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Thread: Achieving a meaningful market correction of property prices

  1. #1
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    Default Achieving a meaningful market correction of property prices

    [URL="http://propertysoul.com/2014/11/05/meaningful-market-correction/"]http://propertysoul.com/2014/11/05/meaningful-market-correction/[/URL]

    [SIZE=3][B]Achieving a meaningful market correction of property prices[/B][/SIZE]


    November 5, 2014

    Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam told the press that there is “some distance to go in achieving a meaningful correction”, hinting that the property cooling measures are here to stay.

    I am surprised by Mr Tharman’s creative use of the word ‘meaningful’. It is an adjective or a descriptive word that leaves much room for imagination. It is up to the target audience to figure out the real meaning behind it.
    [I]
    When the government replies with a definite yes or no answer, you are certain what is next.
    When the government replies with a vague answer, you are confused what to do next.
    When the government replies with a descriptive answer, you are fear of what will be next.
    - Property Soul[/I]


    [B]How to define meaningful?[/B]

    The word ‘meaningful’ means significant or serious, meaning to say that the government would like to see a sizable market correction before they consider uplifting any buying restriction.

    So, what does it mean for this meaningful word? Is it a major correction in price level? A massive slump in transaction volume? A prolonged depressed market? A big drop in the number of first-time or multiple-property buyers? Is it more meaningful to measure in percentage, indexes, values or length of time?


    [B]Waiting for the meaningful time[/B]

    When the Singapore government will call for an election is everyone’s guess. The timing of the next election also gives uphold of cooling measures a whole new meaning.

    With a majority of voters who find private properties unattainable or overpriced, it is meaningful to sacrifice the interests of a comparatively smaller group – namely the stakeholders in the real estate industry, including the developers, agents, consultants, mortgagees, landlords and owners. Afterall, it is a great opportunity to narrow the widening gap between the haves and don’t haves in the society.

    On the other hand, if relaxation of cooling measures comes too late, and the property market continues to correct itself, it can make the final withdrawal meaningless.

    [I]I’m afraid that if you look at a thing long enough, it loses all of its meaning.
    - Andy Warhol, American artist[/I]

    Take the example of a primary school student who needs to do correction for a wrong answer. There are still mistakes after the correction and he is asked to redo the correction again. But there is still room for improvement so the teacher asks the student to redo it again and again. When the teacher finally puts that long-awaited tick there, the whole thing has long become meaningless in the eyes of the student.

    From 1998 to 1999 and 2001 to 2005, there were countless introductions of property purchase incentives – suspension of land sales, lift of capital gains tax, property tax rebates, lower cash deposit, higher loan-to-value limit up to 90 percent, cash rebates and interest-free loans from the banks, etc. – but every time the market responded with a lower PPI (Property Price Index) and transaction volume compared with the last quarter.

    [B]Property, like comedy, is all about timing. Action is futile when it comes too early or too late.


    What it means for different parties[/B]

    We all have our own vested interest. Every time there is a new policy, we give it thumbs up or down depending on how we can benefit from it.

    [B]1. The public deserves some meaningful data.[/B]

    Both the URA and SRX data do not reflect the rebates and subsidies from developers to buyers. Lodgment of caveats is also based on voluntary submission. Property data is incomplete and PPI is inflated. What is the meaning of reporting the data when they do not mean to represent the full picture? (Read more in my previous post [URL="http://propertysoul.com/2014/09/09/developer-invited-you-to-play-project-discount/"]Developer invited you to play Project Discount[/URL])

    [B]2. Home buyers are waiting for a meaningful correction.[/B]

    Mr Tharman’s words that the government cannot let “property prices run ahead of the growth of household incomes over the long term” are sweet as honey to people looking to buy an affordable private property. His comment especially means something to the home upgraders. They are all waiting for property prices to fall back to a level in par with general affordability again.

    [B]3. Sellers find cooling measures too mean.[/B]

    The cooling measures coincide with market softening and expected oversupply in the next two years. No one likes the feeling of being left holding the hot potato when the music stops. Over-stocked developers and desperate sellers are most likely to be the parties who trigger the domino effect in a market correction.
    [B]
    4. Investors are waiting for meaningful hints to enter market again.[/B]

    National Development Minister Khaw Boon Wan mentioned that there is still room for prices to moderate. The worse the market sentiment, the more often the sellers tell the media that “market shows signs of recovery”, “prices will pick up next year”, “market has reached bottom”, etc. The contradicting comments are confusing investors who are holding their horses.

    [B]5. More owners will end up with a meaningless investment.[/B]

    With the impact of falling rental demand starts to surface, more landlords are feeling the pain of their already very humble return of under 3 percent. It is meaningless to hold onto an investment that can’t generate a positive return.

    Owners are also under the constant threats from continuing softening of the market, the possible hike in interest rates, and the unexpected onset of another recession. Those with little holding power are just hoping to survive a meaningful correction with their meaningless investment.
    [URL="http://propertysoul.com"]http://propertysoul.com[/URL]

  2. #2
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    1. The public deserves some meaningful data.

    Too many data, you become data analyst not property investor.

    2. Home buyers are waiting for a meaningful correction.

    MTB will wait for price to fall, when price fall they will wait for meaningful price raise.

    3. Sellers find cooling measures too mean.

    Seller after selling keep money in the Bank for meaningful interest.

    4. Investors are waiting for meaningful hints to enter market again.

    If you are waiting for meaningful hint, better buy 4 D your chance is higher buying.

    5. More owners will end up with a meaningless investment.

    Property investment meaningless ? I don't know what others is meaningful.

    Property investment can use it to hedge against inflation, can give it to the children,
    can use as holiday home, can use as self storage, can use as office, etc.
    anyone got no meaningful use of property can sent me a message.

  3. #3
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  4. #4
    Ultimate Underdog

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    You just have to give it to Tharman for creating meaningsful conversations and dialogues, and for our favourite forum to share our meanings.

    Meaningsful indeed!
    The three laws of Kelonguni:

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

  5. #5
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    Meaningful correction cannot exist in a vacuum. It is relational term used to connect the meaning between 2 or more entities. Correction means adjustment usually from one price baseline to another price baseline. Price Baseline is one entity. The other entity is Income Baseline. Meaningful correction means that the 2 baselines ( price and income ) must provide the meaning for one and the other and vice versa. Tharman is saying he didm't see the meaningful connection between 2 baselines.

  6. #6
    Ultimate Underdog

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    Quote Originally Posted by Wunderkind View Post
    Meaningful correction cannot exist in a vacuum. It is relational term used to connect the meaning between 2 or more entities. Correction means adjustment usually from one price baseline to another price baseline. Price Baseline is one entity. The other entity is Income Baseline. Meaningful correction means that the 2 baselines ( price and income ) must provide the meaning for one and the other and vice versa. Tharman is saying he didm't see the meaningful connection between 2 baselines.
    So one possible interpretation of his prediction is that housing prices will not be moving down, but neither will it be moving up. But there will be a freeze of prices until incomes actually catches up with the prices. Or that housing price may still rise but will be way slower than income rises. Possible scenario?
    The three laws of Kelonguni:

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

  7. #7
    Senior

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    I think it more important to see what the government do rather than what the government says.

    a) If Tharman wish to see a bigger correction, he would have introduce another round of cooling measures instead of words.

    b) If government intend to see a major correction, they would not have cut the GLS confirmed list and BTO supply.
    And when they do, its usually a sign that they are doing to balance the supply to meet slowdown in demand.

    c) Tharman is the head of MOF, and he is well aware of Singapore banks exposure to the mortgage loan.
    A crash is property prices will send shock wave to the banking industry and NPL will balloon.
    This is certainly not going to be good for Singapore position as a financial center.
    "[I]Never argue with an idiot, or he will drag you down to his level and beat you with experience[/I]."

  8. #8
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    Politicians are very good at smoking...

    I would guess they ...like the rest of us couldn't really predict what is going to happen...

    Coz it could be a drastic price correction, triggered by a dreadful combination of factors, events...and thats not their intended effect.

    Meaningful is a neutral word can be taken positive, negative what so ever.
    Last edited by Yuki; 6th November 2014 at 12:19 AM.

  9. #9
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    Can Singapore property be cheaper than KL, Jakarta, Bangkok, if no than that is the level.

  10. #10
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    Quote Originally Posted by Arcachon View Post
    From this video, the stats shows that even right NOW we are in a situation of under supply and over demand. However we are seeing more vacant homes now than ever. So either
    A) the stats are wrong somehow
    B) more people are living on the streets or somewhere that we do not know
    C) the average people living in a household in SG is not 3.53 but a higher figure?
    D) Or???

    So where is the discrepancy? So perhaps it's a good time to poll how many people we have today living under the same household. For me it's 1.5.

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