The year 2020 has come and gone. But the persistent Covid-19 is still hanging around with no end in sight. The virus is on a recent resurgence this January with cases ballooning worldwide despite ongoing vaccine efforts. On the economic front, Singapore’s GDP has taken another beating with a contraction of 3.8% in the last quarter of 2020. Yet despite all this negative news, the US stock market and digital assets like bitcoin are at an all-time high. Property prices in Singapore are also creeping upwards and high network individuals bagging trophy homes at record prices.
How To Predict The Direction Of Any Market In 2021
So, why is this happening? With things so unpredictable, how would we know where the direction of the market is heading in 2021? Well, there is a perfectly reasonable economic explanation behind this. I was watching one of Jim Cramer’s Youtube Video. He is the host of Mad Money on CNBC, and in this video, the man has the answer. For your convenience, I have embedded the video for your easy reference.
Jim mentioned that he was puzzled during his early years in Goldman Sachs as to why the stock market rallied during that time. There were no major new events, and nothing was “going on” in his own words. Puzzled, he decided to ask this senior trader who then told him one thing. The only thing that requires prices to go up is this.
“More Buyers Than Sellers”
The Only Rule For Capital Appreciation
So, there you have it. No matter what product you are looking at, as long as there are more buyers than sellers, prices will increase. So, the most important question you must ask yourself is this. What is the future demand for my asset? Will there be more buyers than sellers? If there are more buyers than sellers, naturally the price will go up. This philosophy is also why I mentioned that certain undervalued properties might not be a good buy. Why? Simply because there is not going to be more buyers than sellers in the future.
Do Not Listen To Analyst Or Experts, Do Your Own Homework
So, to make sense of the market, you must do your own research. Do not listen to any experts or analysts who can tell you where the market is heading. Why? Because when it comes to timing, it has to do with an element of predicting the future. Which nobody can ever successfully do and be correct 100% of the time. Remember this article in the Business Times where various analysts predicted that private home prices would fall by 8%? And there was even one journalist that said that buyers who bought during this time are gamblers! On hindsight, what they highlighted seemed perfectly logical at that time. Unfortunately, that is the problem with making predictions.
Besides, most analysts will only look at the property price index. The problem with using the index is that it will lump data across the various unit types into a single number. It is not an accurate reflection of the price movement in various districts and unit types throughout the island. For example, the index may go up, but the units you are looking at could be dropping in prices. The reverse is also true.
How To Do Your Own Homework
To make good decisions engaging the real estate market, there are a few things you need to do.
First, you must understand yourself. You will need to find out what are your long-term goals and objectives. This means understanding the time frame of holding on to the asset, financing costs, location, number of bedrooms, etc.
Second, you will need to monitor the unit type’s past demand and prices over a certain time frame. Is the overall quantum increasing or decreasing for that unit type? How many are sold in a month? What is the cost of goods of the nearby future developments? After processing this information, you would be in a better position to understand the market better. And can now appreciate why certain developments like Penrose, Clavon and The Linq at Beauty World can sell so well. You will then not be shocked by the sales and blame it on conspiracy theories.
Nobody Knows Where The Market Is Heading In 2021
Nobody can predict where the market is heading in 2021 with a high degree of accuracy. However, it is possible to understand the future demand for a particular property type to a certain degree. This is the same logic as to why most people will know that BTOs always make money, and Good Class Bungalow will continue to fetch record prices in the future. And of course, there is no such thing as a loss-making executive condominium as well. These are just some of the reasons I always emphasise that timing is not the most important factor in real estate. It all depends on what you are purchasing.
I hope you do not get confused by the movement in the property price indexes or analyst predictions. Because the data they analyze may not be relevant to you. Do your own diligence and analyze all the information yourself. If you need help with doing this homework, please let us know so we can assist you better. Meanwhile, stay safe and always look at the numbers!
Article contributed by Jerry Wong.
Jerry Wong is a realtor with Propnex Realty. He loves coffee, cookies and condos and has been in real estate for ten years. Most importantly, he loves connecting people to properties and gets enormous satisfaction when they acquire their dream home. Or making well-informed decisions that see their assets grow. Book a video call appointment and Jerry will share with you the following.
- How certain factors affect real estate prices. Why some condos can make a million dollars while others can lose that same million.
- Why timing is not the most important thing. Because some people can buy the same condo at the same time, but one end up making $100k to $200k while the other suffers losses of the same amount!
- Understanding your requirements and craft a solution for your real estate needs. Be it in the form of asset progression, tax planning, financial calculations, rentals, sales, etc.
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