Clear the hogwash and whitewash

Wishes for next year: More market transparency and independent views in the property sector

When I was a student, I believed everything I read in the papers. If it appeared in print, it had to be true. When I did my stint as a reporter, I realised that not every bit of important information we gathered came out in print. Sometimes, alternative or opposing views just did not go well with the story flow.

These days, I advise my student interns not to believe everything they read and to be discerning, more so now than in the past, as there is a lot more “noise” in the market these days. While reporters used to hassle news-makers for information, a lot more information is pushed to the media these days.

Marketing views seem to predominate nowadays. Higher-priced properties are automatically classified as prime housing or as belonging to the luxury segment. An 800 sq ft or even a 1,600 sq ft unit, no matter how exquisitely finished, cannot qualify as a luxury unit. If you tell a foreigner from one of the developed economies that you have just purchased one such “luxury” unit, they will have a different notion of what you own. If you then tell them it is only 800 sq ft, they will break into laughter.

Small units in the Central Business District are also not prime apartments. A more accurate description would be inner-city apartments.

Doubled-storeyed top floor units are also not automatically penthouses. A 1,600 sq ft unit split into two floors atop a block in a private housing project is definitely not a penthouse – it is a maisonette. And there are no penthouses in the HDB resale sector, no matter what the agents say. A penthouse is almost always a luxury unit.

This week, an agent described the rising vacancy levels in one of the property segments as a “short-term statistical blip”. If there is a short-term blip, should there not be a long-term blip? A blip is a result that goes against the trend in just one outcome. If it carries on for four quarters, it is a trend and no longer a blip.

Monthly data such as developers’ sales should not just be compared against the result in the previous month. Or else, it will be good, bad, good, bad, ad infinitum. It should be compared against a monthly average. A year-on-year comparison is better if the market is seasonal in nature.

The time horizon for buying ahead of the curve should be restricted to one property cycle, which may be five years or seven years depending on the market segment. It makes no sense rushing to buy a project next to a future MRT station or in an emerging area if it is coming up only 10 years later or more. It would make better sense to wait to buy during the lowest point of the cycle.

Predicting an interest rate hike within the next five years is not worth the paper it is printed on. Even a student can do that.

And a report predicting a rental increase of 30 per cent over three years is not news; it amounts to an average of only 10 per cent each year.

Lately, I have seen some industry heads taking to publishing their own guide books. Browse around the bookshops and you will find them. Some pointers in these books are useful, while others are less so – and even misleading if you are not careful.

Schematic location maps of some future private housing projects also confuse more than they enlighten. The purpose, it appears, is to show as many amenities and attractions in “close proximity” to the project rather than the actual location. I sometimes have to refer to the street directory to find the project’s actual location. I feel these developers not only do a disservice to buyers but also to themselves as they lose credibility in the long run.

Finally, I wish for more independent debate on property matters for next year. In this respect, I hope more academicians and economists will contribute their views to the media. Imagine how much more enlightening for the public as well as policy-makers if there are more insightful views on matters such as housing affordability and on the effectiveness of actual and potential cooling policy measures.

By Colin Tan, Head, Research & Consultancy, at Chesterton Suntec International.

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