Buying a Resale Property Now? Beware of Mini Seller’s Market Phenomenon


For whatever reasons that you want to buy a property in the resale market now (this year end), you have to know this to understand why sellers are gaining temporary power on pricing negotiation.

Seller market is coming

You must be thinking – “Are you sure?”

Firstly, for the benefit of all, a seller’s market refers to the situation where demand exceeds supply and sellers have a stronger power in pricing negotiation.

Yes, we all know it is generally a buyers’ market now, but the real estate market is just like any other marketplace. It is highly dynamic and driven by several forces, there bound to be small ups and downs in any long-term up or down trend.

Here I’m giving you a heads up of an imminent mini seller market phenomenon that will last for 2-3 months likely to happen in the month of November.

During this period, buyers may face upfront seller decline of your seemingly high offer. Do not be too surprised, because there are actually quite a few reasons behind it.

Mini seller market phenomenon

Be it HDB or private non-landed resale market, it will undergo this unstoppable prevalent phenomenon.

There are essentially two indicators to observe its arrival;

  1. a significant drop in volume
  2. an increase in average prices (usual on a small reversal)

Some historical data

Look out for the small upswing in average prices and a decline in volume.


HDB Resale Transaction, source:
Private Non-landed Transaction, source :


Why is there such phenomenon?

What we see from the above charts is the outcome, but what’s more interesting are the causes. Here are two of them;

  • Festive season
    • Christmas will come in 2 months time and Chinese New Year will come in 3 months time.
      • Vacant possession will fall in these festive periods and it will be a big hassle. Where is the seller gonna stay when he hands you the key 1 week before Xmas/CNY?
    • Pre-occupied with vacation planning
      • Sellers are busy planning for their year end family trips and have no urgency to sell. With the lack motivation, Sellers tend to be very persistent on the asking price, there is possibly zero room for negotiation.
  • Year-end slowdown
    • Yearly targets and KPI
      • Same for agents, by now, most of the diligent ones have already met their target, it’s about time to slow down and spend time with their family. With lesser brokers to ensure timely closure, transaction volume will go south.

In this situation, the supply seems to have dropped significantly, so if you are a buyer looking to buy a resale property, you need to know how to protect your interests and to ensure you still get a good deal.

Otherwise, you will be one of the contributors for the year-end price upswing.

So How?

If you are a DIY resale buyer, unless you have chanced upon a distressed sale, you are left with 2 options;

  • wait for another 3 months
  • talk to an estate agent to strategise the game plan with you.

Nevertheless, how about taking a look at the new launch market?



The Day Your Monthly Income Crosses $6,000



You are now ‘officially’ above Singapore median income level.

From today onwards, you should be financially savvy enough and does not require any subsidy or assistance from the government.

Financial Independence

Still remember those days, where a $100 pay increment will give you an additional $37 increase in CPF contribution amount (20% from yourself and 17% from your employer). However, from today onwards, your total CPF contribution will be capped at $2220 (37% X $6000).

From today onwards, with the ordinary wage ceiling, any salary increment you get is what it is, there will not be an additional 37% into your CPF.

By now you should be wise enough to manage your own finances without mandatory savings plan (a.k.a CPF) for the portion above $6,000.

You are on your own, do spend wisely.

Forget about HDB BTO

As we all know the income ceiling for HDB BTO is $12,000 and assuming your spouse is working as well with similar experience, your combined income should be very close or over the ceiling already.

Fret not, it is not that bad. You still have executive condominium which has an income ceiling of $14,000. Hurry up, before you miss the chance again.

On the other hand, if you are a single planning to apply BTO under the Singles schemes, you are too late.

You have been disqualified due to your income being more than $6,000. You are now left with HDB resale flats in the open market.

Forget about HDB loan

If you are a single buying a resale HDB, you are no longer eligible for HDB loan. You have no other choice but to get a bank loan instead.

In short, get your flat early before your income crosses $6,000!

So You Are Still Hoping For The Property Market To Go Down By Another 10%. Do You Know What It Takes?

Still hoping for property market to decline by another 10% -

With the eight rounds of cooling measures, the property market has retraced southward by 10% and showing signs of a bottom. If you are still hoping for it to go south by another 10% or even to 2009Q2 level, do you know what sort of events can cause it to happen?

Here are some hypothetical events that are essential to make that happen.

  • New cooling measure adding on top to the existing 8 cooling measures
  • Direct foreign investment withdrew – more companies leaving Singapore for another country, severe oversupply of properties to let
  • Singapore unemployment rises to double digit – more people unable to repay their mortgage
  • Fewer developers bidding for Government land sales resulting in lower successful bid for land prices
  • Sustained increase interest rates – unlikely but if it happens buyers will need to pay more for monthly mortgage
  • Fewer attractive new private condominium launch that cannot be missed – leading to oversupply of unsold properties
  • Smaller property developers reduce price point to reduce penalties from unsold completed units
  • Lower transaction volume from a reduction of qualified buyers or sellers
  • Rising tension and instability geopolitical situation in the south-east Asia region repelling investors to channel their funds elsewhere
  • When terror threats slip through Singapore’s multiple layers of firewalls
  • and many more.

Now, do you still think the property market can go south by another 10%?

If you think so, when would that happen? Share with me.



How Much Should a Property Really Cost You?

how much should a property really cost you

There are generally three approaches to calculate the right price for any property; using historical data, using today’s data, and using future data. Most people use the first two approaches as they are more straightforward and easily understood, but in this post, I will focus more on the third approach – using future data.

Common approach – using historical and today’s data

Using historical transaction data – starting from launch price to the recent transacted prices, one will be able to calculate the average yearly capital appreciation and use that to estimate the reasonable price tag for a particular property at this point in time.

Using today’s data is only possible recently with the help of SRX’s live platform which provides real-time transaction information. However, this real-time information is not available for individual buyers or sellers who are not represented by an agent which put them in a less favourable spot when comes to getting the best deal.

By referencing to historical and present data, the common approach has a goal of validating if the current asking price is the right entry price to buy – entry strategy. In the next section, I will introduce an approach that is closer to an exit strategy.

Less used but powerful approach – using future data


This approach is not new to the financial world, but very under-utilized in the arena of real estate.

It is the discounted cash flow approach.

It looks at bringing the projected future income into today’s monetary equivalent so as to get a meaningful indication if the cost to purchase is worthy or not.

Step 1: List down all yearly income and expenses

  • Multiply recurring monthly income and expenses by twelve to get the yearly amount
  • Include all cost of buying and selling such as legal fee, agent’s fee and etc.
  • Set aside some expenses for some minor repair work


Step 2: Discount net cash flow for each year to present value

  • For each year, sum up all the income and minus all expenses to get the net cash flow for the year
  • Calculate the present value for each year by using the formula in the diagram below


Step 3: Sum up all discounted present value

  • Add up all discounted present value
  • You will get the net present value of this property
  • This is how much it should cost you to buy today


Should cost method is always wrong

Just like any estimate or projection, this should cost method will always be wrong. It can never be entirely correct.

Due to the assumption made on interest rate either constant for the entire time period or varies as per your subjective interpretation of the future and the inflation effects on future income and expenses, these uncertainty makes it only an estimate.

So why use this method?

Because we all have an interpretation of the future whenever we buy any investment product (consciously or subconsciously), and this method will allow you to quantify them into numbers.

Should cost method will allow you to quantify interpretation of the future into numbers.

Hence, by using these numbers will bring objectivity in when you are comparing a few properties based on the same assumptions.

This is how you should shortlist and find the right property to invest.

Are you already using this method?


When ABSD becomes basic BSD


when absd becomes bbsd

We have heard countless times from different ministers on being too early to lift or even relax the property cooling measures, particularly the additional buyer’s stamp duty (ABSD) introduced in Jan 2013. What if the ABSD is here to stay and to merge with the existing buyer’s stamp duty (BSD)?

Perhaps when it is not an “additional” tax, buyers currently holding back will be more willing to embrace the new norm?

With the ever increasing sums needed for nation building, a steady stream of taxes is important to sustain Singapore’s growth as a nation. Social development has always been a big chunk of the nation’s spending at 52.9% in 2015, and as our population ages, more funds will be needed to cater for these social needs. Where do you think the money comes from?


Tax spending fy2014_2015.JPG
Source: IRAS – The Singapore tax system 


Furthermore, in order to remain competitive in attracting foreign businesses and high net worth individuals to Singapore, corporate and income tax have always been kept low and it will most likely to stay like this.

So where do you think the money have to come from? Road tax, cars COE, Property taxes, stamp duties.

Okay you see the point.

Let’s say only 15% of citizens have paid 7% for their second property after the introduction of ABSD. Within the next two years, another 30% – 50% will accept the fate to pay the 7%.

Sooner or later,  when half of Singaporeans have already paid the ABSD for their second property, it would somehow be seen as the new norm.

When the time comes, would it be easy to merge ABSD to the existing BSD?

And will there still be a mental barrier for buyers to wait further?