“New Private Home Sales Dive”, that is today’s news headline. “The number of units sold last month slowing 25 per cent to 1,182 units from the 1,575 units sold in May – which was down from 1,805 in April.”
However, this should not surpise you at all. Since Jan 2011, the government has implemented policies to curb property speculation. When Khaw Boon Wan started to blog his “concerns” of property market, it is already a clear signal that the property speculation is going to face strong head wind.
I have posted the chart below in my previous post “Is private property investment safe? high yield? inflation hedged?” It is clear that the private property price has surpassed pre-crisis level. What worries me is that there are an increasing number of my clients talking about investing private property, this includes a group of “conservative” investors, who used to only put their money in bank savings or fixed deposits.
Obviously, one of the key reasons, in my opinion is, as stated in the news article, “Experts say despite the latest fall, the numbers still represent a healthy market”.
Have you ever heard these “experts” told you to stay away from property investments at all? When the property price rises, they will picture the once in a life time booming market which you cannot miss. When the property price falls, you will be advised to hunt the bargains.When they really cannot give you any reason to invest in private properties like now, they will tell you to pay attention to the commercial properties.
In my article how information overload leads to bad investment decisions, I highlighted that people tend to “switch off” and leave the decision to “experts”. Property investment is as risky and complicated as stock investment. However, many investors spend less time in valuing and assessing the properties than evaluating if they should buy an iPhone or Android phone, even though the properties cost them millions.
Right investment decision is nothing but common sense; but most of the time, people choose what they want to hear, that’s why investment is so difficult. Look at the chart below again.
- STI vs PPI vs HDB (source: www.singaporerealestate.info)