Property Perspectives: Chaos

Mr Greenshoe placed 3 offers in the past 3 months in Districts 9 / 10 hoping to sneak a good bargain. All were rejected. Yes, Mr Greenshoe's aware that he's the nightmare of real estate agents - the ones who spoil the market. Well, perhaps he's just one of the many players in the market creating more chaos and uncertainty.

Please don't get me wrong, Mr Greenshoe absolutely enjoys this chaos. He also particularly likes the fact that no one, absolutely no one, knows what is going to happen. Research analysts, housewives, property agents, sophisticated investors all appear to have their own view, but frankly, no one has a clue where the market is going.

Mr Greenshoe shall attempt to break this chaos down into 3 buckets.

1st bucket: Global macro

• Down: Fed has ended QE, borrowing cost goes up, property prices come down
• Down: China's home prices slip further c.2.6% in October. Effect is felt in HK and indirectly Singapore
• Up: ECB, BOJ, PBOC have commenced on their own QE ambitions to stimulate growth; does this neutralize the liquidity influx into markets and continue to keep rates low?

2nd bucket: Local property economics

• Down: Supply rising faster than demand, rental competition increasing
• Down: ABSD and TDSR result in investors to waiting on the sidelines. A 7% / 10% buyer stamp duty is just too significant for many to swallow. Note that these cooling measures merely delay transactions, innate demand is still present
• Down: Cooling measures have drastically reduced transactions, for example, c.60% for CCR 9M2014. Prices however still remain relatively stable, albeit exceptions from high-end luxury developments
• Up: New launches stabilize prices as they do set a benchmark in some sense. Numerous upcoming launches will act as a support for prices in their respective areas, unless, a developer become very desperate
• Up: Sound developments still generate steady demand. The likes of 70 St Patricks, Marine One, Coco Palms, Lakeville are testaments that good, sound, quality developments still can attract buyers

3rd bucket: Local property politics

• Down: Price of houses have reached unbelievable prices. Thinks it's just the price to pay for being a first world city. Government will to some extent contain / reduce the rate of price increases to ensure affordability (prices to rise in tandem with salary increases)
• Property represents the largest proportion of Singapore's domestic wealth. Property players such as CDL, Far East, Oxley play a crucial role in Singapore economy's growth. A logical government will have to protect this wealth. Some say, it's merely a propaganda to briefly cool the market ahead of the general elections; some also say that there's potential for the removal of ABSD post GE2015; some even say markets will rebound and soar should ABSD be lifted - (Mr Greenshoe predicts it will take place roughly during the National Day period)

These 3 buckets categorically represent the chaos that plagues every home buyer / investor / seller. Is there a smarter way around it? Definitely.

There's always a good buy in every market. It's how one finds this buy. On one hand, property data / charts are often skewed due to outliers or in-comparability, on the other, the media is indubitably distorted towards objectives. The onus hence lies on the buyer to make a calculated decision.

Mr Greenshoe is happy to graciously share some tips in the next few posts.

Watch this space.

GS