Thursday, May 29, 2008
Local analysts said "Muted property market situation is temporary ... Bullish property market forecast for next 2 years"; but banks like Barclay and Credit Sussie have forecasted a 40% dip in Singapore property price.
Amidst all these conflicting forecasts and outlooks, one buyer expressed his confusion in a forum post, "Some say up, some say down. I'm having a headache .. buy or not buy?"
"Show me the future ....."
Buy or not buy? Let's face it, either way, it's a gamble.
But always remember that you're placing a bet with your hard-earned money, and perhaps, unearned money; you cannot afford to just skim the headlines and come to a decision.
This is the way I'd go about filtering out the noise.
NUMBER ONE : Don't assume that the experts know better than you.
A lack of confidence in your own judgement and an over-reliance on the so-called expert opinions can be a grave mistake.
Ask yourselves: Did the experts tell you to buy Singapore properties in 2005 or 2006 because they foresaw that property price would double in the following year? If they didn't know better than you did then, why would they now?
According to my own observations, the experts are more often than not to shout "BUY" when price is already sky-high. Then indeed price continues to rocket making it looks like their expert opinions are to be held with high regards, when in fact it is the classic self-fulfilling prophecy playing out itself. A speculative bubble like that is destined to burst. Will you be one of the victims then?
No one else would lose more sleep over your hard-earned money than you. So do your homework and make your own judgement.
NUMBER TWO : When someone says something about the property market, check who's saying it.
In particular, check if the party concerned has a vested interest in the property market.
Let's have a little practical lesson. Read this article from CNA :
Bullish property market forecast for next 2 years; speculators cautioned.
What's the occassion ? (Singapore Press Club talk) Who are making the statements ? (Ku Swee Yong, director of Marketing & Business Development of Savills Singapore, the Prestige Homes & International Marketing team; Tan Tiong Cheng, MD of Knight Frank Singapore; and Winston Liew, a senior investment analyst on Properties at OCBC Investment Research who stands to differ.)Well ?? ?
NUMBER THREE : Check what the neutral party says
Frankly, I'm not sure if there is really a neutral party. The government is probably closest to it. From MM Lee to Minister Mah, the word is already spelt out for us: P-R-U-D-E-N-C-E. Hey, don't expect them to join the market crash talk like the one we're having here. They have a more important mission of building investors' confidence than teaching naive Singaporeans about the property cycles.
NUMBER FOUR : Know your friends from your foes
A reader of this blog made this comment: "I do see the high prices but somehow don't feel deterred". I must confessed I was like that too when I was young and foolish, until the reality of paying for the mortgage choked me like an iron chain.
There are no good guys and bad guys in the property market, only winners and losers. Join hands with the like-minded people, they'll keep you vigilant when you snooze from the fatigue of what seems like an endless, sometimes even hopeless, wait.
(Just a digression: If we can have collective sales, can we not also have collective purchases ?)
MOST IMPORTANT : Study the economic fundamentals
The most threatening one now is the sustained, high oil price. If oil price stays at this high level for a prolonged period, it will eventually cripple the world's economy. It has already sent prices of commodities and even food, sky-rocketing. This also comes in a time when the global economy is wobbling on the US subprime problem. Though Singapore's economy has shown a great deal of resilience thus far, don't ever be deceived into believing that we have developed an immunity to all global ailments. If there is anything closest to the truth, Singapore as a small city state with no natural resources and has to import everything it needs, Singapore's economy is really more vulnerable than any other countries.