why oh why, that is pretty spot on... I believe that people's strong views on property and stocks are largely a result of attempts at self-justification; in other words, a desire to convince yourself and others that you have made wise decisions. Whether you have decided to buy or to rent, or buy or sell some equity, it is probably natural to want to believe that you made a good choice.
So, on forums like this you tend to see landlords and property agents being very gung-ho about outlooks, and tenants / expats (they tend to overlap) taking the view that rents are bound to fall.
I have been in both camps (tenant, landlord, and tenant again), and it is almost funny how quickly your sentiment can switch as you move from one group to the other... Again, I think it is mostly a question of self-justification or self-deception.
I think you are right, it makes more sense to try to read up elsewhere and try to form your own opinion. I don't give much for the vocal declarations on sites like this, except for as a possible measure of how sentiments might be changing. And of course you will get to read and hear plenty of stories from people on how much money they made on their house, or how much they got their landlord to lower their rent, but I strongly suspect that you mainly get to read the success stories while those that did not fare as well remain quiet. You can see the same pattern if you look at any trade magazine - you will find extremely few articles where a corporate leader states that "
we invested in the XX business management system and lost money!", or where a hospital director will admit "
we re-organized our cardiac care team and more patients died!". Instead, you typically get to see and hear only the success stories.
NEWbuyer, of course it is not true that no-one ever makes a profit from Singapore property, or that prices always go down. Many people have made profits in the past, and without doubt there will in the future be many who will make profits - as well as people who will suffer losses.
If you want to see the official statistics, go to
https://www.ura.gov.sg/real_estate/main.jsp The site only shows the aggregate trends, but if you track the transaction prices of individual units over time, you will see that there are plenty of owners who have made substantial capital gains from the time they bought until they sold - as well as plenty of owners who suffered losses. It all depends on when you buy, and when and under what circumstances you sell. Over time, though, most properties have tended to increase in value. In a bad-case scenario, you might however have to buy-and-hold for a decade or more if you happen to get the timing wrong.
Do be aware that the historical record is pretty clear about stocks almost always outperforming real estate over the long run. The further back you go, the worse real estate seems to perform relative to equities; e.g., the Herengracht Index (based on Amsterdam high-end properties tracked over 345 years since 1628) strongly suggests that property prices tend to merely track wages over the long run (see
http://arno.unimaas.nl/show.cgi?fid=10696). Meanwhile stocks have performed much better. Of course, this is Singapore in 2010 and maybe the world has changed (though things looked pretty bright for Amsterdam in 1628 too...) Either way, you can live in an apartment but not in an equity portfolio :-)
For some reasonably level-headed analyses of local property markets from an investment perspective, check out
http://www.globalpropertyguide.com/Asia/ In their Country Statistics section for Singapore, do make sure to click on each entry to take a look at the cross-country comparisons. On the negative side, that site's most recent write-ups and news are sometimes from several months ago; but you should probably base your investment decisions on fundamentals and your guestimate of what will happen in the future rather than on what the Strait Times wrote this week.
You ought to read up on Singapore property yourself to form your own opinion; but basically, you should be aware that the Singapore real estate market is somewhat unusual in several respects:
- The first of these oddities is that Singaporeans' forced CPF savings are allowed to be used for buying property (whether for investment or own stay). This results in a lot of local CPF savings getting invested in property (especially when many people get the idea that it is a good time to buy property).
- The second oddity is that when it comes to so-called "private property" (condos, apartments, and houses), the vast majority of the available units are rented out (or vacant) and few units are owner-occupied. Rather, the owners tend to live in "public" HDB estates or overseas and keep the private units with an eye towards rental income and/or capital gain from appreciation in prices.
- The third oddity is the size of Singapore (and the Singapore property market) relative to international capital flows. Singapore and Singaporean real estate has long been a "parking space" for a very noticeable amount of capital of e.g., Indonesian origin, but there is plenty of capital from elsewhere as well. And do be aware that there are some rather extraordinary outflows of capital from several countries right now. Much of this capital might be suspected of being tied to cheap credit and relatively poor rates of return in these foreign countries, and could conceivably be subject to sudden withdrawal from Singapore if foreign interest rates and more importantly exchange rates start moving in the wrong direction from the investors' point of view. This is unfortunately not a situation without precedence...
These factors, combined with fear and greed, can sometimes cause rather strong movements (up and down) in the market. So while over the long run, properties tend to increase in value in Singapore, there is no guarantee at all that they will do so from year X to year Y. If you happen to buy at the wrong time (and believe me, no-one can say for sure when the right or wrong time is), then you may end up having to wait for many years before you can sell and realize a capital gain. Meanwhile you might of course be saving some money compared to renting (or maybe not), but that is a separate discussion.
Anyhow, if you are buying-to-live this may all be moot points. Your home may have a lot of emotional value to you and give you a sense of stability and pride, so as long as you can comfortably afford it even if interest rates rise, then buying may make perfect sense regardless of what the buy-versus-rent analysis shows. Many expats will tell you that you are better off buying a house or condo in some other country and rent it out, and use the rental yield to pay for a rented property in Singapore; and while that might be largely true from an accounting viewpoint, are you willing to take on the hassle and worry of managing an overseas property? Also, don't forget the possible exchange rate risks. And again, no-one can tell you for sure what will happen in the future. So, if you will be in Singapore for a long time and the apartment will be your home, then I would personally advise you to not think so much on "will I make a profit or loss" but rather focus on whether you like the place as a home and whether you can comfortably and safely afford it. Then, if you are lucky you may make a profit at some future date; and if not then at least you will have enjoyed a nice home.
