Property Market Sentiments

[specuvestor]

Most people have good experiences with property simply because 1) they tend to hold very long term and inflation itself will help the property prices which is a function of inflating rental cost and 2) it is ~4X levered. So a better comparison of equities vs one's specific property might be to synthetically leverage equities by 4X and compare the opportunity cost.

Even US house prices are already above GFC so unless one buys property in Japan in 1990 or HK property recently (which is the world's most expensive on some measure) it tends to appreciate if one negates the opportunity cost which is why I think it is a good idea for CPF to require the 2.5% opportunity cost refund to CPF first so opportunity cost is built into the transaction.

From a policy point of view I support govt's L99 policy for renewals but lament the idea of HDB being an investment that a PM tried to advocate in his Singapore Inc policy... it's becoming a political hot potato cause HDB is supposed to go to zero but 80% voters stay in HDB and thinks it's an investment.

[weijian]

@Bibi
Shorting a stagnant market VS fradulent companies are 2 different things. The latter has a much better returns with adjusted for risk. I am not sure if you could make alot of money by shorting a stagnant market? But you surely LOSE alot for shorting a bull. Look at how worn out Carson Block (Muddy Water) is with his publicly confession, or value investors' (ex?) favorite short-seller Jim Chanos.

@specuvestor
To add to your good points: Survivorship bias is always at work. Due to leverage, the avg property investor who wins is going to earn more than the avg equity investor. Flip that, the avg property investor who loses is going to lose more than the avg equity investor. Losers are not going to "bang the gong" and said I lost XXXXX! On the contrary, property agents are more than incentivised to "bang the gong" for their clients when they win XXXXX. I do not have vivid memories of brokerage firms "banging gongs" when their clients made XXXXX. Maybe only from those who are selling courses/advice.

[Bibi]

@Bibi
Shorting a stagnant market VS fradulent companies are 2 different things. The latter has a much better returns with adjusted for risk. I am not sure if you could make alot of money by shorting a stagnant market? But you surely LOSE alot for shorting a bull. Look at how worn out Carson Block (Muddy Water) is with his publicly confession, or value investors' (ex?) favorite short-seller Jim Chanos.

I have never do any shorts so far. Just frm observing how the listed companies in spore languish after few years. Some examples include nanofilm, sea, noontalk etc... I believe there are many more.

[weijian]

@Bibi
Shorting a stagnant market VS fradulent companies are 2 different things. The latter has a much better returns with adjusted for risk. I am not sure if you could make alot of money by shorting a stagnant market? But you surely LOSE alot for shorting a bull. Look at how worn out Carson Block (Muddy Water) is with his publicly confession, or value investors' (ex?) favorite short-seller Jim Chanos.

I have never do any shorts so far. Just frm observing how the listed companies in spore languish after few years. Some examples include nanofilm, sea, noontalk etc... I believe there are many more.

hi Bibi,

A big reduction in stock prices of individual companies, as a result of earnings depression OR a re-rating of the P/E multiple, is a common feature among all markets. It is not unique to the Spore market. Every market has their winners and losers.

Anyways, SEA is not listed on SGX although it is in MSCI Spore index since 2021 as a result of its incorporation.

[dreamybear]

This looks to be somewhat related to the Today's article a few posts back but with the example of buying a property with parents' help. Time will tell whether the particular property is a gd investment but at least she now has an asset base to build her wealth which likely sets her in front of peers who do not.

Since the law of nature dictates we can only grow older, a younger person will be eligible for a longer loan tenure, and the resulting higher likelihood that the rental can cover the monthly instalment. Stable economic situation, "floor" price to the land price, likelihood of increasing cost of construction does make SG property a good bet.

Being the CNY period of visiting, I wonder has Singapore's social mobility been on the uptrend / downtrend / stable over the generations ?

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https://www.channelnewsasia.com/singapor...nt-4122221
"...The 28-year-old bought a one-bedroom condominium apartment in Farrer Road last year for about S$1.4 million (US$1.04 million). She forked out half of the S$350,000 down payment, while her parents chipped in to pay the other half.
Ms Sharmila said the housing prices in Singapore can be quite steep. “I thought it would be smart to secure a house as fast as I can,” she added. ..."

https://www.businesstimes.com.sg/propert...warded-ura

[CY09]

I have been fortunate or not fortunate, but I have relatives and know of people on both ends. My feeling is social mobility is on a decline. As alluded, it is indeed true. Parents are coming in to backstop their children in home purchases with one even plonking nearly full for a top floor EC.

Most of the time, the purchase of the property is to help the kids to have 01 for living and 01 for renting. This is because my talks with them is that they have the view that the current government will keep bringing in foreigners who are priced out of home ownership, instead rent and who will then return to their home state 20-25 years time even if they are SPRs.

Wealth building using parents funds via home renting seems viable. This is because bank loans are cheap (at 4.3% interest, what i hear from them is that banks are giving loans at SORA+0.6%), equity is provided by parents. The rental proceeds cover most of the interest and the ever appreciating home prices is to these kids their capital gain. The children, should they need to fund the interest of their 2 home loans are backstopped with their parent finances. Parents are willing to do it because the deposit rates in Sg banks are low. My uncle suggested my parents offer me a 3.5% loan to finance my home purchase because my parents are not better off placing the money in FD. The benefit for me: I get a "Cheaper home loan" rate, can use my money for investment purposes and not subject to LTV convenants

On the other hand, ppl whom I know are at the lower end are facing financial difficulties owning a home. A recently married couple is facing a BTO cost of $500,000 plus upcoming renovation. In the meantime while their BTO is up, they are living in their parent's home. As for me being still single, I lost in the BTO ballot recently due to an overwhelming 13 to 1 "lose" rate. I refuse to purchase to be saddled with an expensive resale which i have to plonk 400k + renovation to live in.

In my view, the best way is to increase the property tax for non-owner occupier. It is good to know that the government has started revising the non owner occupied property tax rate upwards but I feel this is slow; most of the demands for renting stems from government labour policies. In its right, the government should demand more from rental proceeds because the gains are due to government policy and not due to property investors being smart.

[dreamybear]

I am not a property agent/expert but just sharing the following observations :
i) Home Loans - fixed rates around 3% (https://www.propertyguru.com.sg/mortgage...perty-loan); HDB interest rates lower.
ii) Savings
a) FD - 3% OCBC (https://www.ocbc.com/personal-banking/de...it-account)
b) T-bills - 3%+ (https://www.businesstimes.com.sg/compani...ls-tracker)

I think an idea for resale to work could be to move in with parents into the resale unit and rent out parents' existing unit for them to enjoy passive income or continue staying with parents and rent out the resale(think subjected to some restrictions if HDB else 1 small private ppty with existing tenancy) for passive income and help to pay down the mortgage.

[dreamybear]

While I am not entirely familiar with the regions listed(e.g. Serangoon, Sengkang, Bedok), it seems that HDB flats in the regions of $900k+/$800k+ are not uncommon. And it's not those mega sized flats or CBD areas and some even have remaining lease < 70 years.

Perhaps 5 rm flats are really rare or there is a huge demand for a min floor area ?

https://forums.hardwarezone.com.sg/threa...s.7033242/

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S$1.101M Toa Payoh HDB is the most expensive 4-room resale flat in town (for now)
https://www.99.co/singapore/insider/s1-1...room-town/

[CY09]

Hi my inkling is due to the price of rentals and the supposedly risk free rate in Singapore.

5 room flats are going at $3,500 rental. Negating half month agent commission, 1 month property tax, a HDB owner gets about $35,000 in yearly returns. For a 70 year flat at risk free rate of 4.0% (SG now is 3.6%), the present value of cashflow is $818,000, throw it in at 75 year lease, it is $828,000. That's the price of the resale flat you have now.

Unlike USA and UK, Singapore has a very low risk free rate because the government tries to suppress the SORA by ensuring a strong currency with an appreciating currency band. If risk free rates similar to USA is used (7% discount rate), the above 2 figures will be $496,000 and $497,000. These creates a second order issue of margin calls with a impairment of 40% in asset value, many property owners will hit 90-100% LTV, cash top up is required and it will be difficult for many existing owners to finance.

[dreamybear]

Interesting developments in the SG property market ... reverting back to pre-Covid or a temporary adjustment phase ?

Meanwhile, interesting to observe the home buying journey of a young couple .... the SG dream is still alive

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SG PROPERTY A BAD INVESTMENT IN 2024? Latest Rents Dropped Again...
https://www.youtube.com/watch?v=3SXOS12wcBM

Condo Rental Market In Trouble Now!
https://www.youtube.com/watch?v=unl0zbwiksQ

2 MOST IMPORTANT ADVICE! PROPERTY MARKET SLOWDOWN! ARE YOU READY? / Singapore Property
https://www.youtube.com/watch?v=33TMltNsIZU

Life of a Data Scientist x buying a house for the first time | productive work week in my life vlog
https://www.youtube.com/watch?v=gTYx-SCycmI