the expectation of 10yrs or longer. You hold for the capital appreciation and rental is to keep your investment afloat without you paying(or paying a little more for it). You need to buy roughly near the trough or beginning of the recovery. The property market is not as efficient as the stock market as the players involved are mostly uneducated and dealing with emotions more than financial judgement. So the trough and recovery is not like stock market where you missed out one month and that's it. it will take a good 6months before most market participants feel confident it is sustainable.
![PostCountWarrior[+1]](https://forums-media.hardwarezone.com.sg/data/avatars/m/323/323388.jpg?1616642408){kind=avatar}
