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#49 (**permalink**) 11-11-2011, 10:51 PM

Quote:

Originally Posted by Unregistered

The best way to learn from history is to look at the HDB resale price index, which went up from 33.6 to 187.2, that's 557% in 20 years!

Remember never never ever sell your HDB flat in mature estate. It's a freehold property pretending to be a 99-year leasehold. "Don't sell your HDB flat. The price will go up", says MM.

Those who do not learn from history are doomed to repeat it, again and again, every quarter.

2011 III 187.2 3.8% II 180.3 3.1% I 174.8 1.6%
2010 IV 172.0 2.5% III 167.8 4.0% II 161.3 4.1% I 155.0 2.8%
2009 IV 150.8 3.9% III 145.2 3.6% II 140.2 1.4% I 138.3 -0.8%
2008 IV 139.4 1.4% III 137.5 4.2% II 131.9 4.5% I 126.2 3.7%
2007 IV 121.7 5.7% III 115.1 6.6% II 108.0 3.0% I 104.9 1.3%
2006 IV 103.6 1.0% III 102.6 -0.2% II 102.8 1.0% I 101.8 0.2%
2005 IV 101.6 0.4% III 101.2 -0.4% II 101.6 -4.8% I 106.7 0.1%
2004 IV 106.6 1.0% III 105.5 0.1% II 105.4 1.2% I 104.1 0.2%
2003 IV 103.9 1.2% III 102.7 2.4% II 100.3 2.1% I 98.2 1.6%
2002 IV 96.7 0.0% III 96.7 1.0% II 95.7 0.2% I 95.5 -0.8%
2001 IV 96.3 -1.4% III 97.7 -2.0% II 99.7 -1.6% I 101.3 -3.4%
2000 IV 104.9 -2.2% III 107.3 -2.2% II 109.7 -1.3% I 111.1 0.6%
1999 IV 110.4 2.2% III 108.0 8.1% II 99.9 1.4% I 98.5 -1.5%
1998 IV 100.0 -3.5% III 103.6 -4.3% II 108.3 -4.2% I 113.0 -7.1%
1997 IV 121.7 -6.0% III 129.4 -4.1% II 134.9 -1.0% I 136.3 -0.4%
1996 IV 136.9 2.7% III 133.3 6.0% II 125.7 12.8% I 111.4 9.3%
1995 IV 101.9 8.9% III 93.6 5.9% II 88.4 11.6% I 79.2 4.5%
1994 IV 75.8 0.4% III 75.5 5.6% II 71.5 2.6% I 69.7 2.8%
1993 IV 67.8 2.9% III 65.9 20.3% II 54.8 31.1% I 41.8 5.6%
1992 IV 39.6 2.3% III 38.7 2.1% II 37.9 6.2% I 35.7 2.9%
1991 IV 34.7 -0.6% III 34.9 -0.9% II 35.2 2.0% I 34.5 1.2%
1990 IV 34.1 -1.4% III 34.6 2.4% II 33.8 0.6% I 33.6

Nice. I like working with numbers.

Well let's evaluate the numbers a little more closely:-

1996 IV 136.9

2002 I 95.5 (down 30%)

It took the index until Q3 2008 before it exceeded 136.9 again, a full 12 years. And that's assuming no inflation.

Assuming 3% inflation p.a., the equivalent index number to achieve breakeven today is 136.9 X (1.03^15) = 213.

2 points here:-
1) If we bought a HDB flat in 1996, we would still not have achieved breakeven in real terms after 15 years (assuming a very conservative 3% p.a. inflation - we saw 4-6 % last couple of years).

2) Even if you don't care about inflation adjusted return, and only care about absolute returns, then you would have been underwater for a full 12 years if you bought a flat in 1996.

So, things are not as cut and dry as they seem, no? Take into account 2% agent commission when you sell, loss of renovation cost etc, and the picture becomes even more muddied.

Cutting a long story short, timing is everything here i.e. its better to buy in 2002 than it is to buy in 1996. And looking at all the fundamentals, I venture we are closer to a 1996 situation now than a 2002 situation.