Global Market Effect On Singapore Property Prices

The idea that banks are willing to lend their credit facilities more freely

, it would be wise to examine the terms and conditions of the credit facility you are planning to take as property market comes in phases (Source: Wikipedia, 2009)

Europe

Europes practice of collective austerity may affect the world economy. Europe can no longer spend more than they earn. This could have an impact on the world economy. The balance and tightening of an individuals budget may sound noble but it is not the way to go about housing and other investments. Spending cuts may add to the creation of jobs. For example, if the countries UK and Germany cut public spending that the private sector relies, this may hurt the private enterprise sector and could lead to job loses or retrenchments. This could also lead to diminishing trade with the rest of the world. The self-imposed austerity drive might do more harm to the economy than improve the situation of the people. Hopefully, the wealthy people might have more liquidity that would be enough to create more investments and jobs. Austerity is remarkable but capitalization through credit is the only way to move forward.

USA

The economy of the US seems to approach stability now after a trillion dollar efforts to recover. This situation sends good news and kind of stabilizing signal to the rest of the world. During the economic recession in US, many countries were also affected. However, the world is now reaching the tail end of the problem. The strategy of President Obama launched on Dec 2008 was quite effective. Economic recovery has been remarkably doing great. Many states depended to issuing municipal bonds to fund their deficits and balance their budget (Source: http://www.tradingeconomics.com/Economics/Interest-Rate.aspx?Symbol=USD)

The US was able to maintain the Federal Reserve interest rate at 0.25% level for over a year now. Most homeowners had equally benefited from the low interest rates and cheap credit loans. Businesses also benefited from the cheap borrowing rate offered by the banks. For sure, a bit part of it will certainly flow overseas as a Carry Trade activity where borrowers borrow at cheap rates and convert it to a higher yielding investment in another country. The fast flow of international borrowings makes it difficult to track and know the amount of funds operating overseas. International borrowings could move certain dollars out of the country fast and move back certain dollars into the country as fast as it goes out.

by: Shirley Tan

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