Wednesday, June 28, 2006

[RealEdge] TodayOnline : Property no more a favoured investment


  This story was printed from TODAYonline
 
 
  Property no more a favoured investment

Wednesday • June 28, 2006

Chow Penn Nee
pennnee@newstoday.com.sg

ONCE a preferred asset class, property has fallen out of favour among Singaporeans as an investment tool.

In its place, financial assets like stocks and insurance policies are where Singaporeans increasingly park their money in.

These are the findings of the Singapore Household Balance Sheet: 2005 Update and Recent Trends, released yesterday by the Department of Statistics.

The report found that household net wealth — assets left after liabilities — grew steadily at 6.6 per cent to about $660 billion last year. This was attributed to economic growth accompanied by rising property and equity markets in recent years.

The average family's holdings of financial assets — which include cash, shares, CPF balances and insurance policies — grew faster than their share of non-financial assets, mainly residential property, it said.

Financial assets grew 8.9 per cent from the previous year, while property assets grew by only 1.4 per cent.

Explaining the shift, the report said: "Until recently, the sluggish performance of the property market could have prompted households to diversify their asset portfolios towards increasing their holdings of financial assets to reduce the investment risks from property assets."

It added that the rising stock market since 2002 is also a pull factor towards financial assets.

Holdings of currency and deposits have declined steadily, with their share of financial assets dropping from 40 per cent to about 33 per cent over five years.

Usurping their position are life insurance policies and stocks, which have been on an upward trend since 2002.

Meanwhile, household liabilities increased by 0.7 per cent — or 1.1 billion — to reach $160 billion, with mortgage loans growing by 1 per cent and personal and other loans declining by 0.3 per cent.

Commenting on the findings of the report, Mr Vasu Menon, vice-president and chief editor of finatiQ.com said: "In the 80s and 90s, people bought two to three properties. There has been a huge downturn in the property market since 1996, and prices have declined about 35 to 40 per cent since then. Singaporeans have lost faith in the property market.

"People are participating in the rally in Asian stock markets through unit trusts and investment-linked products, therefore they have put more money into these," he added.
 
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// posted by Shajahan @ 2:11 PM


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