Hi Susan,

Just to share my “biases” against the widespread and deep-rooted investor confidence in SG private properties.

Many realtors believe that over long term (10Y+ is my horizon), Singapore property prices will continue climbing. I am not sure.

Hongkong may or may not be a valid reference, but that’s the only comparable location. The supply/demand profile is different in each region and in each era:

• Chinese tier-one property markets (Shanghai, Beijing, and possibly Shenzhen) have evolved under its own political, economic, demographic environment, so I don’t feel Chinese cities are reliable references.
• Europe, Australia, North American, Japanese cities are also unreliable references if you ask me, because I am convinced that the (mainland and overseas) Chinese mentality — preference for buying over renting.. betting on windfall appreciation and ignoring rental income..– is one of the biggest demand-side factor that can’t be overstated.
• Europe, North America, Australia, and Japan have a much longer history of prosperity

Over the last 30 years, the Chinese property investors have not seen a real bust as in Japan. https://asia.nikkei.com/Business/Markets/Property/Tokyo-property-prices-near-bubble-era-levels shows a 30-year property market recovery that’s still incomplete.

I would imagine that because of this positive collective memory, Chinese investors can’t intuitively assess “over-valuation” and “bubble”. This is such an important point in my reasoning that I will attempt to give a few analogs:

• Until I saw, as a pupil, a magnet pushing another magnet without touching, I couldn’t imagine such a phenomenon. This is a natural science example. Rest are social science examples.
• For centuries, people can’t imagine any country’s population could shrink permanently so we couldn’t imagine such a shrink. Now we are seeing it in some developed countries. Permanent? Let’s watch.
• U.S. investors have watched the U.S. stock market recovering from every collapse very swiftly, without fail, so U.S. investors can’t imagine a prolonged “trough” like the ones in Japan, Europe and China.
• Singapore property price history is similar to U.S. stock prices — over the last 30 years it has always rebounded after every correction, so the market watchers can’t imagine a Japanese-style long trough.

I’m slightly different from other Chinese investors —
1. I feel I don’t need a huge windfall profit — most realtors talk about 500k+ realized profits.
2. I value current rental income more than windfall appreciation
3. I wish to diversify geographically, like spreading over China, U.S., SEA

“Slightly” is my honest self-assessment. I’m 60% same as other Chinese investors in terms of my drivers — greed, fear, analysis, observations, information source, the people I listen to…

I really want to be more independent, marching to the beat of my own drum, but I can’t really tell myself to shut out the outside influence. I need a selective filter … tough balance.