I guess this question is on almost every Singaporean's mind. I get asked by quite a number of people: aspiring home owners, upgraders and investors. Afterall, everyone wants to buy at the lowest price.
However estimating the bottom of the market requires a very big crystal ball. Unfortunately I do not have a big crystal ball now. Unless someone wants to sponsor me a Swarovski crystal ball.
I do have a small soccer ball. A mini 2010 World Cup soccer ball - a gift from my previous company.
I shall put my head on the chopping board and attempt to guess the bottom of the market.
Let's take a look at the chart below. It shows the price index of the Singapore Private Residential Property Market. The green years are the peak in the property market and the red years are the bottom of the property market.
It appears there is a certain trend in the market. The property cycle seems to be five to six years. A property cycle is defined as either peak to peak or bottom to bottom.
Some will argue that it is only four years from 1996 to 2000 and eight years from 2000 to 2008. We must remember that the sentiments in the property market was badly shaken by the dotcom bust in 2000/2001, 911 terrorist attacks in 2002 and SARS in 2003. That led to the rise in property prices coming to a halt and staying dormant till 2004.
But nevertheless from 1996 to 2013, in a short span of 18 years, we witnessed three property cycles each averaging around six years.
If we look at the bottom of the market, it shows a time gap of between five and six years between cycles. Again, counting the time span between 2009 and 1998 which is 12 years, it is again around six years for each property cycle.
So if the past trends were to hold true, we are not at the bottom of the market yet. If anything, the earliest the market will bottom out is probably end of 2014. But a more likely scenario will be 2015.
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| Source: URA / Real Property Advisory Singapore |
There you have it. 2015 will be the bottom. Do your homework and assess your purchasing power before you commit to a property buy.
But please don't come after me if it did not materialise. Afterall I used a soccer ball instead of a crystal ball to peek into the future.
