Someone laments that, for those investing in a second property in Singapore, only 10 percent make money at the end.
Getty Goh mentioned the same in his book ‘Buy Right Property’ (2011),
Of the properties that were purchased in 1996, more than 80% were sold for a loss, with the largest drop in value amounting to more than $1,466 psf. In other words, if the unit was 1,000 square feet in size, the total loss would have amounted to more than $1 million. This goes to show that the simple buy-and-hold strategy does not always work and properties are definitely not ‘sure-win’ investments.
Of the 15,000 non-landed private property purchases in 1996 (bought when the market was at its peak), 32% (about 5,000 properties) have been sold at a loss. About 59% of the owners are still holding on to their properties, some doing so because the current day prices have not yet reached the 1996 prices and they would suffer a loss in value if they were to sell them.
Why are so many people making such big losses in property investment?
We spend an average of 15 to 20 years in school to study all the necessary subjects.
To acquire any technical skill, it is not hard to find relevant formal training with well-structured syllabus.
But for what’s often the most expensive purchase in our life, we don’t need any pre-qualification to put down a deposit.
It’s interesting to see some people spending hours and hours surfing the net, talking to buddies and test driving before buying a vehicle. Yet their apartment was bought after just a weekend visit to the showflat!
They just announce that property prices have reached a new height. Why are people continue buying?
Are they afraid of missing the boat and can’t wait to jump into the water?
If you know that you are too late for the party, do you still rush all the way there to see other guests leaving?
The market will make you look foolish next time. Yes, you almost hear Skeeter Davis sing ‘There’s a fool born every minute’.
Bulls make money, bears make money, pigs get slaughtered, chickens survive. (Martin Weiss, The Ultimate Depression Survival Guide)
I would rather be chickens who run away from dangers in time than pigs that follow the crowd blindly and get slaughtered!
Many people fear that price will go further up. Since 2009, price has been going up despites 5 rounds of cooling measures. Visited some showflats, developers are absorbing the (additional) stamp duty which the government imposes. I sympathesize with the geniuine buyers, those who bought out of necessity now, like due to high rental, family planning etc.The price is really ridiculous now for mass condos and HDB. Another factor is the low interest rate which makes motgage loans cheap now.
Buyers who have the patience will be generously rewarded. It’s only been three years since the prices find their way up.
From 1991 to 1996, the property price index climbs from 60 to 180 in five years. For those who couldn’t wait and bought in 1996, if they had the holding power, they would have been waiting for 15 years for their overpriced purchase to breakeven!
Many people fear that price will go further up. Since 2009, price has been going up despites 5 rounds of cooling measures. Visited some showflats, developers are absorbing the (additional) stamp duty which the government imposes. I sympathesize with the geniuine buyers, those who bought out of necessity now, like due to high rental, family planning etc.The price is really ridiculous now for mass condos and HDB. Another factor is the low interest rate which makes motgage loans cheap now.
Buyers who have the patience will be generously rewarded. It’s only been three years since the prices find their way up.
From 1991 to 1996, the property price index climbs from 60 to 180 in five years. For those who couldn’t wait and bought in 1996, if they had the holding power, they would have been waiting for 15 years for their overpriced purchase to breakeven!
With free and paid property investment seminars and advertisements help to fan the fire (to get more buyers and thus, their commissions), one has to be in clear mind to see the real need to buy a property. The force of demand and supply always work in all kinds of markets. Create demand (buy) -> create supply (build) -> sales (commissions, profits), and it will run till last pig is slaughtered. The problem is – no one thinks he/she is that last pig.
When people rush in, get out !
People in the property industry all know how to make hay while the sun shines. No one knows what will happen tomorrow. And the boom and bust cycles are getting shorter and shorter. If they’re not able to make the most now, who can tell what will happen come another downturn worse than 2001 to 2006?
With free and paid property investment seminars and advertisements help to fan the fire (to get more buyers and thus, their commissions), one has to be in clear mind to see the real need to buy a property. The force of demand and supply always work in all kinds of markets. Create demand (buy) -> create supply (build) -> sales (commissions, profits), and it will run till last pig is slaughtered. The problem is – no one thinks he/she is that last pig.
When people rush in, get out !
People in the property industry all know how to make hay while the sun shines. No one knows what will happen tomorrow. And the boom and bust cycles are getting shorter and shorter. If they’re not able to make the most now, who can tell what will happen come another downturn worse than 2001 to 2006?
“Buyers who have the patience will be generously rewarded. It’s only been three years since the prices find their way up.”
Government is only “stabilising price” with low sales volume, but price is still high.
A friend who has been looking for an accomodation since 2010 thought that price then was high. He was disappointed with the cooling measures. After waiting for 2.5 years, he was “forced” to buy a small unit recently. He claimed that he could not wait anymore as his wife is giving birth end of year. Furthermore, he thought that paying mortgage is better than rent since loan is cheap.
Wish that he could wait, but no one knows exactly how long.
Wish that he could wait, when interest rates become too high to service the long-term mortgage loan.
Property Soul, your baby is fortunate, she has a stable and spacious home.
The economic factor is always more important than any government influence in determining the property prices.
Property buyers acquire properties when they have the money, or when they think they have the need to do so. Property investors acquire properties when the timing is right, or when they think there’s a good buy.
Looking at it the other way, my current home provides less imagination for my girl to work for her dream home.
“Buyers who have the patience will be generously rewarded. It’s only been three years since the prices find their way up.”
Government is only “stabilising price” with low sales volume, but price is still high.
A friend who has been looking for an accomodation since 2010 thought that price then was high. He was disappointed with the cooling measures. After waiting for 2.5 years, he was “forced” to buy a small unit recently. He claimed that he could not wait anymore as his wife is giving birth end of year. Furthermore, he thought that paying mortgage is better than rent since loan is cheap.
Wish that he could wait, but no one knows exactly how long.
Wish that he could wait, when interest rates become too high to service the long-term mortgage loan.
Property Soul, your baby is fortunate, she has a stable and spacious home.
The economic factor is always more important than any government influence in determining the property prices.
Property buyers acquire properties when they have the money, or when they think they have the need to do so. Property investors acquire properties when the timing is right, or when they think there’s a good buy.
Looking at it the other way, my current home provides less imagination for my girl to work for her dream home.