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SINGAPORE PROPERTY WEEKLY Issue 344
Sin #1: The “worship” of properties ownership and improvement has long been
flowing in our blood.
Singapore is a property-crazy nation and
Singaporeans are property-obsessed. This could be traced back generations ago
when our ancestors landed on this Little Red
What is the Singapore dream? Firstly, apply
Dot to look for a better life. Once they settled
for an HDB or BTO flat. Then upgrade to an
down and started their families, they wanted
executive condo or private condo after five
to have a place to call home.
years. Next, save enough money for a
second private property for investment. In the last 50 years, Singapore has evolved
from an emerging market to a developed
Can you see that the whole life of a
country. With improved infrastructure, stable
Singaporean revolves around properties? As
economy and easy financing, housing prices
we upgrade from one type of property to the
have multiplied many times.
other, we are also paying off one mortgage to
another until the day we retire. That gives local property buyers the faith (and
illusion) that the value of properties will
Property is our life goal. Property is what we
continue to go through the roof in the coming
live for. We pin ours hopes on property
decades. But we forget that the GDP growth
ownership and investment. Every time after
in this mature country can never go back to
we buy a property, we pray very hard that its
where it was decades ago.
value will go up.In fact, the desire of home
Sin #2: Looking for free advice If my advice helps you in some way, you will
most likely forget to thank me. If the advice
As a property blogger, a common message I
influences you to make the wrong decision,
receive in my mailbox reads like this: “I am a
you will conveniently put the blame on me.
44-year-old with two school-going children.
Our monthly household income is $xx,xxx Time is a precious resource for all of us so it’s
and we have a combined savings of $xxx,xxx. best invested in activities that reap
We have an outstanding loan of $xxx,xxx for measurable returns (both for you and me). If
our 4-room HDB flat and we are planning to you’re about to make a million (or multi-
upgrade to a condo (or buy a private property million) dollar decision, would asking for free
for investment). Do you think it’s the right time advice be in your best interest?
to buy? What do you think about condo X and
Ask yourself: When you need advice for a big
condo Y? Which layout is a better buy…”
business deal or in a tricky lawsuit, will you go
Do you know the problem with asking for free for paid professional advice, or just settle for
advice? Because I don’t know you, I can only free advice?
offer you general advice based on
Sin #3: The herd mentality
assumptions. Because it is free advice, I
know you will either take it at face value or Do you know Singapore’s national sport?
trust me half-heartedly and forget about the Swimming? No. Running marathons? No.
whole thing. Shopping? Try again.
Queuing is what we are good at. With asking prices as high as $4,300 to
$7,000psf, all except two of the 116 shop
It is a no-brainer to join the longest queue in
units in Alexandra Central were snapped up
front of the hawker stalls because the food
on the first day of launch. An upper floor unit
must be good. Any hawker can get ten people
under 200 sq ft attracted 150 cheques from
to stand in front of his stall to draw another
buyers.
ten “real customers” joining at the end of the
queue. But two years after the mall was opened,
buyers had to face dismal occupancy rates,
We like to play safe and go along with others.
poor (or non-existent) rental yields and low
Who wants to be a guinea pig when buying
footfalls.
big ticket items like properties? The bigger
the crowd in the sales gallery, the better buy Another hot project J Gateway was released
the new project is. with a record-breaking price of $1,450 to
$1,800 psf in Jurong on that fatal date of 28
A lot of property buyers are not aware that it
June 2013. A total of 1,400 blank cheques
is the job of the marketing agent to ensure
were submitted for balloting. Buyers booked
that the carpark, showflats and discussion
their units but returned home only to find that
tables must look full during the first weekend
the government introduced the infamous Total
of the new launch.
Debt Servicing Ratio that evening.
But reality is cruel.
The two incidents are nothing new. The same quote anyone outside the herd or anti-herd.”–
thing happened before when buyers entered Ken Fisher, Beat the Crowd: How You Can
at the peak of the property market in droves Out-Invest the Herd by Thinking Differently
in 1995, 2000 and 2007.
Property buyers tend to trust what is
Many people buy properties under ignorance published in the media, which unavoidably
and greed with the “kiasu” or herd mentality. It has a tendency to interview all the industry
is ironic that we find it easier to accept our stakeholders and quote their comments in
investment loss than to realize that we catchy headlines.
missed a buying opportunity. Even though we
This is no different from asking the
regret the wrong purchase, it is a “relief to
fishmongers whether the fish is fresh today. It
see that there are many people who are in
is equally awkward to ask anyone working in
the same boat.”
the property industry questions that obviously
Sin #4: Trust the media and conventional attract answers with vested interests.
wisdom
“Humans accumulate a lot of knowledge, and
“Mass media reflects and also influences 95 percent of that knowledge is not true.
sentiment, and most of it has become steadily Instead of using knowledge as a tool for
more groupthink … Modern media makes it communication, we become puppets of
pretty easy to spot widely held beliefs and knowledge.
mass sentiment. The media will only rarely
We give life to that knowledge, and that be clear-headed to avoid making the same
knowledge begins to create a lot of drama mistakes that everyone else is making.
and suffering because it isn’t based on
Sin #5: Avoiding legwork
truth.”– Don Miguel Ruiz, The Four
Agreements Companion Book We can spend hours and hours researching
and test-driving while shopping for our next
When it comes to buying our homes, we tend
car. But buying a home can be a very
to trust conventional wisdom, without verifying
different story.
the facts behind those traditional beliefs.
These include but are not limited to: We limit our choices to new projects being
advertised at that time. We walk inside a
– Freehold is better than leasehold
sales gallery and book a unit in an hour’s
– Brand new is better than resale properties time. We follow the property agent to eight to
ten places and find that they look the same.
– Any time is a good time to buy
Why waste time on more viewing
– Property prices will always go up appointments?
– Putting money in properties is better than There may be over 10,000 resale
putting money in banks transactions of private residential properties
It’s better to be slapped with the truth than this year. How many buyers have done their
kissed with a lie. Do your own research and homework to study Singapore’s property
cycles, past transactions and government As a conservative value investor, I bought all
policies in last three decades? How many my private properties strictly in compliance
bother to do their personal research to look with my 3-3-5 rule. I know many buyers who
for a good bargain, housing loan, property can do the same, if not better.
agent, or conveyancing lawyer?
And don’t forget that I bought and profited
I cannot stress this point more – to make a from mortgagee sale and fire sale properties
sound property-related decision, you have to before, from buyers or investors who
do all the necessary homework which overcommitted or overstretched in a boom
requires time, effort and patience. market. I certainly hope that you won’t be the
next one.
Sin #6: Overstretch financially
Sin #7: Fantasize about being landlords
We listen to the media, property agents and
bankers who show us how we can afford our Remember the Singapore dream of buying a
dream home. We are motivated when we see second private property for rent? Or staying
other property buyers with equal or lower in a newly bought condo while renting out our
affordability going into the market now. HDB flat for passive income? To many, this is
an important step to financial freedom and
That’s why many feel like they are slapped
early retirement.
when I share the 3-3-5 housing affordability
rule.
Non-Landed Residential Resale Property Transactions for the Week of Jan 15 – Jan 19