Future Trends from Past Cycles

You may watch the full consumer seminar video here.

Firstly, I would like to thank OrangeTee for this opportunity to share my thoughts & insights on the future of Singapore’s Real Estate Market. The overview of this presentation acknowledges the current climate of Covid-19’s impact on the economy and how supply chains are disrupted and demands are affected. The context was to highlight the actions of world leaders during past crisis and their steadfastness that restored confidence and revived the economy.

Two aspects of analysis were covered: (i) Fundamental and (ii) Technical analysis.

i) Fundamental Analysis

With the astounding total relief packages of $92.9 billion (which is 19.2% of the GDP), the fiscal measures mapped out by our government to combat against Covid-19 would strengthen investors’ confidence. Furthermore, these measures draws from our country’s reserve, which are debt-free; unlike other countries that relies on credit guarantee.

The short-coming of the fundamental analysis is that information and data are collated only after the market price movement. However, this can be compensated by evaluating the volume as the market unfolds. At this stage, each rising and falling volume was compared against the market price movement to demonstrate the market’s strength.

This first segment essentially brought across the following facts:

  • Singapore’s government is responsive to market signals
  • The real estate market always recovers from crisis
  • Transaction volume encompasses all underlying fundamentals as well as market participants’ interests

The next segment had a more macro-focus, revealing that real estate purchases &/or investment is simply not just the ‘product’ itself, but it also consists of the future growth potential & connectivity of the area. The progression of the country as a whole is also a critical factor to access what lies ahead for any market (i.e. Real Estate Market), which the URA’s masterplan provides such details.

Monetary Authority of Singapore’s (MAS) constructed a Macroprudential policy in Singapore that is centered on the real estate market for banks’ loan portfolios, household’s balance sheet and the potential systemic risks. This implies that the authorities have been proactive in ensuring the stability & sustainability of Singapore’s property market. Other related industries that are influenced by the property market were shared as well (see attached slides for more information)

ii) Technical Analysis

Emphasis was placed that the technical analysis using Elliot Wave Theoryis basically an exercise of examining various scenarios to add value in an environment of limited visibility.

Numerous analysts perused on the projection of the property market’s recovery; discussing whether it will be a ‘V-shaped‘, ‘U-shaped‘, ‘W-shaped‘ or ‘L-shaped‘ curve. Ultimately, the recovery will unlikely follow the predictions of any analysts, including my interpretation. The clearest sign of recovery must be factual & visible to consumers. In essence, there must be upcoming exciting projects (new hotspots) at attractive prices (slightly lower than the surrounding areas) with adequate advertising (media hype); so that consumers (i.e. buyers) are convinced to purchase/invest in the project(s). Only during such a situation will there be a ‘V-shaped’ recovery curve depicting the property market’s bullish sentiment.

Towards the end, the presentation mentioned 7 reasons why one can remain optimistic in spite of the current uncertainty.

In conclusion:

  • The Singapore’s real estate market will return to normalcy, especially with our government’s mitigation
  • The real estate market itself encompasses all the fundamental factors that will drive the price progression/direction
  • The long-term trend of Singapore’s real estate market remains sanguine