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Thread: Recovery? What recovery?

  1. #1
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    Default Recovery? What recovery?

    https://www.propertysoul.com/2017/08...what-recovery/

    Recovery? What recovery?


    August 22, 2017



    Property news from the media can be very confusing these days. Headlines of articles on a single day can be totally contradictory to each other.

    On Monday August 14, Business Times had an article “Analysts upbeat on property, tech after Q2’s mixed earnings”. Flip the Straits Times on the same day and there’s a headline “More firms closing amid tough economy”.

    Such inconsistencies make readers wonder: Is the recovery of the real estate industry independent of the economic slowdown? Should we be upbeat about the property market regardless of the tough business environment?


    An unanimous media support for market recovery

    Newspaper articles that talk about bottoming-out of the property market used to appear only on weekends – when there are pages and pages of advertisements of new launch, re-launch and overseas projects.

    That we understand.

    But recently, whenever there’s a new launch, a Chinese developer won the top bid, or an en bloc sale was concluded or listed on the market, the journalists will automatically emphasize the fact that this is another sign of bottoming-out or recovery of the property sector.

    Without fail, the reports will continue with the interviews and quotes from industry stakeholders – developers, property agencies, market analysts, mortgage banks, credit firms, etc. – all singing the same tune.

    On the same week on August 16, Business Times published another article “Buying momentum buoys July sales of private and EC homes”.

    With aggressive marketing and positive sentiments spread by the media, another two successful new launches resulted in higher July sales volume for new project sale. The article immediately concluded that the data is “reflecting a buoyant buying momentum that analysts believe will continue for the rest of this year and the next”.

    As expected, this was echoed by the quote of a property agency spokesperson who mentioned “potential buyers have likely come to terms with the prevailing cooling measures and have been prompted to act on news that a possible uptick in pricing is looming”.

    Another property agency supported the argument by adding that “the recent uptrend in land prices suggests higher prices for new projects next year, many buyers are deciding to commit to a purchase now rather than later”.

    After reading similar articles, we will definitely have more new launches, more property buyers, higher agent commission, higher mortgage sales, better quarterly results, more positive articles, better market sentiments, more land sales, higher bid prices, more en bloc sales … everybody is happy and SPH reports another quarter of impressive results with high net profit.


    Wide guess from international media

    On August 14, Bloomberg published an article “Hong Kong’s Property Shadow Leaves Singapore Developers Ahead”. Business Times and Today immediately picked up the article the next day.

    Below are some statements from the Bloomberg article:

    “Hong Kong home prices have shot ever higher, bouncing back from the global financial crisis and periodic bouts of government cooling, while Singapore residential prices have declined 12 percent from a peak, dropping for 15 straight quarters.

    A 70 percent divergence in home prices in Singapore and Hong Kong over the past six years is due for a reversal, according to Morgan Stanley. Singapore developers score better in terms of affordability for buyers, a tight home supply, and a potential easing of policy measures.

    The bank’s analysts forecast Singapore residential property prices to rise 5 percent in 2018.”

    There are some fundamental faults in the assumptions and predictions in this article.

    Firstly, just because “Singapore residential prices have declined 12 percent from a peak, dropping for 15 straight quarters” while doubled or tripled Hong Kong property prices still show no sign of weakness doesn’t make Singapore’s property market look more attractive.

    Any asset with its value depreciated for years doesn’t necessarily mean that it will enter a boom market soon (look at what happens in Japan’s market). For prices to go up again, there must be elimination of negative factors and emergence of positive factors before turning the corner.

    And who says Singapore has a “tight home supply”?

    Unlike Hong Kong, we have HDB flats and the supply is determined by the government. For private residential properties, there are still over 46,000 units in the pipelines. The government hasn’t stopped releasing new sites and we have just started the new round of en bloc fever.

    Lastly, what do they mean by “potential easing of policy measures”? Monetary Authority of Singapore just emphasized again on June 29 the nth time that “they remain necessary” and “easing the measures now would send a wrong signal”.

    How well does Bloomberg know about the Singapore property market?


    What about market data showing the opposite?

    If you are not only reading news from SPH, MediaCorp or Bloomberg, it is not difficult to find conflicting property data or reports from other sources.

    1. SRX

    SRX Media Report for Private Resale Non-Landed – July 2017
    – Private Resale Non-Landed Prices Decrease 0.5% in July; Volume Decreases by 9.7%

    2. URA

    Release of 2nd Quarter 2017 real estate statistics
    – Prices of private residential properties decreased by 0.1% in 2nd Quarter 2017.
    – Prices of landed properties declined by 0.3%. Prices of non-landed properties declined by 0.1%.
    – Rentals of landed properties fell 0.1%. Rentals of non-landed properties decreased by 0.2%.


    3. CNBC

    – “Singapore’s residential property market is sending mixed signals. This is what they mean” (CNBC, Jun 14)

    Conclusion: We really need to look for data and reports released by more “neutral” parties, especially when we are talking about buying big ticket items like properties.


    How does real bottoming-out or recovery look like?

    Market recovery is all about facts and figures. There is no need to look for “signs”. We are not talking about superstition or sickness here.

    Below are 3 critical sets of data to prove that there is really a market recovery:

    1) Higher (or at least growing) demand over supply in the market. Problem of oversupply solved.

    2) Resale (not new sale) volumes and prices show “meaningful” increase for a few quarters.

    3) Rental prices and vacancy rates show consistent improvement.

    Still in doubt? Allow me to reinstate the characteristics of the “6 stages of a property cycle” from my book No B.S. Guide to Property Investment – Dirty Truths and Profitable Secrets To Building Wealth Through Properties.



    Honestly, I don’t think the market is even bottoming-out. We are at most in between the stages of consolidating or correcting stage. And it is far too early to talk about recovery.

    For what we are experiencing right now in the market, as what I pointed out in my recent blog post, this is at most a dead cat bounce.

    It may sound sarcastic. But when the real market recovery finally comes, the media may shy away from reporting it or simply ignore the good news. Even buyers doubt whether the good numbers in the recent quarters are sustainable.

    Lastly, if you really want to see the “signs of recovery”, go look for some cold hard data. You will surely find them far more reliable than qualitative comments from some upbeat analysts.

  2. #2
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    No need data lah.

    Just be extra patient - the name of the game is wait, and wait, and wait some more. And continue waiting. Hahaha...
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

  3. #3
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    A Bear will always be a Bear, a Bull will always be a Bull.

    A half-cup of water, there will be people who see Half empty and there will be those who see Half full.

    Noone knows the future otherwise I would have sold my HDB and buy a few more Southbank.

  4. #4
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    Not true. I am bear bull bear bull.

    Quote Originally Posted by Arcachon View Post
    A Bear will always be a Bear, a Bull will always be a Bull.

    A half-cup of water, there will be people who see Half empty and there will be those who see Half full.

    Noone knows the future otherwise I would have sold my HDB and buy a few more Southbank.
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

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    Bull all the way, just do it.

  6. #6
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    Very good for you loh, the most painful is the Bull, bear, bear, Bear, Bear, BEAR, BEAR, BEAR, BEAR, BEAR!!!

    All the Colours and pictures come out le, not stressed mah?


    Quote Originally Posted by Arcachon View Post
    Bull all the way, just do it.
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

  7. #7
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    Default dead cat bounce? what dead cat bounce?

    Go to www.squarefoot.com.sg

    go right down to "property trends" bar chart.
    Slide to 2011 to present.
    select any CCR or RCR district,
    select "resale".
    Then look at the average price line and volume histogram plot.

    Funny. I see prices and volumes creeping up.
    Take for eg perennial favourites D15. prices and volumes moving up since last year, and confirmation of support with increasing volume since Jan 2017.

    So not sure where this dead cat bounce theory is coming from.

    But I suppose I'm an eternal optimist when it comes to the singapore market.

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    Quote Originally Posted by tonymontana View Post
    Go to www.squarefoot.com.sg

    go right down to "property trends" bar chart.
    Slide to 2011 to present.
    select any CCR or RCR district,
    select "resale".
    Then look at the average price line and volume histogram plot.

    Funny. I see prices and volumes creeping up.
    Take for eg perennial favourites D15. prices and volumes moving up since last year, and confirmation of support with increasing volume since Jan 2017.

    So not sure where this dead cat bounce theory is coming from.

    But I suppose I'm an eternal optimist when it comes to the singapore market.
    Dead cat bounce is what you had just observed.

  9. #9
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    We will see who are the trapped cats soon.

    Most importantly, urge them to wait. Tell them don't be impulsive. Interest rate going up. Vacancy going up. Rental rates going down. Population going down.

    Quote Originally Posted by tonymontana View Post
    Go to www.squarefoot.com.sg

    go right down to "property trends" bar chart.
    Slide to 2011 to present.
    select any CCR or RCR district,
    select "resale".
    Then look at the average price line and volume histogram plot.

    Funny. I see prices and volumes creeping up.
    Take for eg perennial favourites D15. prices and volumes moving up since last year, and confirmation of support with increasing volume since Jan 2017.

    So not sure where this dead cat bounce theory is coming from.

    But I suppose I'm an eternal optimist when it comes to the singapore market.
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

  10. #10
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    this is how to be a property winner.
    property prices going up, my current properties increasing in price. i am a winner.
    property prices stable, i have more time to accumulate capital to buy more properties. i am a winner.
    property prices going down, i can buy more properties with my current capital. i am a winner.

    so no matter what, i am a winner

  11. #11
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    teddybear is offline Global recession is coming....
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    If people stick head in the sand, when they lifted their head from the sand they can always perceived themselves to be winner................

    Quote Originally Posted by hopeful View Post
    this is how to be a property winner.
    property prices going up, my current properties increasing in price. i am a winner.
    property prices stable, i have more time to accumulate capital to buy more properties. i am a winner.
    property prices going down, i can buy more properties with my current capital. i am a winner.

    so no matter what, i am a winner

  12. #12
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    And here's how to turn it around to be a complete loser.

    Property prices going up, my current properties increasing in price. But it's meant for stay and I can't buy any more. I am a loser.
    Property prices stable, won't be able to appreciate much if I buy. Poor yields and capital gains. I am a loser.
    Property prices going down, it has not reached bottom. It never will bottom out. Anything positive is dead cat bounce. I am a loser.

    Quote Originally Posted by hopeful View Post
    this is how to be a property winner.
    property prices going up, my current properties increasing in price. i am a winner.
    property prices stable, i have more time to accumulate capital to buy more properties. i am a winner.
    property prices going down, i can buy more properties with my current capital. i am a winner.

    so no matter what, i am a winner
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

  13. #13
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    Quote Originally Posted by Amber Woods View Post
    Dead cat bounce is what you had just observed.
    For a dead cat, it seems to have landed on firm ground on it's feet and now climbing higher. what a dead cat! Don't underestimate buying power of people here.

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    Quote Originally Posted by hopeful View Post
    this is how to be a property winner.
    property prices going up, my current properties increasing in price. i am a winner.
    property prices stable, i have more time to accumulate capital to buy more properties. i am a winner.
    property prices going down, i can buy more properties with my current capital. i am a winner.

    so no matter what, i am a winner
    that's right. we haven't extended ourselves fully. if prices drop some more, we are waiting to buy another one.

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    price drops buy.
    price up sell..
    price stable wait...

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    We all been fooled by the so called "statistics". If we buy a "whole" chicken at $10 each is cheaper than "half" chicken costing $8. Not only the size, broiler chicken is cheaper than free range "kampong" chicken too.

    Price increase/decrease in general doesn't mean a thing, even in boom time 2 similar property never sell for the same price.

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    To be fair, she is looking at the entire SG market which is arguably not doing a positive curve. The media has a role to up play the current sentiments including the various Developer CEOs. Land banks are being replenished now at record pricing due to En Bloc will drive prices up but that is a supply pricing adjustment. It addresses the pent up demand from those waiting at the side lines for the past ~4 years and the various displacement of En-Bloc etc. Both of which are not really sustainable fundamentals. For example, 30 developers each having enough land will stop buying at some point and GLS will pick up the slack again. Population uptrend needs to absorb the new supply.

    The underlying fundamentals are indeed not very strong which is inline with our domestic growth projections. Rentals have also yet to point upwards in a meaningful way. Again, this is for the entire SG market including CCR, RCR and OCR. We are witnessing uneven growth but one massive driver in terms of volume is in OCR where majority of the population resides.

    Depending where you are vested in, your lens in which her article is interpreted may differ massively.

    The bigger question is whether your current investment valuation is going up or down because that is all it matters. Check that against her article and it will give you another dimension or perspective.

    2 cents,
    PropVestor

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    I suspect the data use to determine housing price index is "average" sales price over a period of time. Which in itself less valuable data if the houses are getting smaller. Not to mention the validity of the data itself with at least 2 months lag time.

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    Let me illustrate my point...lets say last year for the whole sg there are 5 sentosa cove property and 5 woodsland property sold. But this year there are 1 sentosa cove property sold but there are 10 woodsland property sold.

    What happens to the property index? It registered a decline right? Even if woodsland property increase by 100%

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    Very obvious who the perennial bears are. Her articles are not exactly balanced.

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    Quote Originally Posted by frumnat View Post
    Very obvious who the perennial bears are. Her articles are not exactly balanced.
    Yes...in fact gradual shift from CCR to OCR can also register decline in housing price index. But you and I never find any cheap bargain....only ever increasing new launch prices.

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    Is that so? If this is the case, the housing price index is flawed.

    Quote Originally Posted by indomie View Post
    Yes...in fact gradual shift from CCR to OCR can also register decline in housing price index. But you and I never find any cheap bargain....only ever increasing new launch prices.

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    Quote Originally Posted by indomie View Post
    Yes...in fact gradual shift from CCR to OCR can also register decline in housing price index. But you and I never find any cheap bargain....only ever increasing new launch prices.
    I suspect she is very preoccupied with a potential recession based on economic cycles. Hope not ah. Very ‘cek ark’ leh…

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    Quote Originally Posted by melody View Post
    Is that so? If this is the case, the housing price index is flawed.
    The only way property price index "not flawed" if it registered a same property being sold again and again every single year. Which doesn't exist in the real world.

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    Default Don't know where all the Billion go to.


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    wondering how come you all seem to know it's "Her"?

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    Quote Originally Posted by freesoul View Post
    wondering how come you all seem to know it's "Her"?
    https://www.propertysoul.com/vina-ip/

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