It's a buyer's market now
Property investor says market now is drastic change from a year ago, before total debt servicing ratio framework kicked in
A year ago, she would walk into a showflat and be ignored by property agents.
Luxury cars fought for space at the carpark and the agents were spoilt for choice.
Not any more.
Property investor Vina Ip, 41, said she visited 10 property launches last month and often found herself outnumbered by property agents.
Visiting the showrooms over three Saturday mornings, Ms Ip realised that nine out of 10 times, she was often the only potential customer.
Most of the launches were for developments in the heartland, such as Jewel@Buangkok and Sant Ritz at Potong Pasir, and mixed developments like Midtown Residences at Hougang.
After visiting a showflat in the north-east, an agent insisted on accompanying her to the sales gallery of a different developer a short walk away.
There, the agent declared that she was representing Ms Ip as her exclusive agent. A surprised Ms Ip was lost for words.
"It was like someone declaring that he's your boyfriend and you find it hard to clarify because you don't want to embarrass anyone, including yourself," she told The New Paper with a laugh.
The market is a drastic change from a year ago, before the total debt servicing ratio framework kicked in, said Ms Ip, a regional marketing head in an IT firm.
The rule, where a buyer's total monthly debt repayments cannot exceed 60 per cent of gross monthly income, is meant to encourage financial prudence.
This makes it harder for people to invest in multiple properties and Ms Ip has noticed a change in the marketing efforts of developers.
"They now target first-timers or HDB upgraders. Many projects are focused in non-core areas," she said.
Ms Ip used to visit showrooms on Mondays to avoid the crowds, but she now finds them "equally quiet" on weekends.
While acknowledging the slowdown, property agent Charlotte Tan said that interest is slowly picking up as some buyers have come to accept that these measures are here to stay.
Ms Ip said that developers are now more practical and less aggressive on the per-square-foot price.
The Singaporean, who emigrated from Hong Kong 16 years ago, started investing in property in 2002. At her peak, she owned five properties, but has sold them all except the terrace house her family lives in. (See report right.)
She said she is not ready to buy a new property.
"I can't predict when it will be, but I will buy only when the market is at the bottom," she said.
Experts attribute March's lacklustre transactions to the low number of units launched.
Calling the current situation a buyer's market, PropNex Realty chief executive Mohamed Ismail thinks there is a general expectation of price correction.
"Potential buyers could be waiting for good bargains, so the key is to find the right price point that buyers are comfortable with," he said.
They now target first-timers or HDB upgraders. Many projects are focused in non-core areas.
- Ms Vina Ip, who has noticed a change in the marketing efforts of developers
HER FAVE SPOT AT HOME
Simply furnished but cosy, the study in her three-storey home holds a special place in 41-year-old Vina Ip's heart.
Every night, her two girls, aged eight and two, hug and kiss her in the room before heading to bed.
Her family moved into the terrace house in Verde Avenue in Choa Chu Kang in 2007 and family bonding time takes place in the study every evening.
The house originally had a Balinese theme, but Ms Ip repainted it to make it brighter.
"It's cosier than the living room and it's a place where we relax, chit-chat and watch TV," she said.
It is also where the property investor and blogger of propertysoul.com wrote a book over the past year.
Ms Ip took a year's break from work to write the book, titled No B.S. Guide To Property Investment - Dirty Truths And Profitable Secrets To Building Wealth Through Properties.
It is available online and will be in bookstores soon.
BY THE numbers
480 Units sold last month
35% Decline from February
83% Decline from March last year
2,793 Units sold in March last year
SOURCE: URBAN REDEVELOPMENT AUTHORITY FLASH ESTIMATES
Technology changing home valuations
The introduction of the new HDB resale rules has sparked much public discussion about pricing homes versus appraising them.
Last month, HDB moved its official valuation from before the Option-to-Purchase to after it.
National Development Minister Khaw Boon Wan said: "HDB will rationalise the process of price negotiations and restore the original intention of valuation, which is to help buyers get a housing loan.
"Negotiating based on price rather than COV (cash over valuation) will take some getting used to. However, it is a useful move for long-term market stability."
Since then, the public and industry professionals have continued to debate what this rule change means to the market.
What will replace the HDB valuation in the negotiating process? Will HDB valuations match the market price? How can one estimate cash outlay? What is the difference between pricing a property and appraising it?
This debate is taking place because the real-estate market, particularly in pricing, is fundamentally changing, thanks to technology and big data. The market's traditional and imperfect solution of using valuations to price homes is being replaced by a computer overlaid with professional human judgment.
Previously, the process of establishing a price in real estate has been opaque, especially when compared with other financial assets like stocks and bonds. In other words, there is no market clearing price that establishes an equilibrium price for similar properties.
Attempts to substitute valuations for market price are problematic for three reasons.
Firstly, valuation does not equal market price. A valuation is an expert's appraisal of the fundamental market value of a home, based on the best market data available.
Valuations cannot take into account the human element that impacts the final transacted price.
Only a negotiation between buyer and seller can factor in the human considerations that make it possible to agree on the transacted price, which then becomes the market price for the particular home.
Secondly, valuations cannot act as a market clearing price because they are non-standard in that two different appraisers can arrive at different valuations based on the same set of data.
Finally, the valuer may not have access to the best data available or have the capacity to process data from various sources without the use of technology.
Sam Baker is co-founder of the Singapore Real Estate Exchange (SRX), an information consortium formed by leading estate agency companies to share proprietary sales and rental data. For more property-related articles and opinion pieces by SRX, visit www.srx.com.sg Share your views at firstname.lastname@example.org
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