We were waiting for the lift in a shopping mall. Only two lifts were in service for the whole building, including the top few parking levels.
More people joined us after they parked their cars. Two families moved next to us. Another three groups stood right behind.
The lift on the right was full after it reached the fourth storey. Instead of continuing to go up, it descended to the third floor.
Seeing the lift on the left slowly climbing up from the ground floor, a couple found their way to get in front of us. I could feel strangers pressing closely behind.
Feeling uneasy, I came up with an idea.
“See, I told you the two lifts are faulty. They never go up to the parking levels. We have waited so long for the lift. We should have taken the escalator instead.” I grumbled. My husband said nothing.
Overhearing what I said, the guy in front told his wife, “Come, let’s take the escalator.”
Seeing the couple walk away, one by one, other groups all followed them to the direction of the escalator.
Just when the crowd was gone, the lift on the left opened. It was empty inside.
Not long ago, I had successfully “driven out competition” using exactly the same trick.
Why people fall for the lift trick
Did you see why this small trick works like a charm?
Why would people trust the words of a stranger like me?
Had anyone checked whether the lifts were really faulty?
Did they notice that we hadn’t moved an inch, and were still standing and waiting at the same place after everyone left?
Here’s the scenario: Everyone was eager to get into the lift. So when the lift on the right didn’t go up at all, people were all afraid of missing the other one. They had to get in this time no matter what!
But when someone who had waited for the longest time claimed that the lifts were out of order, they changed their mind: That’s why the first lift didn’t stop at our level. That’s why she was waiting there with her husband and kids before we came. That’s why the couple in front walked away. That’s why we had to follow them and not to waste time any more waiting for the lift.
Why buyers follow the herd to buy now
It’s a Singapore dream to upgrade from HDB to condo. It’s conventional wisdom to buy properties to accumulate wealth. Everyone is eager to get there. But no one know when is the right time to buy.
So when the analysts said the market has bottomed out; the property agency said there is high liquidity to invest in properties; the developer said the area is filled with real pent-up demand; the bank said property prices are going for double-digit growth this year, … desperate buyers couldn’t wait to flock the sales galleries.
Seeing the big crowd at the launch over the weekend only proved them right. What the media said is right. The market has picked up again. That’s why everyone is buying now. That’s why we can’t miss the boat too. That’s why we have to buy it fast and buy it now.
Over the last weekend, Oxley Holdings sold 129 units of The Verandah Residences at Pasir Panjang at an average price of $1,815 psf. Lendlease launched the second phase of Park Place Residences at Paya Lebar and sold 149 units at $2,000 psf, Prices have increased 11 percent compared with $1,800 psf in Phase 1.
Did any buyer care to check prices of similar projects in the surroundings? Did any “investor” go and calculate the ROI with current rental return and new interest rate?
Did buyers of Park Place Residences notice that small units of nearby project The Waterina were recently transacted at $1,200 to $1,300 psf only? Do they know that instead of buying at $2,000 psf at District 14, they can top up $200 to $400 psf to buy at prime districts?
By buying new launch projects at sky high prices, the buyers themselves are helping to fulfil the prophecy of further increase in private residential prices in URA and SRX’s next property reports. Thanks to their cooperation. Other developers can look forward to launching their projects from newly-acquired sites at even higher prices per square foot.
What property buyers are lacking
In Singapore, we don’t lack scholars and talents who excel in mathematics, science and technology. But we lack a generation with independent thinking, the creativity to think out of the box, and the courage to promote their bright ideas.
In the property market, we don’t lack buyers and investors who have the will and money to buy. But we lack buyers and investors who have individual judgement, who know how to make their own decisions rather than buying under ignorance, greed, fear, insecurity, kiasu or herd mentality.
Many lack the ability to think for themselves, and differentiate whether the information presented to them is true or false. Instead of evaluating risk and return, they go along with others, thinking that it is safe to follow the majority. And the herd goes around like parrots repeating what everyone is saying.
Many people look for safety and security in popular thinking. They figure that if a lot of people are doing something, then it must be right. It must be a good idea. If most people accept it, then it probably represents fairness, equality, compassion, and sensitivity, right? Not necessarily.
– John C. Maxwell, How Successful People Think
Unfortunately, as what investor David Skarica had pointed out, from time to time “the market wants as many people to be wrong as possible” and makes everyone go under at the same time.
Allow me to quote from my book No B.S. Guide to Property Investment again.
It may be ironic, but in investment, it is often easier for people to justify their loss than to miss an investment opportunity.
In fact, people feel more terrible missing the opportunity to make money, compared with the consequence of being stuck with a bad investment. When the market crashes, it is common to find others who end up with the same fate. And it is a relief to know that ‘we are all in the same boat’.
Are people afraid of missing the boat and can’t wait to jump into the water? Or do they think that the sinking boat is safe provided that the majority of the people are there?
Did you watch my video “2018 Singapore Property Market – what developers, agents, banks and analysts are hiding from you”? Watch it now!
Dugu Qiubai says
I have started tracking the balance sheets of OUE (Twin Peaks) and Chip Eng Seng (Fulcrum) for how their DPS properties will pan out in the coming quarters. There will be more to come on the balance sheets of other developers who go via the DPS route. They can paint glossy pictures and rave lyrical about their assets but at the end of the day, numbers don’t lie.
By the way, the entire 12 on Shan is unsold and has been converted to serviced apartments (TA Corp AR 2017). There had been news about TA Corp selling the entire project instead but there was no mention of it in their AR 2017.
Just putting things in perspective. The truth is out there… if one bothers to look.
Property Soul says
Thanks for the update. You are absolutely right.
Besides, projects with unsold units after 5 years will be automatically “deregistered”. URA will stop tracking them and they are forgotten. So no one really know exactly how many unsold units are there in the market.
Dugu Qiubai says
Thanks again for putting some perspective on the frenzy. I can see the title of your next book… “No B.S. Guide to Property Investment II – See I Told You So!”.
Property Soul says
Haha thanks for your suggestion. I’m actually in the midst of deciding on the title and theme of my next book.
Bruce says
Does that indicate you are not convinced with current frenzy trend in the property market, which is indeed happening for all kinds of signals.
Property Soul says
What kind of signals? You mean the ones from the media and stakeholders? I only believe in the set of data I kept and the few experts in this industry who told me the truth.
Freddy says
Yes most people are not aware of their own psychological behavior. Frankly I don’t trust what stakeholders or media may say about a particular market especially if they are giving bias view or somehow directly or indirectly involved in a particular industry. Imagine if they interview a spokesman from a property agency,
Developer, Banker ( indirectly involved in mortgage loan, etc. Would they say something bad about the market like don’t buy now or PLS consider carefully before doing so. I think their bosses will sack them the next day! So always do yr research well n discipline yr thinking habits which may sound easy but difficult to practise.
Property Soul says
It’s interesting to see people asking the fishmonger whether the fish is fresh today. Frankly, SPH also depends on the advertising dollars from project launch to save their disappointing results. Similarly, if property portals don’t paint a rosy picture, how to help the subscribed property agents to move their units?
Benjamin says
Wow, 2000psf for pasir panjang area? Is there alot of major developments there to that justify this price?
Property Soul says
Now developers are setting prices on new projects solely based on their “cost”. Previous unique selling positions such as future development, potential upside, high yield, reasonable price, value-for-money, etc. have thrown out of the window.
Bruce says
That is one kind of ‘signals’ that I mentioned in comment sections to your another post. it is only logical develops behave this way when they can afford to.
Property Soul says
I totally agree with you.