#20: How Distortion Effect affects Volume and Price Movement in Real Estate | NOTG S2 E20

1 [Melvin Lim]
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-Alright, welcome back to our next episode

2 [Melvin Lim]
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of Nuggets On The Go.

3 [Melvin Lim]
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So, today we’re going to dive in further

4 [Melvin Lim]
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into our PLB MOAT analysis,

5 [Melvin Lim]
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and how our MOAT analysis helps our clients

6 [Melvin Lim]
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as well as even ourselves

7 [Melvin Lim]
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to hunt for the next correct property

8 [Melvin Lim]
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for you and your family.

9 [Melvin Lim]
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Let’s go.

10 [Melvin Lim]
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Alright, so if you have followed us on the previous episode

11 [Melvin Lim]
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we dived in a little bit deeper into the PLB MOAT analysis

12 [Melvin Lim]
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to understand a little bit about the whole entire connection

13 [Melvin Lim]
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on how valuations are being derived in Singapore,

14 [Melvin Lim]
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why is that correlated to volume and density,

15 [Melvin Lim]
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as well as the frequency and the amount of transactions

16 [Melvin Lim]
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that happen within the project itself.

17 [Melvin Lim]
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So we hope that everybody had a better understanding

18 [Melvin Lim]
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into analysis and opinion

19 [Melvin Lim]
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on how valuation metrics are being done in Singapore.

20 [Melvin Lim]
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This time round, on this particular episode,

21 [Melvin Lim]
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we want to dive in a little bit deeper

22 [Melvin Lim]
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on some of the other factors

23 [Melvin Lim]
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in our PLB MOAT Analysis analytics tool,

24 [Melvin Lim]
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as well as we want to share with you guys

25 [Melvin Lim]
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a little bit about this very interesting chart

26 [Melvin Lim]
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that we have came out from our data analytics team.

27 [Melvin Lim]
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Let me just show you on screen right now.

28 [Melvin Lim]
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So basically if you have seen our posts,

29 [Melvin Lim]
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you can head onto our Instagram or Facebook to have a look.

30 [Melvin Lim]
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So basically we shared a little bit more

31 [Melvin Lim]
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deep dive on the point grading system

32 [Melvin Lim]
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which is one of the key features of our PLB MOAT analysis.

33 [Melvin Lim]
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Because sometimes when we want to hunt for the next property,

34 [Melvin Lim]
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there are so many condo choices available

35 [Melvin Lim]
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in the particular district or estate.

36 [Melvin Lim]
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And sometimes we might be a little bit confused about

37 [Melvin Lim]
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“Hey, you know there are so many projects.

38 [Melvin Lim]
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Or maybe I really like these five projects,

39 [Melvin Lim]
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but how do I rate them even deeper?”

40 [Melvin Lim]
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And try to analyse what are some of the key factors

41 [Melvin Lim]
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that correspond to my family preferences

42 [Melvin Lim]
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or my own investment needs?

43 [Melvin Lim]
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So this grading system is meant to be a guide.

44 [Melvin Lim]
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It can be on a detailed fashion on how much you want

45 [Melvin Lim]
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to have this level of point system

46 [Melvin Lim]
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to factor into your purchase decision.

47 [Melvin Lim]
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We have these 11 factors

48 [Melvin Lim]
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that includes volume, value, density,

49 [Melvin Lim]
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which are some of the key factors

50 [Melvin Lim]
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that we talked about last week,

51 [Melvin Lim]
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as well as quantum which was in all of our previous episodes.

52 [Melvin Lim]
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When we talk about the quantum effect

53 [Melvin Lim]
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and how things have changed before 2013 and

54 [Melvin Lim]
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after 2013, which is precisely the year

55 [Melvin Lim]
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that the TDSR cooling measures came about,

56 [Melvin Lim]
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and that technically changed the configuration

57 [Melvin Lim]
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and layout plans within new launches

58 [Melvin Lim]
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which then brought on a lot of ripple effects

59 [Melvin Lim]
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into the current market situation.

60 [Melvin Lim]
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So these 11 factors are being live data fed

61 [Melvin Lim]
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into our PLB condominium MOAT analysis tool.

62 [Melvin Lim]
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Wherever when we meet up with some of our clients,

63 [Melvin Lim]
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and when we want to dive deeply into some of the projects.

64 [Melvin Lim]
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So just to give you an illustration

65 [Melvin Lim]
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on how this works in case you are curious

66 [Melvin Lim]
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about how this tool can actually help all of us

67 [Melvin Lim]
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to determine some of the scoring system.

68 [Melvin Lim]
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But of course, the disclaimer is

69 [Melvin Lim]
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that this is technically a scoring system

70 [Melvin Lim]
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based on what PLB has experienced over the past years.

71 [Melvin Lim]
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These are the exact factors that we want to consider

72 [Melvin Lim]
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even when we purchase or invest a property for ourselves.

73 [Melvin Lim]
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And thus, we think that in our own analysis method,

74 [Melvin Lim]
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we think that these are very useful analysis factors

75 [Melvin Lim]
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for everybody to consider.

76 [Melvin Lim]
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But use it to your own discretion

77 [Melvin Lim]
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as well as your own preferences.

78 [Melvin Lim]
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But most importantly is that if this is your first property

79 [Melvin Lim]
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or this is your primary residence,

80 [Melvin Lim]
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always try to balance with your family’s needs and wants.

81 [Melvin Lim]
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Always try to balance to ensure that yourself

82 [Melvin Lim]
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and your spouse and your kids,

83 [Melvin Lim]
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they are all happy, visualising

84 [Melvin Lim]
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that you can enjoy your next couple of years

85 [Melvin Lim]
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living there together as a family.

86 [Melvin Lim]
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Because most importantly,

87 [Melvin Lim]
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you guys must be happy living in your primary residence.

88 [Melvin Lim]
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Of course, when it comes to your second or third property,

89 [Melvin Lim]
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if it’s an investment property,

90 [Melvin Lim]
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we always advise our clients

91 [Melvin Lim]
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that you can fully base it on these 11 factors.

92 [Melvin Lim]
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But if it’s your primary residence,

93 [Melvin Lim]
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do balance with your family’s happiness level.

94 [Melvin Lim]
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All right, so just to give you an example,

95 [Melvin Lim]
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let’s say if I am somebody that loves to live

96 [Melvin Lim]
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near to Bedok Reservoir

97 [Melvin Lim]
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because at the strip of condominiums

98 [Melvin Lim]
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just right across the reservoir,

99 [Melvin Lim]
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currently there’s an MRT station already, it’s a Downtown line.

100 [Melvin Lim]
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And maybe I love nature, and I want to live near there.

101 [Melvin Lim]
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And maybe my families are around there,

102 [Melvin Lim]
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or I’m hunting for a school around there as well for my kids.

103 [Melvin Lim]
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And let’s say I’m comparing these six different projects.

104 [Melvin Lim]
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So let’s just take these six projects for example.

105 [Melvin Lim]
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We have Aquarius by the Park,

106 [Melvin Lim]
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a slightly more mature development.

107 [Melvin Lim]
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You have The Clearwater.

108 [Melvin Lim]
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You also have the entire Waterfront series

109 [Melvin Lim]
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from Waterfront Gold, Isle, Key, and Waves.

110 [Melvin Lim]
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You just want to see in terms of scoring, how do they fare,

111 [Melvin Lim]
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pros and cons in conjunction and comparison with each other.

112 [Melvin Lim]
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When we select these six projects,

113 [Melvin Lim]
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basically what we see on our MOAT analysis

114 [Melvin Lim]
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is that we will have a chart right here

115 [Melvin Lim]
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in terms of what we called like the power chart.

116 [Melvin Lim]
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So basically in terms of our scoring system,

117 [Melvin Lim]
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there will be different variations on the 11 projects.

118 [Melvin Lim]
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And then we take that range,

119 [Melvin Lim]
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and we develop a final score right here.

120 [Melvin Lim]
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So you can see that Aquarius by the Park,

121 [Melvin Lim]
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this is the final score.

122 [Melvin Lim]
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The Clearwater has this score.

123 [Melvin Lim]
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Waterfront Gold, as well as Waterfront Isle, Waterfront Key, and Waterfront Waves.

124 [Melvin Lim]
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The score is a combination of the 11 factors.

125 [Melvin Lim]
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But if you want to deep dive into, for example,

126 [Melvin Lim]
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the parents’ attraction factor,

127 [Melvin Lim]
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you will see that Waterfront Waves have the score of five,

128 [Melvin Lim]
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compared to Waterfront Key whom has a score of four.

129 [Melvin Lim]
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So basically you can then deep dive

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into a certain aspect to see which of the 11 factors

131 [Melvin Lim]
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have a higher priority based on your own needs.

132 [Melvin Lim]
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And this is where the beauty of this MOAT score comes about.

133 [Melvin Lim]
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Because you can deep dive into different factors,

134 [Melvin Lim]
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as well as you can reference to the final scoring factor.

135 [Melvin Lim]
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If you’re keen to find a little bit more

136 [Melvin Lim]
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about the MOAT analysis,

137 [Melvin Lim]
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basically, you can always check in

138 [Melvin Lim]
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with any of our Buyer Consultants from PLB.

139 [Melvin Lim]
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They’ll be very happy to run through this with you.

140 [Melvin Lim]
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If you’re hunting for a particular property,

141 [Melvin Lim]
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or you’re in the midst of planning to sell your home

142 [Melvin Lim]
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yet a little bit worried about your key choices

143 [Melvin Lim]
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for the next home.

144 [Melvin Lim]
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So this entire tool cover all the projects in Singapore,

145 [Melvin Lim]
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and they’re updated on a live-feed status.

146 [Melvin Lim]
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So everything is updated month-on-month basis.

147 [Melvin Lim]
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We live feed the data right here

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so to ensure that it’s always updated at any point in time.

149 [Melvin Lim]
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And now we’re going to look at this new analytics tool

150 [Melvin Lim]
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that we have just came out.

151 [Melvin Lim]
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Our PLB research and data team has done such a great job

152 [Melvin Lim]
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in always coming up with a lot of new tools

153 [Melvin Lim]
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for our audience as well as our clients.

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And this tool is fantastic

155 [Melvin Lim]
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for our broad-based research basis

156 [Melvin Lim]
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to look at some market trends,

157 [Melvin Lim]
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as well as for us to understand a little bit better

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about the market.

159 [Melvin Lim]
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Essentially what we have done

160 [Melvin Lim]
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is that we have come up with this tool

161 [Melvin Lim]
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to look at the correlation

162 [Melvin Lim]
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between private residential, landed plus non-landed

163 [Melvin Lim]
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combined into a full index,

164 [Melvin Lim]
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as well as to split them up

165 [Melvin Lim]
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into a different kind of index graph.

166 [Melvin Lim]
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And we’ve also decided to pump in the HDB price index

167 [Melvin Lim]
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together as well as all the volume of HDB,

168 [Melvin Lim]
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resale volume, new sub-sale or resale volume for non-landed,

169 [Melvin Lim]
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as well as the volume of new and resale for landed as well.

170 [Melvin Lim]
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So let’s have a look at maybe,

171 [Melvin Lim]
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shall we have a look at landed?

172 [Melvin Lim]
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All right, for those of you who are very keen

173 [Melvin Lim]
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on landed property,

174 [Melvin Lim]
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you can see what we’ll be looking at in this graph is

175 [Melvin Lim]
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that I can toggle quite a fair bit of things.

176 [Melvin Lim]
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And what we’re going to do is that we’re going to

177 [Melvin Lim]
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make this available on our PLB website in due time.

178 [Melvin Lim]
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We’ll announce to you guys

179 [Melvin Lim]
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through our social media platforms.

180 [Melvin Lim]
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And everybody can come in here, and you can manoeuvre,

181 [Melvin Lim]
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and you can play around with this tool.

182 [Melvin Lim]
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And of course, if you have any questions,

183 [Melvin Lim]
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do drop us an email into this email inbox right here.

184 [Melvin Lim]
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So I’m going to flash it up.

185 [Melvin Lim]
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So this is the official email

186 [Melvin Lim]
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for our Nuggets On The Go series.

187 [Melvin Lim]
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You can just email us at [email protected].

188 [Melvin Lim]
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If you have any questions that you would like us to answer

189 [Melvin Lim]
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in the next few subsequent episodes of Nuggets On The Go,

190 [Melvin Lim]
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just feel free to email us.

191 [Melvin Lim]
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We’re very happy to answer live questions as well.

192 [Melvin Lim]
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So coming back to the landed property chart.

193 [Melvin Lim]
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So basically we have combined the property transaction volume

194 [Melvin Lim]
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together with the price index graph.

195 [Melvin Lim]
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So I can also remove different graphs

196 [Melvin Lim]
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if I just want to look at pure landed index graph.

197 [Melvin Lim]
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And let me just do that for you.

198 [Melvin Lim]
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So basically when I toggle off the different buttons,

199 [Melvin Lim]
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what is going to happen is

200 [Melvin Lim]
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that the lines will then gradually disappear.

201 [Melvin Lim]
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And what I’m seeing right here now

202 [Melvin Lim]
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is just the landed price index.

203 [Melvin Lim]
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So landed price index, of course,

204 [Melvin Lim]
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this being derived from the data from URA and REALIS.

205 [Melvin Lim]
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What we’re seeing here right now is that you will see

206 [Melvin Lim]
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just purely landed property price transactions

207 [Melvin Lim]
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on transactions volume

208 [Melvin Lim]
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that has been lodged and paid with Buyer’s Stamp Duty.

209  [Melvin Lim]
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So that’s how you derive property transactions

210 [Melvin Lim]
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and their price index as well on a quarter-to-quarter basis.

211 [Melvin Lim]
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So we have also done it on quarter-to-quarter basis

212 [Melvin Lim]
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all the way starting from the year 2000 until the year 2022.

213 [Melvin Lim]
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So these are a full 22 years kind of data point.

214 [Melvin Lim]
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Basically what we can see

215 [Melvin Lim]
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is that there’s some generic trends

216 [Melvin Lim]
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that we can all observe.

217 [Melvin Lim]
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Notice that when prices are coming down,

218 [Melvin Lim]
00:08:35,240 –> 00:08:38,320
and this is basically derived from the year 2013.

219 [Melvin Lim]
00:08:38,320 –> 00:08:40,440
So 2013 was actually a very big hit

220 [Melvin Lim]
00:08:40,440 –> 00:08:42,080
to most of the market price index

221 [Melvin Lim]
00:08:42,080 –> 00:08:44,960
because not just the landed property price index came down.

222 [Melvin Lim]
00:08:44,960 –> 00:08:46,600
Basically non-landed price index

223 [Melvin Lim]
00:08:46,600 –> 00:08:48,720
also had the same behaviour trend.

224 [Melvin Lim]
00:08:48,720 –> 00:08:50,480
And later we can have a look at the behaviour trend,

225 [Melvin Lim]
00:08:50,480 –> 00:08:52,200
or maybe I just toggle it down for you right here.

226 [Melvin Lim]
00:08:52,200 –> 00:08:53,000
As you can see,

227 [Melvin Lim]
00:08:53,000 –> 00:08:56,000
non-landed price index also has a dip down here from 2013

228 [Melvin Lim]
00:08:56,000 –> 00:08:58,240
because these cooling measures that happened in 2013.

229 [Melvin Lim]
00:08:58,240 –> 00:09:00,480
Basically the total debt servicing ratio

230 [Melvin Lim]
00:09:00,480 –> 00:09:02,120
was a huge thing in the market.

231 [Melvin Lim]
00:09:02,120 –> 00:09:04,440
Everybody took time to get used to this.

232 [Melvin Lim]
00:09:04,440 –> 00:09:05,960
Developers took time to get used to this

233 [Melvin Lim]
00:09:05,960 –> 00:09:07,400
on how they configured that next new launch.

234 [Melvin Lim]
00:09:07,400 –> 00:09:11,400
As well as the ABSD which has a dramatic effect on this as well.

235 [Melvin Lim]
00:09:11,400 –> 00:09:12,240
When this came down

236 [Melvin Lim]
00:09:12,240 –> 00:09:14,040
you’ll notice two very significant thing.

237 [Melvin Lim]
00:09:14,040 –> 00:09:16,520
The most significant observation is that you will notice

238 [Melvin Lim]
00:09:16,520 –> 00:09:19,840
that when price comes down, volume dips.

239 [Melvin Lim]
00:09:19,840 –> 00:09:20,680
And why is that so?

240 [Melvin Lim]
00:09:20,680 –> 00:09:23,440
Is that there’s this thing called distortion effect.

241 [Melvin Lim]
00:09:23,440 –> 00:09:24,920
So for distortion effect,

242 [Melvin Lim]
00:09:24,920 –> 00:09:27,360
I gave a brief explanation on the last episode as well,

243 [Melvin Lim]
00:09:27,360 –> 00:09:30,040
but in detail is that distortion effect

244 [Melvin Lim]
00:09:30,040 –> 00:09:31,760
happens usually in the stock market.

245 [Melvin Lim]
00:09:31,760 –> 00:09:35,040
Is that when prices fall and prices rise for certain stocks,

246 [Melvin Lim]
00:09:35,040 –> 00:09:38,920
investors tend to liquidate and exit those stocks

247 [Melvin Lim]
00:09:38,920 –> 00:09:40,280
that made a paper gain

248 [Melvin Lim]
00:09:40,280 –> 00:09:41,520
instead of those that made a paper loss.

249 [Melvin Lim]
00:09:41,520 –> 00:09:43,480
In hope that the stocks that made a paper loss

250 [Melvin Lim]
00:09:43,480 –> 00:09:45,880
they can U-turn and come back and make a gain again.

251 [Melvin Lim]
00:09:45,880 –> 00:09:48,800
But by right, the rational investors did study

252 [Melvin Lim]
00:09:48,800 –> 00:09:50,080
that two stocks and by right

253 [Melvin Lim]
00:09:50,080 –> 00:09:52,240
if let’s say the stock is not performing well

254 [Melvin Lim]
00:09:52,240 –> 00:09:54,760
it has dropped in price due to fundamental reasons,

255 [Melvin Lim]
00:09:54,760 –> 00:09:57,080
then most of the time, it might be more wiser

256 [Melvin Lim]
00:09:57,080 –> 00:09:59,160
or it might be more fundamentally rational

257 [Melvin Lim]
00:09:59,160 –> 00:10:01,080
to actually keep the winning stock

258 [Melvin Lim]
00:10:01,080 –> 00:10:02,560
and exit from the losing stock

259 [Melvin Lim]
00:10:02,560 –> 00:10:04,640
and then pump the balance money into the winning stock

260 [Melvin Lim]
00:10:04,640 –> 00:10:06,200
instead for it to continue rising.

261 [Melvin Lim]
00:10:06,200 –> 00:10:08,360
However, when it comes to real estate,

262 [Melvin Lim]
00:10:08,360 –> 00:10:11,360
the distortion effect has another kind of behaviour

263 [Melvin Lim]
00:10:11,360 –> 00:10:13,640
in the sense that because real estate is fundamentally

264 [Melvin Lim]
00:10:13,640 –> 00:10:16,560
more illiquid than stocks and equity.

265 [Melvin Lim]
00:10:16,560 –> 00:10:17,360
Why is it illiquid

266 [Melvin Lim]
00:10:17,360 –> 00:10:18,400
is that because in Singapore,

267 [Melvin Lim]
00:10:18,400 –> 00:10:20,640
firstly there are two tiers of illiquidity.

268 [Melvin Lim]
00:10:20,640 –> 00:10:22,040
The first tier of illiquidity

269 [Melvin Lim]
00:10:22,040 –> 00:10:23,280
is that real estate by itself,

270 [Melvin Lim]
00:10:23,280 –> 00:10:24,920
by and large, for every property transaction

271 [Melvin Lim]
00:10:24,920 –> 00:10:27,040
you need time to purchase and exit

272 [Melvin Lim]
00:10:27,040 –> 00:10:28,480
on top of having to market the place.

273 [Melvin Lim]
00:10:28,480 –> 00:10:30,800
You need the property transaction of two to three months

274 [Melvin Lim]
00:10:30,800 –> 00:10:33,680
for it to take place at the law firm, CPF board, URA,

275 [Melvin Lim]
00:10:33,680 –> 00:10:34,680
SLA and stuff like that.

276 [Melvin Lim]
00:10:34,680 –> 00:10:37,080
So fundamentally as an asset class,

277 [Melvin Lim]
00:10:37,080 –> 00:10:39,200
it is more illiquid than equity

278 [Melvin Lim]
00:10:39,200 –> 00:10:40,840
which you can just exit the next day.

279 [Melvin Lim]
00:10:40,840 –> 00:10:43,080
The second level of illiquidity comes

280 [Melvin Lim]
00:10:43,080 –> 00:10:44,600
from the onset of cooling measures.

281 [Melvin Lim]
00:10:44,600 –> 00:10:45,680
Because with cooling measures,

282 [Melvin Lim]
00:10:45,680 –> 00:10:47,680
you have that blackout period for the Seller’s Stamp Duty

283 [Melvin Lim]
00:10:47,680 –> 00:10:50,040
the moment you buy residential property, three years,

284 [Melvin Lim]
00:10:50,040 –> 00:10:51,400
if you sell, you’ll be taxed Seller’s Stamp Duty.

285 [Melvin Lim]
00:10:51,400 –> 00:10:54,360
Thus, everybody is demotivated to sell

286 [Melvin Lim]
00:10:54,360 –> 00:10:55,680
within the first three years,

287 [Melvin Lim]
00:10:55,680 –> 00:10:58,120
that then increases the illiquidity,

288 [Melvin Lim]
00:10:58,120 –> 00:11:00,480
and it also increases the stability

289 [Melvin Lim]
00:11:00,480 –> 00:11:03,600
of real estate itself in Singapore, which is a good thing.

290 [Melvin Lim]
00:11:03,600 –> 00:11:06,680
However, when prices drop because of distortion,

291 [Melvin Lim]
00:11:06,680 –> 00:11:09,360
effect, it demotivates everybody to sell.

292 [Melvin Lim]
00:11:09,360 –> 00:11:12,160
Because now I’m holding let’s say example a landed property.

293 [Melvin Lim]
00:11:12,160 –> 00:11:13,360
I’m happy staying here.

294 [Melvin Lim]
00:11:13,360 –> 00:11:16,760
If I know that there’s economic kind of change in the market

295 [Melvin Lim]
00:11:16,760 –> 00:11:18,880
or maybe because of TDSR and things like that,

296 [Melvin Lim]
00:11:18,880 –> 00:11:19,960
prices start to come down,

297 [Melvin Lim]
00:11:19,960 –> 00:11:21,880
then all the more I’m not motivated to sell.

298 [Melvin Lim]
00:11:21,880 –> 00:11:23,720
And that is also part of the distortion effect

299 [Melvin Lim]
00:11:23,720 –> 00:11:26,280
because I will only be more motivated to sell

300 [Melvin Lim]
00:11:26,280 –> 00:11:30,160
when I see this up-trend movement of my landed property.

301 [Melvin Lim]
00:11:30,160 –> 00:11:32,080
Because when I see the up-trend movement,

302 [Melvin Lim]
00:11:32,080 –> 00:11:35,000
I will be more motivated to sell to realise that gain,

303 [Melvin Lim]
00:11:35,000 –> 00:11:37,600
that paper gain that is lock in profits under my home.

304 [Melvin Lim]
00:11:37,600 –> 00:11:39,240
I want to exit, take that profit,

305 [Melvin Lim]
00:11:39,240 –> 00:11:40,280
and maybe buy a bigger home,

306 [Melvin Lim]
00:11:40,280 –> 00:11:42,520
or maybe buy two properties instead

307 [Melvin Lim]
00:11:42,520 –> 00:11:43,880
of just holding onto one property.

308 [Melvin Lim]
00:11:43,880 –> 00:11:45,080
So technically speaking,

309 [Melvin Lim]
00:11:45,080 –> 00:11:46,880
when I see an uptrend, distortion effect

310 [Melvin Lim]
00:11:46,880 –> 00:11:49,880
also kicks in for the real estate property owners

311 [Melvin Lim]
00:11:49,880 –> 00:11:52,000
because then I’ll be more motivated to sell.

312 [Melvin Lim]
00:11:52,000 –> 00:11:53,840
Which is why when you see this upline graph,

313 [Melvin Lim]
00:11:53,840 –> 00:11:56,160
the volume technically picks up here,

314 [Melvin Lim]
00:11:56,160 –> 00:11:59,240
and that is an example of distortion effect.

315 [Melvin Lim]
00:11:59,240 –> 00:12:00,800
Now let’s also then pump in

316 [Melvin Lim]
00:12:00,800 –> 00:12:03,240
the non-landed private residential properties

317 [Melvin Lim]
00:12:03,240 –> 00:12:05,560
which are technically the condominiums and apartments.

318 [Melvin Lim]
00:12:05,560 –> 00:12:07,920
So as you can see, they have the same effect.

319 [Melvin Lim]
00:12:07,920 –> 00:12:09,720
And if I want to look at the private residential volume,

320 [Melvin Lim]
00:12:09,720 –> 00:12:10,920
I just toggle on here.

321 [Melvin Lim]
00:12:10,920 –> 00:12:13,400
So as you can see in terms of volume as well

322 [Melvin Lim]
00:12:13,400 –> 00:12:15,720
when the price index falls,

323 [Melvin Lim]
00:12:15,720 –> 00:12:18,400
private non-landed index actually dips

324 [Melvin Lim]
00:12:18,400 –> 00:12:20,200
in terms of the TDSR effect

325 [Melvin Lim]
00:12:20,200 –> 00:12:23,400
after 2013. You can see that our volume drops dramatically

326 [Melvin Lim]
00:12:23,400 –> 00:12:25,760
in terms of resale and new sale.

327 [Melvin Lim]
00:12:25,760 –> 00:12:29,000
And when price started to pick up ever since 2016

328 [Melvin Lim]
00:12:29,000 –> 00:12:30,040
all the way to today,

329 [Melvin Lim]
00:12:30,040 –> 00:12:32,280
basically volume also technically increases.

330 [Melvin Lim]
00:12:32,280 –> 00:12:34,520
You can also see this slight dip right here

331 [Melvin Lim]
00:12:34,520 –> 00:12:35,600
because during this season

332 [Melvin Lim]
00:12:35,600 –> 00:12:38,440
we have technically a lack of supply

333 [Melvin Lim]
00:12:38,440 –> 00:12:42,440
in the sense that 2017 to 2018 was like the en bloc season.

334 [Melvin Lim]
00:12:42,440 –> 00:12:44,120
So there were lesser launches right there.

335 [Melvin Lim]
00:12:44,120 –> 00:12:44,960
And then after that,

336 [Melvin Lim]
00:12:44,960 –> 00:12:46,840
it fundamentally just pick up and all the way until today

337 [Melvin Lim]
00:12:46,840 –> 00:12:48,640
because of the pandemic from year 2020.

338 [Melvin Lim]
00:12:48,640 –> 00:12:51,280
So this distortion effect also applies right here.

339 [Melvin Lim]
00:12:51,280 –> 00:12:53,440
Now, one other observation that we can notice is,

340 [Melvin Lim]
00:12:53,440 –> 00:12:55,440
let me just bring out the HDB graph

341 [Melvin Lim]
00:12:55,440 –> 00:12:57,040
which is very interesting.

342 [Melvin Lim]
00:12:57,040 –> 00:12:59,280
What has technically happened as well

343 [Melvin Lim]
00:12:59,280 –> 00:13:02,400
ever since 2017 quarter three

344 [Melvin Lim]
00:13:02,400 –> 00:13:04,800
is that we are seeing this chasm gap also

345 [Melvin Lim]
00:13:04,800 –> 00:13:07,480
not just between landed and non-landed,

346 [Melvin Lim]
00:13:07,480 –> 00:13:10,360
but between non-landed private residential

347 [Melvin Lim]
00:13:10,360 –> 00:13:12,200
and HDB price index.

348 [Melvin Lim]
00:13:12,200 –> 00:13:15,400
So there’s this escape in terms of HDB price index

349 [Melvin Lim]
00:13:15,400 –> 00:13:17,320
from sticking in together

350 [Melvin Lim]
00:13:17,320 –> 00:13:19,520
with the HDB price index right here.

351 [Melvin Lim]
00:13:19,520 –> 00:13:22,440
So technically speaking, starting from 2017 Quarter Three,

352 [Melvin Lim]
00:13:22,440 –> 00:13:26,080
the private property market has this invisible chasm,

353 [Melvin Lim]
00:13:26,080 –> 00:13:29,280
invisible gap, in between these two different asset classes.

354 [Melvin Lim]
00:13:29,280 –> 00:13:30,560
Now, what does this mean as well

355 [Melvin Lim]
00:13:30,560 –> 00:13:32,120
is that there are two observations.

356 [Melvin Lim]
00:13:32,120 –> 00:13:35,000
Firstly, this flee, or this chasm gap,

357 [Melvin Lim]
00:13:35,000 –> 00:13:38,720
has technically mean that perhaps Singaporeans, ourselves,

358 [Melvin Lim]
00:13:38,720 –> 00:13:39,520
or most of the buyers.

359 [Melvin Lim]
00:13:39,520 –> 00:13:42,120
Because most of the buyers that happened after the increment,

360 [Melvin Lim]
00:13:42,120 –> 00:13:44,440
in ABSD technically, a lot of transactions in Singapore,

361 [Melvin Lim]
00:13:44,440 –> 00:13:46,320
more than 80% of transactions in Singapore,

362 [Melvin Lim]
00:13:46,320 –> 00:13:49,000
quarter-on-quarter, are made by Singaporeans ourselves.

363 [Melvin Lim]
00:13:49,000 –> 00:13:51,560
So you can see that perhaps after 2017,

364 [Melvin Lim]
00:13:51,560 –> 00:13:53,240
and also I think that was the season

365 [Melvin Lim]
00:13:53,240 –> 00:13:56,120
in conjunction with all the news and debates and topics

366 [Melvin Lim]
00:13:56,120 –> 00:13:58,320
about 99-year HDB coming to zero.

367 [Melvin Lim]
00:13:58,320 –> 00:14:00,360
The realisation of that after balance

368 [Melvin Lim]
00:14:00,360 –> 00:14:02,880
60-year lease, withdrawal limits start to kick in

369 [Melvin Lim]
00:14:02,880 –> 00:14:03,840
and stuff like that.

370 [Melvin Lim]
00:14:03,840 –> 00:14:05,480
Then perhaps there was this flee,

371 [Melvin Lim]
00:14:05,480 –> 00:14:07,240
and the more appreciation

372 [Melvin Lim]
00:14:07,240 –> 00:14:09,880
of private properties in terms of condos and apartments.

373 [Melvin Lim]
00:14:09,880 –> 00:14:13,360
And we also seeing a rise in HDB upgraders

374 [Melvin Lim]
00:14:13,360 –> 00:14:15,400
moving upwards towards private property.

375 [Melvin Lim]
00:14:15,400 –> 00:14:18,480
So which then might have gave rise to this chasm gap.

376 [Melvin Lim]
00:14:18,480 –> 00:14:20,240
And of course the second observation is

377 [Melvin Lim]
00:14:20,240 –> 00:14:22,280
that at the fundamental level,

378 [Melvin Lim]
00:14:22,280 –> 00:14:24,280
these two are still in line

379 [Melvin Lim]
00:14:24,280 –> 00:14:28,320
and run almost parallel ever since 2020.

380 [Melvin Lim]
00:14:28,320 –> 00:14:30,560
So 2020 also has a different kind of effect

381 [Melvin Lim]
00:14:30,560 –> 00:14:32,960
that happened for HDB vis-a-vis private

382 [Melvin Lim]
00:14:32,960 –> 00:14:35,400
is that firstly, HDB also came under pressure

383 [Melvin Lim]
00:14:35,400 –> 00:14:37,960
in terms of its resale market because of pandemic.

384 [Melvin Lim]
00:14:37,960 –> 00:14:41,320
There was a delay in the construction timeframe of BTOs

385 [Melvin Lim]
00:14:41,320 –> 00:14:44,240
which then also gave rise to a huge influx of buyers

386 [Melvin Lim]
00:14:44,240 –> 00:14:45,480
buying HDB properties.

387 [Melvin Lim]
00:14:45,480 –> 00:14:48,160
Secondly, it was also because private property prices

388 [Melvin Lim]
00:14:48,160 –> 00:14:50,840
were rising way faster in terms of overall price quantum

389 [Melvin Lim]
00:14:50,840 –> 00:14:51,960
than HDB property (prices).

390 [Melvin Lim]
00:14:51,960 –> 00:14:54,000
And that created sort of like a gap

391 [Melvin Lim]
00:14:54,000 –> 00:14:55,600
between the affordability level.

392 [Melvin Lim]
00:14:55,600 –> 00:14:57,440
So perhaps a lot of HDB upgraders,

393 [Melvin Lim]
00:14:57,440 –> 00:14:58,960
or maybe first-time HDB buyers,

394 [Melvin Lim]
00:14:58,960 –> 00:15:00,560
or maybe first-time private property buyers,

395 [Melvin Lim]
00:15:00,560 –> 00:15:01,560
they actually wanted to get

396 [Melvin Lim]
00:15:01,560 –> 00:15:02,760
into the private property market.

397 [Melvin Lim]
00:15:02,760 –> 00:15:06,080
But because of the price escape of private property prices,

398 [Melvin Lim]
00:15:06,080 –> 00:15:08,800
they then fall back on HDB apartments

399 [Melvin Lim]
00:15:08,800 –> 00:15:11,000
because generally HDB apartments are bigger in size

400 [Melvin Lim]
00:15:11,000 –> 00:15:11,840
and things like that.

401 [Melvin Lim]
00:15:11,840 –> 00:15:13,760
And thus, that also increase the amount

402 [Melvin Lim]
00:15:13,760 –> 00:15:16,360
of transaction volume for HDB resale prices

403 [Melvin Lim]
00:15:16,360 –> 00:15:18,920
in conjunction with the delay in construction of BTO flats.

404 [Melvin Lim]
00:15:18,920 –> 00:15:21,600
Then we can see probably this sharp rise

405 [Melvin Lim]
00:15:21,600 –> 00:15:24,200
that runs parallel to the private property price index.

406 [Melvin Lim]
00:15:24,200 –> 00:15:26,480
So if I were to put these three graphs together,

407 [Melvin Lim]
00:15:26,480 –> 00:15:27,560
this is what we see.

408 [Melvin Lim]
00:15:27,560 –> 00:15:29,280
Three of them run almost parallel.

409 [Melvin Lim]
00:15:29,280 –> 00:15:30,480
But the very clear-cut thing

410 [Melvin Lim]
00:15:30,480 –> 00:15:33,440
is that landed prices actually has technically created

411 [Melvin Lim]
00:15:33,440 –> 00:15:36,160
that chasm ever since Lehman Brothers recovery

412 [Melvin Lim]
00:15:36,160 –> 00:15:37,640
in 2009, 2010.

413 [Melvin Lim]
00:15:37,640 –> 00:15:38,600
It has never touched

414 [Melvin Lim]
00:15:38,600 –> 00:15:40,520
private property price index ever again.

415 [Melvin Lim]
00:15:40,520 –> 00:15:42,840
The second chasm was in 2017

416 [Melvin Lim]
00:15:42,840 –> 00:15:44,480
where condo and apartment prices

417 [Melvin Lim]
00:15:44,480 –> 00:15:46,920
has never touched HDB prices ever again.

418 [Melvin Lim]
00:15:46,920 –> 00:15:50,680
So thus, we have this two new chasm gaps that has been created.

419 [Melvin Lim]
00:15:50,680 –> 00:15:53,320
If I were to go to HDB volume, very interestingly,

420 [Melvin Lim]
00:15:53,320 –> 00:15:55,520
you can also see a very similar trend

421 [Melvin Lim]
00:15:55,520 –> 00:15:58,000
when the HDB index sort of came down.

422 [Melvin Lim]
00:15:58,000 –> 00:16:00,720
So basically it also shares a little bit pf similarities

423 [Melvin Lim]
00:16:00,720 –> 00:16:03,480
that when price increase, volume increase.

424 [Melvin Lim]
00:16:03,480 –> 00:16:05,600
When price dip, volume dip.

425 [Melvin Lim]
00:16:05,600 –> 00:16:07,080
Same scenario, if let’s say

426 [Melvin Lim]
00:16:07,080 –> 00:16:08,560
somebody is holding a HDB apartment,

427 [Melvin Lim]
00:16:08,560 –> 00:16:11,720
they see the newspaper, price index increasing,

428 [Melvin Lim]
00:16:11,720 –> 00:16:12,560
volume is increasing,

429 [Melvin Lim]
00:16:12,560 –> 00:16:13,640
price is increasing,

430 [Melvin Lim]
00:16:13,640 –> 00:16:15,400
I’ll be more motivated to sell,

431 [Melvin Lim]
00:16:15,400 –> 00:16:18,080
realise my profit that’s trapped under my HDB apartment.

432 [Melvin Lim]
00:16:18,080 –> 00:16:21,160
So because that gave me an extra bandwidth of profit

433 [Melvin Lim]
00:16:21,160 –> 00:16:23,160
for me to upgrade to a private property.

434 [Melvin Lim]
00:16:23,160 –> 00:16:26,040
So the distortion effect applies technically

435 [Melvin Lim]
00:16:26,040 –> 00:16:27,920
to all three markets in Singapore.

436 [Melvin Lim]
00:16:27,920 –> 00:16:29,680
And we have come to the end of this episode.

437 [Melvin Lim]
00:16:29,680 –> 00:16:31,400
So we hope that you had enjoyed this episode

438 [Melvin Lim]
00:16:31,400 –> 00:16:32,400
of Nuggets On The Go.

439 [Melvin Lim]
00:16:32,400 –> 00:16:33,960
Hope that you also stay in tune

440 [Melvin Lim]
00:16:33,960 –> 00:16:36,000
with the next upcoming episode as well,

441 [Melvin Lim]
00:16:36,000 –> 00:16:38,160
as we share with you more updates about the market

442 [Melvin Lim]
00:16:38,160 –> 00:16:39,360
and also chat a little bit more

443 [Melvin Lim]
00:16:39,360 –> 00:16:41,240
about investing in real estate in Singapore.

444 [Melvin Lim]
00:16:41,240 –> 00:16:42,120
So my name is Melvin Lim.

445 [Melvin Lim]
00:16:42,120 –> 00:16:43,080
Thank you for staying tuned with us.

446 [Melvin Lim]
00:16:43,080 –> 00:16:46,280
If you want to enjoy Nuggets On The Go, on the go,

447 [Melvin Lim]
00:16:46,280 –> 00:16:47,480
do tune in and subscribe

448 [Melvin Lim]
00:16:47,480 –> 00:16:49,600
and download our episodes from Spotify

449 [Melvin Lim]
00:16:49,600 –> 00:16:51,160
as well as Apple iTunes.

450 [Melvin Lim]
00:16:51,160 –> 00:16:52,440
And we hope to see you on the next one.

451 [Melvin Lim]
00:16:52,440 –> 00:16:53,160
Cheers.