Below is the US Case-Shiller property index. The US has undergone one of the worst real estate correction in a century. It is down by over 30% and is only just beginning to turn up.
Below is the London House Price Index. If you look at the blue line, which is the "Nationwide Nominal Index", it has broken past 2008's high but still has not reached sustainable levels. I would say that this is a mid-cycle phase and is similar to Singapore in 2010 - 2011. It means that the turning point was in 2010 / 11. But don't forget, the index is skewed by zone 1 properties which has run well ahead of the 2008's peak. Zone 2's level is still at around the "Halifax Nominal" level, i.e. still 15% below 2008's peak.
Below is another index of London property, but inflation adjusted. It is still well below 2008's high. Let me share with you another fact: London's population grows at 100k per annum. They have about 2.5 people per household. They need net addition of 40k per year. But they managed to complete only 20 - 25k per annum! This is a classic case of chronic shortage because there is simply no en bloc rules.
Now look at Singapore's URA property price index. It has not only hit a new high, we are expecting unprecedented supply from now until 2016! The odds are pointing to the downside.
Iskandar's population is 1.8m. It has around 4.5 people per household. They need roughly 360 - 370k of housing stock. But truth is, they currently have 415k of inventory. They have another 100k of new homes completing in the next 3 years. You can bet your last penny that rental yields will drop below mortgage rates. If population growth is slower than expected, i.e. not 5% per annum, vacancy rate could hit 30%! Iskandar, along with China's third and fourth tier cities, is one of the biggest property bubble around!
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