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?



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?


Buy Low Sell High Is Merely A Pleasant By-product of Execution Excellence

buy low sell high is a pleasant by product
Buy low sell high – a pleasant by-product

“Buy low sell high” is and will never be the goal or guiding principle of successful property investors. Although conventional wisdom tells us to ‘buy low, sell high’ to gain a profit, by having this four words stuck in your head will not only cause you to not get a profit but will put you in the red zone very quickly for a very long time.

Start Off the Right Footing – Goal Setting

If you have not already realized, ‘buy low sell high’ is not the goal. Your goal should be something like – “to retire early at the age of 50 with sufficient passive income and savings to enjoy quality time with your grandchildren and serving the community.”

Use this well known template to set your SMART goals:

Source: j6design

Current State Analysis – Financial Planning & Strategies

Understand where you stand now. How’s your financial health? How’s the maturity of your current property portfolio?

Find out how much cash and leverage you command by reviewing the excess cash after accounting for your usually monthly expenses. After gathering these information, you will be able to narrow down to which asset classes and strategies suitable for you.

Closing the Gap – Timing & Actions

After sorting out all the big picture items (goals, finances planning), we are now moving on to when to take action. This is the hardest step out for many people who could talk and plan until the cows come home but afraid to take the leap of faith and work towards their goal.

“By taking small risk, you open up opportunities. By not taking any risk, you are essentially risking it all”

After taking the first step out and here comes the real challenge. If you are selling it yourself, try not to get emotional about selling high in today’s market. Read the life of a diy seller and understand that selling lower is better than not selling at all. Unless you have the luxury of time and available cash to buy another property now, you will not have the time to wait for the market to pick up again. Furthermore, with the recent release of government land sales and the sentiment the state is portraying, the return of sky rocketing price may not even come.

Execution Excellence

Some of you must be already wondering when am i going to write about buying low and selling high? You are almost there, the truth is – it is merely a pleasant by-product that successful investors enjoy seeing.

It is merely a pleasant by-product that they enjoy.

If you have done the above the right way, from goal setting to closing the gap, profits will come naturally. By focusing on doing it right from the start and constantly keeping your end goal always at the back of your mind, profits from buying low / selling high is merely a pleasant by product.

Spend More to Earn More

spend more to earn more
Spend more to earn more

We all know people generally spend more when they earn more but is the opposite possibly true as well?

As we climb up the corporate ladder, gradually getting salary increment and more savings in the bank. The natural tenancy would be to spend more on enjoyment as the experience is just pure pleasure even when it actually creates a big hole in our pocket. I understand the emotional struggle especially when you have worked really hard for the last few weeks and what you ask for is merely a deserving break. What few of us know is that the opposite is true as well and in fact even more appealing  – earn more by spending more.

Before you start to build castle in the sky, let me write it more accurately – by spending more correctly, you will earn more eventually.

By spending more correctly, you will earn more eventually.

Smart items to spend on

Spending more here does not refer to unnecessary purchases but spending on creating assets and opportunities. This could simply be any of the following:

  • Purchase of property when one meets the loan criteria
  • Purchase of financial products which comes with dividends
  • Purchase of experience (travelling, overseas exchange)
  • Attending value adding courses
  • and the list goes on

These items are assets that will bring more value to your personal development which will also generate wealth. In some scenarios,  you may need to cut down expenses on unnecessary items to pay your spending on these smart items. I can assure you that it is worthy! A friend of mine needs to downgrade his BMW x3 to a Toyota to free up more cashflow for his second property which will provide him a passive rental income. Hence, by spending more you earn more.

You must have heard of – don’t work hard, work smart. Today I introduce a complimentary quote to you. Don’t spend hard, spend smart.

Don’t spend hard, spend smart.

Let me know if you have spent on something which made you earn more! 🙂