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Thread: 12.9% fall in property price over last 11 months. A survey.

  1. #1
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    Default 12.9% fall in property price over last 11 months. A survey.

    12.9% fall in last 11 months

    Method:
    A simple property price survey was performed based on URA website caveats. Sampled all condos who's name starts with "The", from 'The 101' all the way to 'The Yardly'.
    Stratified them into 4-month groups, and took the mean price/psf for each 4 monthly group.

    Results:
    Sep-Dec 2007, 1453 units, $1108/psf
    Jan - April 2008, 710, $1043/psf = 5.8% fall
    May -July 2008, 595, $965/psf = 7.5% fall

    Cumulative 12.9% fall over 11 months.

    Discussion:
    In the resale/subsale market, mean prices have been falling over the last year.

    In 11 months, property has devalued 12.9% on top ofthe 7% rate inflation. That means that you've lost a total of 20% had you bought property. In fact if you had left your cash in FD at 1.5%, then your total loss by buying property would have been 21.5%.

    The URA property price index calculation, I don't know how they did it. Perhaps they included prices of new units launched, where the price slides have been artificially masked by 'discounts', 'rebates', stamp-duty rebates, and furnishing vouchers.

    The rate of fall actually seems to be accelerating rather than stabilising. Fall was 5.8%, then accelerating to 7.5%.


    Criticisms
    Since I only sampled condo's starting with 'The', they are probably newer condos. I don't know if there are any problems generalising these results to all condos irregardless of name (and hence age). Someone with more patience and time could repeat the study by including all condos listed in the URA website.

    On the other hand, since almost every new condo (from high to low end) these days seems to start with "the", this may turn out to be a good representative sample of the market.

    This survey hasn't distinguished the price changes over time stratified by condo project. Hence, it can't distinguish if the fall in mean price was due to falling prices at each project, or because of a relative increase in proportion of mass-market sales. Someone who has access to proper statistical software and knows how to use it could do the study but stratify them by project type.



    Conclusion
    In my own simple sample of 2758 transactions over the last 11 months, mean prices have fallen almost 13% in 11 months alone, with no sign of stabilisation, but in fact accelerating fall..
    Last edited by 2ndTimeLucky; 07-08-08 at 23:13.

  2. #2
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    Quote Originally Posted by 2ndTimeLucky
    12.9% fall in last 11 months

    Method:
    A simple property price survey was performed based on URA website caveats. Sampled all condos who's name starts with "The", from 'The 101' all the way to 'The Yardly'.
    Stratified them into 4-month groups, and took the mean price/psf for each 4 monthly group.

    Results:
    Sep-Dec 2007, 1453 units, $1108/psf
    Jan - April 2008, 710, $1043/psf = 5.8% fall
    May -July 2008, 595, $965/psf = 7.5% fall

    Cumulative 12.9% fall over 11 months.

    Discussion:
    In the resale/subsale market, mean prices have been falling over the last year.

    In 11 months, property has devalued 12.9% on top ofthe 7% rate inflation. That means that you've lost a total of 20% had you bought property. In fact if you had left your cash in FD at 1.5%, then your total loss by buying property would have been 21.5%.

    The URA property price index calculation, I don't know how they did it. Perhaps they included prices of new units launched, where the price slides have been artificially masked by 'discounts', 'rebates', stamp-duty rebates, and furnishing vouchers.

    The rate of fall actually seems to be accelerating rather than stabilising. Fall was 5.8%, then accelerating to 7.5%.


    Criticisms
    Since I only sampled condo's starting with 'The', they are probably newer condos. I don't know if there are any problems generalising these results to all condos irregardless of name (and hence age). Someone with more patience and time could repeat the study by including all condos listed in the URA website.

    On the other hand, since almost every new condo (from high to low end) these days seems to start with "the", this may turn out to be a good representative sample of the market.

    This survey hasn't distinguished the price changes over time stratified by condo project. Hence, it can't distinguish if the fall in mean price was due to falling prices at each project, or because of a relative increase in proportion of mass-market sales. Someone who has access to proper statistical software and knows how to use it could do the study but stratify them by project type.



    Conclusion
    In my own simple sample of 2758 transactions over the last 11 months, mean prices have fallen almost 13% in 11 months alone, with no sign of stabilisation, but in fact accelerating fall..

    Hi there, nice effort but I think that you have already highlighted the fundamental flaw of your analysis in your 'criticisms' section above.

    To elaborate, by lumping all transactions for condos with names beginning with 'The...', without separating transactions for each individual project or each class of condos (high-end, mid-tier, mass market, etc), the analysis does not provide an accurate picture of price trends anymore.

    For example, if in the first quarter in the analysis, a larger proportion of transactions were from high-end condos (with relatively higher PSF prices), the overall average will be higher.

    In the subsequent quarters, if mass-market transactions (which have relatively lower PSF prices) make up a higher proportion than the previous quarter, the overall average prices will definitely be lower.

    Given that the situation above is likely to have happened, i.e. mass market transactions formed a higher proportion of total transactions in May-Jul 08 than in the previous Jan-Apr 08 period, and Jan-Apr 08 itself had more mass market transactions than the previous period, you would undoubtedly have arrived at the conclusion you have. The statistical analysis is fundamentally flawed and cannot be used to objectively support at the conclusions that you have drawn from it.

    Note that I am not concluding whether prices are actually falling or not, just that it cannot be fairly deduced from the analysis method provided. Who knows? Your conclusion can turn out to be accurate even though the method you used to arrive at them is flawed.... But we wouldn't know for sure based on the above statistical analysis

  3. #3
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    Quote Originally Posted by 2ndTimeLucky
    12.9% fall in last 11 months

    Method:
    A simple property price survey was performed based on URA website caveats. Sampled all condos who's name starts with "The", from 'The 101' all the way to 'The Yardly'.
    Stratified them into 4-month groups, and took the mean price/psf for each 4 monthly group.

    Results:
    Sep-Dec 2007, 1453 units, $1108/psf
    Jan - April 2008, 710, $1043/psf = 5.8% fall
    May -July 2008, 595, $965/psf = 7.5% fall

    Cumulative 12.9% fall over 11 months.

    Discussion:
    In the resale/subsale market, mean prices have been falling over the last year.

    In 11 months, property has devalued 12.9% on top ofthe 7% rate inflation. That means that you've lost a total of 20% had you bought property. In fact if you had left your cash in FD at 1.5%, then your total loss by buying property would have been 21.5%.

    The URA property price index calculation, I don't know how they did it. Perhaps they included prices of new units launched, where the price slides have been artificially masked by 'discounts', 'rebates', stamp-duty rebates, and furnishing vouchers.

    The rate of fall actually seems to be accelerating rather than stabilising. Fall was 5.8%, then accelerating to 7.5%.


    Criticisms
    Since I only sampled condo's starting with 'The', they are probably newer condos. I don't know if there are any problems generalising these results to all condos irregardless of name (and hence age). Someone with more patience and time could repeat the study by including all condos listed in the URA website.

    On the other hand, since almost every new condo (from high to low end) these days seems to start with "the", this may turn out to be a good representative sample of the market.

    This survey hasn't distinguished the price changes over time stratified by condo project. Hence, it can't distinguish if the fall in mean price was due to falling prices at each project, or because of a relative increase in proportion of mass-market sales. Someone who has access to proper statistical software and knows how to use it could do the study but stratify them by project type.



    Conclusion
    In my own simple sample of 2758 transactions over the last 11 months, mean prices have fallen almost 13% in 11 months alone, with no sign of stabilisation, but in fact accelerating fall..
    The analysis on inflation which exacerbate the loss in further erosion of value is flawed. The effect should be opposite. If you put your money in the bank and only get 1.5% interest, then inflation will have eaten your purchasing power by 11% plus (assuming your inflation rate is correctly extracted). But by purchasing a property (which is defined as an asset), it will lessen the impact on present value net carrying amount. And consumers benefit as they are paying less interest over the relatively higher inflation rate.

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