#3 Why is it important not to time the market for your own stay property? | NOTG S2 E3

1[Melvin Lim]
00:00:20,679 –> 00:00:23,359
All right so we’re back with our Episode 3

2[Melvin Lim]
00:00:23,359 –> 00:00:24,760
of Nuggets on the Go.

3[Melvin Lim]
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And this is our Season 2.

4[Melvin Lim]
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So, I hope that you’ve enjoyed Episode 1 and 2 of Season 2.

5[Melvin Lim]
00:00:31,879 –> 00:00:33,520
And today, we’re gonna talk about

6[Melvin Lim]
00:00:33,520 –> 00:00:37,240
what is actually happening to the Singapore property market.

7[Melvin Lim]
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And it’s a little bit of continuation of the UOB webinar

8[Melvin Lim]
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that we had late last year.

9[Melvin Lim]
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This is also loaded onto our YouTube channel.

10[Melvin Lim]
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You can have a look at our YouTube playlist

11[Melvin Lim]
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called “Talks and Seminars” by PropertyLimBrothers.

12[Melvin Lim]
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So, what has exactly happened

13[Melvin Lim]
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ever since we moved out of Circuit Breaker

14[Melvin Lim]
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in the middle of last year, 2020.

15[Melvin Lim]
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And of course right now, we are coming to almost,

16[Melvin Lim]
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I think the end of quarter 1.

17[Melvin Lim]
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So we’re now coming to the end of February at the point of recording.

18[Melvin Lim]
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And the property market in Singapore has moved upwards

19[Melvin Lim]
00:01:15,200 –> 00:01:18,280
in terms of its price index across different categories,

20[Melvin Lim]
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even HDB resale price index has moved up

21[Melvin Lim]
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based on statistics at the end of 2020.

22[Melvin Lim]
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Landed property has moved up. Resale property has moved up.

23[Melvin Lim]
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New launch condos has moved up as well.

24[Melvin Lim]
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And of course, if you look at what are the ongoing prices

25[Melvin Lim]
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in terms of new launches,

26[Melvin Lim]
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you would have realised that maybe early part of last year,

27[Melvin Lim]
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or maybe the end of 2019, beginning of 2020,

28[Melvin Lim]
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if you have about maybe about $1.5, $1.6 mil,

29[Melvin Lim]
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you can still get something

30[Melvin Lim]
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in terms of new launch properties.

31[Melvin Lim]
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But right now, with the same amount,

32[Melvin Lim]
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it seems like the kind of property

33[Melvin Lim]
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that you can get is getting smaller.

34[Melvin Lim]
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Last time, $1.5, $1.6 mil, easily we can get a 3-bedder.

35[Melvin Lim]
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Now it seems like a 3-bedder is getting harder

36[Melvin Lim]
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to be realised with the similar quantum

37[Melvin Lim]
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as they’re all inching towards

38[Melvin Lim]
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like the $1.7, $1.8 (mil) kind of range.

39[Melvin Lim]
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Yeah, so just one year back,

40[Melvin Lim]
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maybe with the same amount at $1.6 mil,

41[Melvin Lim]
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I can get a 3-bedroom premium

42[Melvin Lim]
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with a proper three bedrooms plus a utility room.

43[Melvin Lim]
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Now with the same amount,

44[Melvin Lim]
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I can only get a 3-bedroom compact,

45[Melvin Lim]
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meaning that there’s no utility room,

46[Melvin Lim]
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there’s no home shelter, so it’s a compact 3-bedder.

47[Melvin Lim]
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So there is a vast difference.

48[Melvin Lim]
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And as prices moved up in terms of PSF,

49[Melvin Lim]
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we need to really understand what is happening

50[Melvin Lim]
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in the local property market.

51[Melvin Lim]
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Of course, everything we share in Nuggets on to Go,

52[Melvin Lim]
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on our podcast

53[Melvin Lim]
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is all based on our personal ground experience.

54[Melvin Lim]
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So, some disclaimer first.

55[Melvin Lim]
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And of course, I think it’s very important for us

56[Melvin Lim]
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to understand that Singapore

57[Melvin Lim]
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is really in a very different kind of environment

58[Melvin Lim]
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compared to 10 or 15 years ago.

59[Melvin Lim]
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The property market is behaving very differently.

60[Melvin Lim]
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Right now, the very fundamental difference

61[Melvin Lim]
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is that our price index

62[Melvin Lim]
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has so many rounds of cooling measures being priced into it.

63[Melvin Lim]
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Meaning that it’s very different from the past

64[Melvin Lim]
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whereby there were no cooling measures in the price index.

65[Melvin Lim]
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Right now, if let’s say you are fearful

66[Melvin Lim]
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to enter the property market

67[Melvin Lim]
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and you perhaps belong to the school of thought that,

68[Melvin Lim]
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“Hey, I want to time the market

69[Melvin Lim]
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for my own home stay property.”

70[Melvin Lim]
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So let’s talk about your first property.

71[Melvin Lim]
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Let’s say if you’re planning to time the market,

72[Melvin Lim]
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you have sold the property, maybe three, six months ago,

73[Melvin Lim]
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you’re hoping for a correction

74[Melvin Lim]
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so that you can buy something lower,

75[Melvin Lim]
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I think it is not advisable to time the market

76[Melvin Lim]
00:03:57,879 –> 00:04:00,800
if this is your primary property for your family

77[Melvin Lim]
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because the key rationale is that in Singapore,

78[Melvin Lim]
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it is very risky to time,

79[Melvin Lim]
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because not just Singaporeans are waiting

80[Melvin Lim]
00:04:10,400 –> 00:04:12,159
and eyeing to buy properties,

81[Melvin Lim]
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there are foreign buyers and investors that are overseas,

82[Melvin Lim]
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they are eyeing on our properties in Singapore.

83[Melvin Lim]
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And the key reason is because Singapore properties

84[Melvin Lim]
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are such a great store of value.

85[Melvin Lim]
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And our land is scarce, our supply is extremely limited.

86[Melvin Lim]
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There’s only a fixed amount of properties

87[Melvin Lim]
00:04:32,480 –> 00:04:33,800
that can be built in future,

88[Melvin Lim]
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even though our government still have land banks going on.

89[Melvin Lim]
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En blocs don’t happen easily.

90[Melvin Lim]
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It takes time to develop.

91[Melvin Lim]
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It takes years for en blocs to happen as well.

92[Melvin Lim]
00:04:44,720 –> 00:04:47,879
And thus I think if this is your primary property,

93[Melvin Lim]
00:04:47,879 –> 00:04:49,720
and you and your family, your kids,

94[Melvin Lim]
00:04:49,720 –> 00:04:51,360
they are renting right now,

95[Melvin Lim]
00:04:51,360 –> 00:04:52,879
you’re trying to time the market,

96[Melvin Lim]
00:04:52,879 –> 00:04:58,920
I think primary property, you can find a location,

97[Melvin Lim]
00:04:58,920 –> 00:05:01,240
the type of property that your family likes.

98[Melvin Lim]
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Enter into it. I think that’s totally fine.

99[Melvin Lim]
00:05:03,360 –> 00:05:05,680
Now, if this is your investment property,

100[Melvin Lim]
00:05:05,680 –> 00:05:08,199
it’s a second property, your third property,

101[Melvin Lim]
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you want to time the market, by all means.

102[Melvin Lim]
00:05:11,360 –> 00:05:12,319
Why am I sharing this

103[Melvin Lim]
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Is because based on our 14 years experience,

104[Melvin Lim]
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we have seen people who have timed the market,

105[Melvin Lim]
00:05:18,720 –> 00:05:22,199
and then they had to reenter about three, five years later

106[Melvin Lim]
00:05:22,199 –> 00:05:23,600
at a much higher price.

107[Melvin Lim]
00:05:23,600 –> 00:05:28,079
And sometimes, prices just move up very quickly,

108[Melvin Lim]
00:05:28,079 –> 00:05:29,879
it just moves up very rapidly.

109[Melvin Lim]
00:05:29,879 –> 00:05:32,920
And when it moves so quickly, of course,

110[Melvin Lim]
00:05:32,920 –> 00:05:35,120
intervention comes in from cooling measures

111[Melvin Lim]
00:05:35,120 –> 00:05:37,959
and there again, it reduces your leverage

112[Melvin Lim]
00:05:37,959 –> 00:05:39,120
kind of positioning

113[Melvin Lim]
00:05:39,120 –> 00:05:42,160
because the amount of down payment increases,

114[Melvin Lim]
00:05:42,160 –> 00:05:43,800
or maybe the interest rate environment

115[Melvin Lim]
00:05:43,800 –> 00:05:46,360
at the point of you wanting to buy changes,

116[Melvin Lim]
00:05:46,360 –> 00:05:48,639
or maybe the taxation changes

117[Melvin Lim]
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because there’s an increased amount

118[Melvin Lim]
00:05:50,279 –> 00:05:51,800
in buyer’s stamp duty and stuff like that.

119[Melvin Lim]
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So I think primary property, at best, don’t time it.

120[Melvin Lim]
00:05:56,399 –> 00:05:59,639
Buy something, live in it, hold the property.

121[Melvin Lim]
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As long as you’re comfortable, you’ve done your sums,

122[Melvin Lim]
00:06:02,680 –> 00:06:04,720
you’re comfortable with the monthly mortgage,

123[Melvin Lim]
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I think that’s fine.

124[Melvin Lim]
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I mean Singapore, very different from the rest of the world

125[Melvin Lim]
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because we are very high ownership kind of culture.

126[Melvin Lim]
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90% over of people own homes.

127[Melvin Lim]
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Majority own public housing, resale, BTOs.

128[Melvin Lim]
00:06:20,360 –> 00:06:21,680
And of course, private property

129[Melvin Lim]
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is always a kind of aspiration

130[Melvin Lim]
00:06:24,879 –> 00:06:28,560
for people to look forward to, to want to own it.

131[Melvin Lim]
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So, there are many varying degrees of demands

132[Melvin Lim]
00:06:34,519 –> 00:06:38,079
of types and profiles of buyers

133[Melvin Lim]
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that are eyeing private properties.

134[Melvin Lim]
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So firstly, of course,

135[Melvin Lim]
00:06:40,920 –> 00:06:44,959
we talk about the foreign buyers rationale,

136[Melvin Lim]
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currency is strong in Singapore.

137[Melvin Lim]
00:06:46,720 –> 00:06:51,720
So let’s say if I am somebody that is in Indonesia,

138[Melvin Lim]
00:06:52,120 –> 00:06:53,759
and I’m a businessman

139[Melvin Lim]
00:06:53,759 –> 00:06:59,000
and I own several properties in Indonesia, Jakarta,

140[Melvin Lim]
00:06:59,000 –> 00:07:01,680
I bought some properties in Australia and the UK.

141[Melvin Lim]
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I look at Singapore, currency is stronger than mine.

142[Melvin Lim]
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And if I were to buy a $4 mil property

143[Melvin Lim]
00:07:08,279 –> 00:07:10,240
that I hold it for five, 10 years,

144[Melvin Lim]
00:07:10,240 –> 00:07:12,439
even if I were to sell it at a slight loss

145[Melvin Lim]
00:07:12,439 –> 00:07:16,319
or at a same price and convert it back to my own currency,

146[Melvin Lim]
00:07:16,319 –> 00:07:19,120
the currency strength that has increased

147[Melvin Lim]
00:07:19,120 –> 00:07:23,600
over the 5 to 10 years is actually a gain

148[Melvin Lim]
00:07:23,600 –> 00:07:26,319
when I convert it back to my own country’s currency.

149[Melvin Lim]
00:07:26,319 –> 00:07:28,480
So that’s actually what’s going on

150[Melvin Lim]
00:07:28,480 –> 00:07:32,120
on the way that foreign investors are looking at Singapore

151[Melvin Lim]
00:07:32,120 –> 00:07:35,680
because not just is our property a great store value

152[Melvin Lim]
00:07:35,680 –> 00:07:40,160
in terms of price, maintenance and price appreciation,

153[Melvin Lim]
00:07:40,160 –> 00:07:42,120
if you select the right property.

154[Melvin Lim]
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But the sub effect is because of the currency strength,

155[Melvin Lim]
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vis-à-vis their own currency strength.

156[Melvin Lim]
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So that’s the second thing.

157[Melvin Lim]
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And of course, Singapore cost of borrowing is extremely low.

158[Melvin Lim]
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Not just are we packed to SIBOR.

159[Melvin Lim]
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Of course we have different rates from the banks.

160[Melvin Lim]
00:07:59,160 –> 00:08:00,160
They have SOR rates,

161[Melvin Lim]
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they have their own bank deposit rates and stuff like that.

162[Melvin Lim]
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But now it’s so low.

163[Melvin Lim]
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You can get financing for your own mortgage for 1%-odd.

164[Melvin Lim]
00:08:09,360 –> 00:08:12,160
So that’s one of the third rationale

165[Melvin Lim]
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that why are property prices moving.

166[Melvin Lim]
00:08:14,920 –> 00:08:17,439
And of course, the fourth reason

167[Melvin Lim]
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is that Singaporeans themselves,

168[Melvin Lim]
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they are the source of demand.

169[Melvin Lim]
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Just take a look at the past couple of years.

170[Melvin Lim]
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Close to above 85%, above 90% of most of the buyers,

171[Melvin Lim]
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they are actually Singaporeans ourselves.

172[Melvin Lim]
00:08:32,159 –> 00:08:34,879
So, we are the ones that are buying the property,

173[Melvin Lim]
00:08:34,879 –> 00:08:38,919
and HDB upgraders are buying the property.

174[Melvin Lim]
00:08:38,919 –> 00:08:40,480
Families that own private properties

175[Melvin Lim]
00:08:40,480 –> 00:08:42,559
are buying secondary properties.

176[Melvin Lim]
00:08:42,559 –> 00:08:45,080
Some families that are well-to-do,

177[Melvin Lim]
00:08:45,080 –> 00:08:47,000
they’re buying properties as a store of value

178[Melvin Lim]
00:08:47,000 –> 00:08:48,320
for their children.

179[Melvin Lim]
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And of course there are families that are buying properties

180[Melvin Lim]
00:08:51,120 –> 00:08:53,799
and putting them as trust for their kids as well.

181[Melvin Lim]
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So there are varying degrees of demand

182[Melvin Lim]
00:08:56,639 –> 00:08:59,159
that’s coming in for properties.

183[Melvin Lim]
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And of course, I think worldwide,

184[Melvin Lim]
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if you look at some of the statistics, even after COVID-19,

185[Melvin Lim]
00:09:03,759 –> 00:09:07,480
prices for real estate seems to have ticked up

186[Melvin Lim]
00:09:07,480 –> 00:09:08,919
over the past couple of months.

187[Melvin Lim]
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I think the key rationale

188[Melvin Lim]
00:09:09,879 –> 00:09:13,240
is because when this sort of pandemic happens,

189[Melvin Lim]
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most people are living at home.

190[Melvin Lim]
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They then realise that space is so important.

191[Melvin Lim]
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That’s why there’s a lot of focus on real estate,

192[Melvin Lim]
00:09:21,720 –> 00:09:25,600
it’s end of the day, a brick and mortar shelter,

193[Melvin Lim]
00:09:25,600 –> 00:09:28,559
it’s a place for our family to dwell in,

194[Melvin Lim]
00:09:28,559 –> 00:09:30,519
it’s a place of security,

195[Melvin Lim]
00:09:30,519 –> 00:09:33,080
at the same time, it’s a physical asset

196[Melvin Lim]
00:09:33,080 –> 00:09:34,679
that we can touch and feel,

197[Melvin Lim]
00:09:34,679 –> 00:09:37,039
we can pass it on for generations.

198[Melvin Lim]
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So, I think very importantly,

199[Melvin Lim]
00:09:40,360 –> 00:09:43,679
we of course, we are very fortunate to live in Singapore,

200[Melvin Lim]
00:09:43,679 –> 00:09:46,159
but I think the key fundamental

201[Melvin Lim]
00:09:46,159 –> 00:09:48,440
is that if you’re a Singaporean,

202[Melvin Lim]
00:09:48,440 –> 00:09:51,600
most importantly is that I think planning is very important.

203[Melvin Lim]
00:09:52,519 –> 00:09:55,639
Plan your trajectory for the next 10, 15, 20 years

204[Melvin Lim]
00:09:55,639 –> 00:09:57,320
depending on what age you’re in.

205[Melvin Lim]
00:09:57,320 –> 00:10:00,960
Try to think about based on your career,

206[Melvin Lim]
00:10:00,960 –> 00:10:04,320
based on your business, if you are still a young person,

207[Melvin Lim]
00:10:04,320 –> 00:10:05,759
let’s say you are 25 or 30,

208[Melvin Lim]
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try to plan and think at which point in your life,

209[Melvin Lim]
00:10:10,240 –> 00:10:12,480
would a switch in the type of property

210[Melvin Lim]
00:10:12,480 –> 00:10:15,960
be very suitable for your life stage.

211[Melvin Lim]
00:10:15,960 –> 00:10:18,039
Yeah, so that’s something that I want to talk about.

212[Melvin Lim]
00:10:18,039 –> 00:10:23,480
And today’s topic basically is really talking about the fact

213[Melvin Lim]
00:10:23,480 –> 00:10:27,120
that I think we should not time the market

214[Melvin Lim]
00:10:27,120 –> 00:10:28,840
if it’s your primary property.

215[Melvin Lim]
00:10:28,840 –> 00:10:31,279
So, I hope that you can take this away,

216[Melvin Lim]
00:10:31,279 –> 00:10:33,080
and I’ll see you on episode number 4,

217[Melvin Lim]
00:10:33,080 –> 00:10:34,200
and in the meantime, take care.

218[Melvin Lim]
00:10:34,200 –> 00:10:34,799
Cheers.