End of Season 2: Review and Thoughts…

By Centauri78

Dear Readers,

Season 2 of The Straits Times Property News Heat Map has come to an end. We are taking a break from updating the heat map for a few weeks. We will inform you in due course when Season 3 will start up. Here are the results of Season 2:

Week of Negative Neutral Positive Total
13-May 1 6 3 10
20-May 2 6 3 11
27-May 2 13 5 20
3-Jun 2 8 2 12
10-Jun 0 10 2 12
17-Jun 1 15 2 18
24-Jun 3 11 2 16
1-Jul 2 10 3 15
8-Jul 0 11 1 12
15-Jul 3 10 3 16
22-Jul 2 7 1 10
29-Jul 3 4 2 9
5-Aug 2 6 2 10
12-Aug 1 7 2 10
19-Aug 3 7 2 12
26-Aug 1 5 0 6
2-Sep 1 6 0 7
Total 29 142 35 206
% 14.08% 68.93% 16.99% 100.00%

Based on the data above, we can see that the news flow is rather slow, with an average of 12.11 articles per week. Negative and positive news are pretty much balanced. The NUS SRPI currently is only updated till July, but we can definitely see a slow-down. I feel confident in predicting that when the figures comes out for August and September, it should continue the sideways movement.

Latest NUS SRPI up to July 2013. Thanks, NUS!

Qualitatively, we are seeing the cumulative effects of the latest cooling measures in Jan and the TDSR taking hold in the market. It has now become so onerous to buy properties as an investment that the market is taking a break as sellers want to be compensated for their replacement costs and buyers wait for prices to come down, resulting in stagnant prices and low volume.

Personally, I think that with all the cooling measures put in place, those who bought property during this time are in such a secure investment, given the huge amount of equity, that they are able to hold on to it even if times are bad. Chances of fire sales are becoming less and less likely. If anything, the government measures have put a base on prices, and people should recognise this as the new normal.

Over the last week, various people have told me that property prices would drop 5 – 10% over the next few years. They may well be right. After all, with volumes so low, price movements are bound to be exaggerated. However, it doesn’t mean that you will be able to buy the property that you want, even if the index says that prices have dropped. You would need something drastic to happen, like a crisis in China, or something. However, we also need to remember that the cooling measures (or at least some of them) are reversible, so you would need to keep that in the equation.

Disclaimer:
Centauri78 is not a licensed financial advisor. The information contained here is purely personal opinion, and whilst I make every attempt to ensure the accuracy and reliability of the information, this information should not be relied upon as a substitute for formal advice or as basis for investment.

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