How do I know home buying sentiments have improved?
Answer: When I receive more email asking me which units to buy in a new project than email regretting buying at new launches.
If property purchase sentiments are weak, there is a reverse in the number of messages from both sides. Very accurate. No need to conduct any survey.
Now is the perfect time to launch
There is usually a 3-month time lag between the performance of the stock market and the property market. It’s because it takes around 12 weeks to complete a property transaction.
The Straits Times Index is on the way up since January. When people can make money from stocks, they feel “richer” and are in the mood to buy properties.
What are developers waiting for? If not now, when?
We see developers going all out to launch new projects: Park Place Residences, The Clement Canopy, Grandeur Park Residences, Seaside Residences, … and there are countless re-launch of not-so-new projects with unsold units.
It is a one-size-fits-all formula: The media conveys the optimism of the developer, marketing agent or mortgage bank, not forgetting to mention a “highly anticipated” new project will be launched over the weekend.
After the first launch weekend, the media reports the selling of half of the total units in the project. (Every new launch project moves half of its stock in that critical first weekend. But what happens to the other half of the inventories? When will they be cleared? You go figure out.)
Where is the optimism coming from?
Since March this year, realtors all jump on the bandwagon to show their optimism about the property market:
1. Strong buying interests continue for popular launches in OCR and RCR due to pent-up demand, rare project, good location, future hub … (Are they hotspots or just hot potatoes?)
2. Government’s good intention to save borrowers from refinancing and hefty Seller Stamp Duties in view of interest rate hike is conveniently interpreted as hints to remove more cooling measures. (We see that industry stakeholders are all very uplift. But uplift of Additional Buyer Stamp Duties? Are you sure?)
3. JLL claims residential property prices bottoming by 2018. (So fast? Prices have corrected only 10 percent so far.)
4. Morgan Stanley says Singapore property prices will double by 2030. (How much more prices have to drop before they can double? Salaries of Singaporeans will also double by 2030?)
New sales have direct impact on a developers’ report cards for the next quarter. Property agents have to make money regardless of good or bad times. Banks have to show some results after a recent cut-throat price war on housing loans.
So, if you are not a developer, a property agent, a mortgage broker, or not even an industry stakeholder, you are so upbeat for what?
Did you smell the dead cat?
Do you notice that improved sentiments are mainly on developer sales, but not from the HDB, resale or rental market?
Last Friday URA just released the price index of private residential properties for 1st quarter 2017. Prices of landed properties declined by 1.8 percent while prices of non-landed properties remained unchanged.
New sales made up 59 per cent and 66 per cent of total sales in the RCR and OCR respectively.
Launching more projects in the same quarter doesn’t mean beachcondosindestin.com/buy-modafinil-online/ that the market is turning the corner. It only implies that developers are in a hurry to launch new projects. If they miss this golden opportunity, nobody can tell how long they need to wait.
According to URA, as of the end of 1st quarter, there are 46,016 units (including ECs) in the supply pipeline and 18,870 units remain unsold. From now till end of 2017, there are 14,242 units waiting for TOP.
How long does it take for actual demand (HDB upgraders, import of foreigners, natural population growth, etc.) to catch up with ongoing supply?
Anybody can tell how fast Fed will raise interest rate? Can we foresee the economy to pick up or deteriorate in the next 6 to 12 months? How will the macro factors (political tensions, global debts, etc.) impact the Singapore economy?
If the negatives outnumber the positives, any small upward movement in sales volume or price movement is not called bottoming-out. It is a dead cat bounce – except that the bounce is almost non-existent because we don’t really see a recovery in the market.
And after that, expect a ‘real’ correction in the market. A 10 percent drop in prices we are seeing now is nothing.
Don’t believe what I say? Take some hints from what the media had predicted in 1994 and 1995. Did you remember what really happened to the property market after 1996?
To tell or not to tell
I was thinking about keeping mum about it. Why waste time writing a blog post to warn home buyers to think twice? People will buy anyway.
Afterall, didn’t I earn my first pot of gold from buyers who overcommitted in the previous property cycle?
But I have given up the thought of profiting from fire sales of units bought directly from developers in recent years. I am not interested to buy shoebox units or tiny flats with 3 bedrooms magically squeezed into less than 800 sq ft.
Although Senior Minister Josephine Teo reminded us that “you do not need much space to have sex”. She has yet to demonstrate how to do it with minimum space.
In producing our 2 prototypes over the years, we had taken into considerations just-in-time and cost-effectiveness. But we obviously missed the point of space efficiency in our factory.
There is an urgent need to conduct show-and-tell sessions to teach young couples how to maximize the use of limited space, to make good use of oversized balconies, aircon ledges , bay windows, etc.
Buying properties for the long-term?
Your property agent may tell you that property is a long-term investment. You can buy it any time because no one can time the market. If you can hold onto it for a number of years, prices will eventually go up in the long run.
Well, remember those who bought at the peak of the market in the mid-1990s? It took them almost 20 years to break-even.
Do you have holding power for 15 to 20 years?
I don’t. That’s why I am not buying now.
JLL predicts that the residential property prices bottoming by year-end or early next year. Well, we have only 8 months to go. Let’s wait and see.
Did you watch my video “2018 Singapore Property Market – what developers, agents, banks and analysts are hiding from you”? Watch it now!
Hi hi ,
Time and again, I see the Singapore as well as the global news (and don’t mean those news published in ST or BT), it tells me one fact, and when I see articles in our local newspapers stating that another opposing “it’s time to buy” article, I just cannot reconcile the 2 pictures. It just didn’t make sense.
I ask myself “am I wrong? ” or “what did I miss ?”..
In the end, I decided, I would rather not buy then to buy while I am not confident or unsure, what can be worst, I’ll just keep my cash for my retirement.
Then, I get an update from Property Soul yourself, and through your even more detailed and in depth scrutiny of the whole game, i say Thank you Vina for consolidating my beliefs.
I’ve been reading your blog as well as your good book for years now, and all I can to say is your even more detailed analysis and amount of data you pull out, the great effort you put in is unbelievable, as it takes heaps of time on any ones part. Kudos to you and a BIG Thank you.
Always a pleasure to read your post and blog.
Gem
Thank you for your words of encouragement. I am grateful that my two cents worth is useful to my readers.
Some people read, and they believe. Some people are puzzled, and they just ignore. Some people read, and they choose to challenge and find the truth. I just happen to be the last type of folks.
Great timely posting. I have done some readings of my own and found that there may be a trend to the property cycle. My estimation is that the bottom will be reached in 3Q2017. Precipitating factors are the unemployment rate, the fallout from Forest City(?), capital controls by the Chinese government (?) and geopolitical uncertainty. After that, it will take maybe about 3-4 years to see some light. The G has some ammunition up its sleeve though… the next boom & euphoria will come from the Tanjong Pagar “waterfront” development at the sites currently occupied by PSA and the shifting out of the AirForce from Paya Lebar airbase (from 2030)… leading to a crash again in 2031. I think that is the gist of it from my crystal ball so far 🙂
When I read your comments, I told myself “wow, there’s someone out there who shares the same thoughts”, except that my crystal ball can’t look that far beyond 2021.
Hi, Vina,
Whilst I also believe the property market is not bottoming out soon, I have found it very difficult to find a suitable apartment for my younger son. Sellers are not willing to make a loss of 5% (not to mention the reported 10% loss suffered by the market)
We have viewed couple of smallest units in the condo I am living at (sky@eleven), and chose the cheaper one (lower floor) for negotiation. But the seller insisted 2.8m which was the price she paid in 2012. We took our sweet time to view some others and when we came back to ask for the lowest price possible, we were told it was taken up at the asking price. And at the same time, the higher floor was also sold at 2.905M.
According to SRXProperty, six units in my condo have been sold in April !
Quite surprising, right?
wing ping
Hi Wing Ping, nice to hear from you.
Thanks for sharing your story. It’s an agent’s job to make the thing buyers are interested in looks very much in demand. But whether you choose to be a deperate buyer is another matter. If you insist to be a value buyer, you can either look elsewhere or wait for the right time to come. Trust yourself that your patience will be greatly rewarded.
Hi Vina
This is another magnum opus!
Property agents who tell us that property is for long term! Anytime is a good time to buy!
I sold my HDB Executive Apartment in 1997 at $650k before the Asian Financial Crises. The price was not beaten even in the property cycle peak in 2006/7 before the global financial crises(GFC). After the GFC, sometime in 2012, that the price is surpassed. A period of 15/16 years!
You sold at the peak when buyers can’t wait to get in. Good for you! Imagine the buyer who bought your flat has waited for 15-16 years if he wanted to upgrade/downgrade without losing any money. That’s a very long time.
thank you,*both thumbs up*, that was an awesome article!
Thank you. Great to see more people like you guys who understand what I am talking about.
For the rest, if they get it they get it; otherwise; it doesn’t matter at all : )
Hello, what do you think about the fact that on an earnings adjusted basis that property is around 30% cheaper now than 3-4 years ago (taking into account price drops plus increased earnings). That’s with the backdrop of price increases and stagnant earnings in most other markets. On both an absolute and relative basis Singapore property is looking OK valued in my eyes. I used to be in your boat but you made money in times we’re unlikely to see again. You need to adjust to the new reality 😊
I don’t think the theory of earnings adjustment applies here. Eager buyers will use any excuse to buy and justify an overpriced property with their own valuation method.
During the property boom in 2000, the property agent also told me that the price level I wanted to enter “we are unlikely to see it again”. Three years later in 2003, I bought the unit at the same price buyers bought during the project launch 20 years ago in 1983. And that’s the reality.
Just curious then, when’s the last time you bought a property in Singapore and how much more decline would you want before you bought again?
Haha, I personally don’t believe what Vina experienced in 2000 & 2003 will repeat in the next five years.
I have been in the residential market during the last six months and have learnt that good properties have not dropped 10% and instead sellers are insisting on selling at the prices they bought in 2012 or before.
So, for my younger son, we ended paying 2.29mill instead of the vendor’s cost of 2.23mill in 2012, for an apt at Jervois
Chan w ping
I am also “just very curious”. why do parents have to help their children buy homes? shouldn’t they earn the money to buy it on their own? it’s an upsetting trend in SG, we are rearing brats who earn and keep but still splurge hundreds charged to parents’ credit lines. In Taiwan, these are “啃老族”. and for those who don’t have parents to help them, what becomes of them? I am sure Vina’s parents didn’t help her with that first pot of gold, am I right?
I bought from 2002 to 2007.
I don’t set a percentage of decline. Buying properties is no different from other types of investment. As soon as there is value in what I buy, and the return is worth my efforts, I will invest.
It depends on individuals.
Because I came from a humble background, I learned to be more independent. I believe this is a blessing in disguise. So I also won’t buy any property or leave anything to my children but only values in life.
https://www.propertysoul.com/2016/08/11/give-properties-to-our-children/
Thank you, thank you! I am very encouraged by what you wrote here and also that 2016 article on bequeathing to children.
and the last line in your reply, you have spoken the essence of the last few paragraphs of the Chinese three character classic i.e. what is the best thing to give our children!
How inspiring and how i wish there are more of you around. then prices won’t spiral when others start buying impulsively. Please continue to write more and more.
I love what you wrote here Vini.
I just sold my landed property and is unsure if i should purchase a hdb flat or just rent an apartment first. I have 4 children and i am afraid of investing wrongly.
The last residential property i bought was in 2005. And i sold it this year. Yes i made a pot of gold. But i am afraid to make a mistake in the next purchase. Hence i ve been an ardent follower of Vini.
Can anyone advise me if i should rent a pasir ris hdb flat 1600 sqft for $2200-2500 or apartments/ condos such as neptune court 1600 sqft at $2600 ?
Thank you.
Very personal view, may not be in line with what the general thinking is. I advise you to buy within the next twelve months otherwise you may miss the boat of getting something at a bargain price and you really like. After the next twelve months you might find the pot of gold worth only a pot of silver.
Chan w ping
In life, people has short memories or their kiasu mentality and impatience to get invested in property, drive them to quickly put down their cheques. They form the majority and this field is well studied by salespeople to capitalise on this weakness.
Today, walk into any Showflat and anyone with a discerning eye can see the great hype in the ambience artificially created to ensure the buying urgencies. The naive majority of buyers esp. cash-rich Singaporeans can be easily lured with massaged numbers ( such as ‘30% drop in property prices taking into account of raised earnings’). Else, history will never repeat itself. You and many gurus out there will not have the opportunities to make a living?
The stakeholders, agents, developers, and property companies of this industry must continue to psyche themselves with their lies to ensure their livelihood. With prospective buying public, they sing one tune, with the Govt. they sing another….pleading to abolish cooling measures…..
1 of the best property article ever written that you’ll never find on Mainstream media. I’ve come to understand & appreciate the phenomena of FAKE NEWS from the 2016 US Presidential elections. But this had been going on for ages. Thank god for the Internet circa 2000. And thanks for real news websites like Property soul for the true state of the property market.
Many investors have missed 2 important criteria for investing in Singapore property post-2020. The 1st is demographics. In short; the number of downgrader (retirees) are going to far exceed the upgrader (nuclei family formation) going forward. The 2nd is foreign investors. S’pore is simply too expensive! Budget 2017 shows the relentless cost-push policies of the govt. for essential cost of living eg. water (costings justification?), electricity (carbon tax aftermath), etc. And instead Chinese property investors voted for HK (3x times upturn since 2003); Vancouver; Sydney & Melbourne. While S’pore property prices had been stagnated since 2013; & for the ultra high-end property; totally collapsed by 50% since 2009. In short, S’pore’s way behind the foreign buyers bucket list. Why? Without foreign buyers & without the upgrader; where is the forward momentum to push the property prices higher?
You are right. And many people forget the fact that Singaporeans can continue to stay or return to stay in HDB flats under any circumstances. It is not like other countries such as Hong Kong that the people have no choice but to go for private housing in any economy or price level.
@ Dugu Qiubai
“The G has some ammunition up its sleeve though… the next boom & euphoria will come from the Tanjong Pagar “waterfront” development at the sites currently occupied by PSA and the shifting out of the AirForce from Paya Lebar airbase (from 2030)… leading to a crash again in 2031.”
Tanjong Pagar to Telok Blangah “waterfront” development may not be achieveable within 1 or 2 property cycles ie. within the next 8.6 to 17.2 years (average 8.6 yr for property cycle). Sentosa serves as a poor benchmark for waterfront property investments. Same goes for Paya Lebar airbase time frame. More likely over 50 years to achieve. By then, most of us serious investors would be already dead.
And you should also consider if S’pore might undergo a permanent state of stagnation & serious decline. Our famous Orchard Road is already in deep decline. And the politicians want to make it car-free in order to revive it. But the real problem here is technological disruption & online retail competition. You can’t apply CPR on a horse that’s already dead. And that’s the problem!
Thanks for taking the time to comment on my post. The property cycle comes in “patterns” and it fits nicely in the charts for 2 cycles. This coming one is the third if the trend continues. However, though the patterns fit nicely, I have come to accept it as a guiding principle and not religion. The G knows the entire scheme of things. We are only the bit part players. When some industries fall, others will rise to take its place. Let’s see how the LNG bunkering hub ambition take shape… the aerospace MRO industries, do you know that we have 2 companies amongst the largest in the world? Just like Kep & Semb in their sectors and yes, theirs is cyclical as well. Property as investment? Not really for me, too illiquid, I am an equity investor who likes to value things who just happened to want to buy a property for own stay. Hence, my journey for knowledge has brought me here. For those “predictions” which I have mentioned, they are merely as such, just predictions but I believe in Elvis’ song, the part where he sang “Only fools rush in”.
Great article. I am also equally flabbergasted by the all the sales talk by the agents and the developers. And agree totally that these developers are pushing for maximum sales with the momentum.
I did step back a few times to ask myself again if what these people say about the property market bottoming out now is indeed true and each time I feel otherwise. What I cannot understand is why are there still so many people out there paying such high psf and also paying ABSD to acquire the property! Its beyond my comprehension and I wish someone could tell me if I have missed something.
I suspect that that most people living here seems to have only one form of investment with their money. The minute they acquire enough money to place the initial deposit of a property, they will put their money into it…simply because they don’t feel safe or not know of other forms of investment or with many others, they have seen how others made lots of money in property. And this seems to apply to both the young and old.
I sold my place in 2014 and have been renting since. Am renting a place (RCR) which the owner is trying to sell $1.05m. I pay $30k rental a year. After deducting maintenance, property tax and sales commission, the net rental yield is about 2.2%. This yield seems very low compared to other forms or investment. With the oversupply still looming, I would think that this rental yield will not be going up soon and hence property prices will have difficulty pushing up. I generate a modest 3% interest on my investments and this is more than enough to pay for my rental. So technically I stay in the rented condo for free, downside of course is that the place is not mine and cant renovate to my liking.
Whilst I am happy with it now, I worry when the market will start turning around and me not sensing it. When that happens, renting would not make sense anymore. Please write and signal when that day arrives. With low interest rates and no impending recession in the near future, I suspect its going to be quite a while.
Thank you.
pete.
Hi Pete, it makes sense to sell your property and rent one. There are lots of good bargains for tenants, especially in areas that are currently overbuilt.
2.2% net return is not bad. These days many owners are already very happy that the rent can cover the mortgage and other expenses. In 2001-2005, many landlords had to “subsidize” the tenants to stay at their place (as a tenant I was also “subsidized” by my landlord at that time) . This will happen soon if the rental market continues to soften.
By the way, if you do nothing and put your money in a fixed deposit, you can also get 1.25% back. Singapore dollars is so strong and the government is very stable. Why risk your money and go through so much hassle to invest in something that is completely out of your control?
Hi Pete,
I am about to do the same. I just sold my house. And is unsure if i should buy now or rent. I ve been doing my homework for the past 5 months and still could not find the right place to buy or rent. Hdb and pte condos rental rate are almost similar now. Hdb pasir ris near mrt $800-900K matches the FH condos at Azalea $850-980K.
I am totally confused. Now i will rent. But i dont know whether i should rent a pasir ris 1600 sqft HDB @ $2200-2500 monthly or Neptune Court @ $2200-2600 monthly.
Any readers, pls advise me what to do next.
I don’t think you are confused at all. You sold your home and you are prepared to rent before finding the right time to enter the market again. Whether you want to rent an HDB flat or a condo is entirely your choice.
It is a tenants’ market now and you are simply spoiled for choices. I know many move from smaller to bigger and newer places but at lower rents. Everyone have their own preferences on where they want to stay so why do you need advice on that?
Dear Property Soul,
So far lots of comments on condos. Would be keen to hear a bit for landed properties. What would your views be on landed properties, especially in dist. 10&11.
Thank you.
It’s a good question. Landed properties are definitely a better buy than condos because developers are not over-building houses in Singapore. Besides the prime districts, there are still a lot of choices of good areas if you look carefully.
If you happen to be a dbs priority customer, try to get a housing loan from them. The best package in Singspore so far. Best rate and for as long as you may like !