You people are full of crap about the property market...talk so much big logic as if you are very smart...but is actually just a big load of garbage talk
The reason for the current bullish demand and crazy prices in the property market in singapore is very straightforward: easy financing from the banks, the government recently introduced tighter financing rules for house purchases which amounted to mosquito measures as far as I am concerned, as long as you dont make people pay 100%cash for their 2nd, 3rd property, the demand would not go down Sillyporean house buyers are now just acting like monkeys, following the crowd to speculate in bricks and mortar as they are afraid to miss the boat, in the process they happily ignore issues of how to service their mortgages should they lose their jobs or should their businesses fail. They believe there would always be a carrot head foreigner willing to pay them high rental to help them cover the mortgage payments. Low interest rates and easy financing offered by eager bankers hungry to fight for housing loan market share just embolden these clown housing investors...I am not even sure if they can call themselves investors since they dont even know what the hell they are doing, just following the crowd. When you see uncles and aunties in their fifties having no qualms taking up 20 year bank loans to purchase 2nd, 3rd properties, this would be the turning point to sound the alarm... |
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Statistics 101. If you are in a closed system, like dealing cards, you can assign probabilities easily. But in an open system, there is no way to do so reliably. Assume Real Madrid plays Barcelona, and assume its an even match. If Messi, Barcelona's star gets injured, it is clear Real Madrid has the better odds, but can you reliably put a percentage to it? Now assume Xavi, the other Barcelona star gets injured, how much better does that make Real Madrid's odds? Even if you assume that we can reliably assign odds to any one event i.e. Messi gets injured means Real has a 10% better chance of winner, or Xavi gets injured means that Real has a 5% better chance. How do you now assign correlation when both Messi and Xavi get injured at the same time? There are ways i.e. regression analysis, historical track record etc, but there's too much noise and often too little data points to make statistically significant conclusions. So, if you cannot assign probability numbers, does it invalidate the conclusion? Well, let's go to basics - what drives up prices ? Liquidity and affordability. There are other factors, but these are fundamental. Let's look at each factor discretely (and assume I can afford to pay $4000 for mortgage because my salary is $10k):- 1. Buy when interest rates can only go up - today i may get a $1mn mortgage but tomorrow I may only be able to get a $750k mortgage. The impact of interest rates on housing prices is straightforward and hard to dispute. 2. Buy at all time high - prices have gone up 100%+ over past 6 years, while salaries have gone up by 20%. Now median household income in Singapore is $7k and median HDB price is $600+k, 7 to 8x price to annual income ratio. The recommended ratio is 3x and the average ratio in the state just before sub prime was 4x. 3. Buy when record amount of TOP in both private and hdb is due over next 3 yrs - basic supply demand dynamics. rental may fall. 4. Buy when govt is doing everything they can to bring down the market to a soft landing (which is always the target but almost never achieved) - remember, govt has unlimited bullets, and they have already taken away foreign liquidity via the 10% stamp duty. Affordability is reduced by 35y/65 yr old rule, 60% mortgage for 2nd pty. 5. Global uncertainty - if europe crashes, it increases the chance of margin calls which increases the chance of forced sales. Affordability is adversely affected by 1, 2, 3 and 4. Liquidity is adversely affected by 3, 4 and 5. How do you see prices go up ? Well the only counter argument is liquidity which could muddy the water, but I think long term, we will see a reversion to fundamentals. In other words, if you lose Xavi and Messi, and Barcelona's coach is ejected, and your goalkeeper gets a red card, you would think that Real's odds have improved... even if you cannot assign a precise probability to each event discretely, nor can you assign a collective probability to the combination of events. Or perhaps I should be asking, whatever is making you so confident of property prices going up despite the above? |
looks like there are many people wanting to buy property badly, hoping for a crash. hoping for a crash is as bad as hoping for prices to shoot up.
here is what you have to do: if you are buying for stay, this is a real need and you should not be speculating. dont keep on renting a place, waiting and waiting - you will soon be out of cash. if you have sold and wanting to buy later, it only makes sense if prices drop by more than what you spend on rent. for instance, if you sold a $1 mil condo and then start to rent for two years, and expected to spend $100K, this only makes sense of the same property you sold will drop by more than $100K. the problem is you cannot predict, what if the prices didnt drop and in fact rise? my advice, if you sell, better buy something else immediately. if you are planning to buy for invest, you are smart enough. |
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Now don’t get me wrong, I’m not against you personally for only having rudimentary laymen knowledge on finance & investment analytics, after all different people have different skillsets. It’s just that earlier on you made a big show about how others are only blindly buy & hold and espoused others to follow your lead in having probability calculations and investment logic. Now in retrospect it looks thick when you are unable to produce anything substantial and try to get away by simply declaring this is just “Statistic 101” or come up with strange excuses like you do not have perfect data or too much noise. Quote:
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You did not address this incompatibility between the government’s goals and your own prognosis that there is a high probability of prices plunging in the next 3 years. Instead we are advised that the Singapore government’s target of soft land is “almost never achieved”. Do you have enough case histories of government intervention failure leading to property price plunge in Singapore to arrive at a probabilistic conclusion? Or is it just another off-hand personal opinion of yours that is whacked to us as a fact? Quote:
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You were the one who jumped in on the need to wait out for property prices to plunge and lecturing other bros that investments should be done like the way you are doing – with business rationale and calculation of the odds and even coined a cute soundbite “play the probabilities”. All I did was invite you to share with us what exactly are the calculations. So far you demonstrated you neither know nor care much about the subject of calculating probabilities. Instead what we have are broad attempts to brush off anything that does not gel with your conclusion with lines like “This is the real world, not university”, “Just statistic 101”, some kopitiam football betting theory, “basic demand supply” etc. Again, where are the calculations which you claimed you did earlier? |
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Poor guy getting pwn badly again. @_@
My personal thought is it is more important to diversify among different assets like properties, shares, bonds and gold. Those who think they are very smart to analyze the market or speculate the odds of going up or down usually end up losing in the long run. Quote:
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I though ptader hv liao write super long book ... at the end also no opinon
Relax la life is short |
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Wiseman1 : If your advice is that we should only buy when the govt makes people pay 100% for their second, third and fourth property, I think you are effectively saying that people should never buy because this will never happen. Unregistered bear: I agree with your points, you make sense. But like others have said, I would not have made money by buying in 09 if I used price to income as a guide. Ptader: you have some valid points (and a number of very leaky arguments) but you are trying too hard. You would be more convincing if you had a point of view. Personally, I think that things are a bit toppish, and personally wouldnt buy for investment, but if you need a place to stay I think there are still bargains to be had ie anchorage at $1200 psf near queens town, freehold, (nearby alexis going for $2k psf) or mutiara condos near great world city going for $1300+ psf, freehold (nearby latitude going for $2.2k psf). You probably won't see prices go down too much there. |
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In fact, that is the only way to tame the current irrational demand for properties which contributed to the ever spiralling prices. If you cant afford to pay cash for investment properties, then you should not be buying in the first place. Dont pretend to be rich when you are not!! |
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