How Far will the Current Property Bear Market Go?

First of all, I would like to wish in advance everyone a happy Lunar New Year.

As all my readers who invest in property or are going to know, the recent property bull market has peaked amid governmental cooling measures and HDB’s mass building activities and the market is on its way down.  By most measures, it’s been down for around 10% and nowhere of a bottom is in sight.  The natural question is whether it’ll rebound and if not, how much further down will it go?

My crystal ball in this aspect is unfortunately hazy.  Experience shows that predicting the directions (worst, the magnitude of a single direction) of the property/stock/bond/commodity markets is a fool’s errand and usually does not have a good ending.  However, I feel like I need to embark on this thankless job and do my crystal ball gazing nevertheless.  So, I shall shamelessly fire away!

All those who have lived in Singapore for decades know that Singapore has a tradition of providing affordable housings via the HDB route except around 1997 and recently.  The ramping up of the prices of property has caused the ruling party dearly in the last election and might do further damage on the next if it’s not being handled properly by the cabinet.

The current consensus among the media and market professionals is that there’s still room for the prices to fall.  Witness the recent quiet resale markets where those wanting to buy wait on the sideline for the prices to fall further!  I agree with the consensus given the stream of newly built BTO flats on the pipelines and the fact that the cooling measures are still in place.  I dare even speculate that prices will fall till they’re affordable by most common measures by the public given that the PAP government would clearly want to score this all important housing political point.

So how low a price would it be to be considered affordable by reasonable standards?  I would like to take the reference point from 2006 when the HDB prices reached a bottom (74.9 for the resale price index).  At the 2014 price level of 137.0, HDB has risen by 82.9% over 8 years.  The prices have clearly overreached themselves and are uncalled for.

If an 82.9% rise is unreasonable, what rise will be reasonable?  There’re 2 figures thrown around frequently, one is the inflation rate, the other is the higher income increment rate.  Personally, I would think that properties should more reasonably increase by the higher income increment rates.  There are 2 reasons, firstly, the dwellers in properties usually work around the area where they buy the properties; thus, the prices of properties will reflect the job opportunities of the surrounding areas.  The income derived from the work will then be used to pay for the down payment and mortgage of the properties.  The valuations of the properties are therefore a reflection of how hip the nearby job markets are.

The second reason why properties will track the income is because the surrounding amenities will improve over the years.  If properties were to track consumer price levels, it will mean that the improving surrounding amenities will get cheaper in real terms!  I feel that income is a better measure of the level of the surrounding amenities as the fiscal revenues used to build these facilities are derived from the economy which is tightly tied to the income level of the residents.

In 2014, the median income from work is 3770 and in 2006, the median income is 2449 based on MOM statistics.  Thus, if housing in early 2015 is as affordable as in 2006, the prices of properties should rise by around 53.9% over the 2006 period.

If we assume that the 2006 property prices are the norm, prices should fall by a further 1.539/1.829 – 1 ~= 16%.

Of course, speculating how much prices will fall could be more/less depending on the base period you choose.  If we select 2007 as the base year, the projected fall in prices will be even greater as income in 2007 increases much faster than price over the preceding year.

Considering how noisy the prices of property markets are, the chances of my prediction gone wrong are much higher than right.  So caveat emptor!

The Russian Stock Market as an Emerging Market Play

Warren Buffet: “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”

One of the most fearful stock markets in the world now is probably the Russian stock market.  It’s hard hit by the recent plummeting oil prices and sanctions by the West for its Ukraine adventure.  Both its stocks and the prices of ruble are hitting new lows.  But then, make no mistake about it, the R in BRICS is still a resource rich country with its huge land masses and untapped potential.

So, the million-dollar question is: is it time to be greedy?  Would you grab hold onto a falling knife?  Why won’t a falling market continue to fall?  My approach is that yes, the market is uncertain, but, it’s already high on the value-play list; so, I joined in the fun and bought some.  If Russia goes up, I’ve some extra pocket money; if it tanks, which it might, it’s nothing major on my financial well being.

This web page here listed Russia’s Shiller P/E as 4.6.  The author even predicted its expected return to be 16.9%.  I think that is a pretty bold assertion, but then if Russia manages to fix its problems, why not?

United States Net Worth Ranking

I’ve created a US net worth ranking system.  It calculates the percentile net worth among the US adult population.

The data points are derived from the Credit Suisse Global Wealth 2016 report.  Basically, the cut-off data points for the top 5.5%, 7.4%, 36.8%, 43.1%, 50.0%, 65.4% are culled off from the report to generate the actual percentile.  The intermediate points, except those in the top 5.5%, are all derived via linear interpolations.  The calculation assumes that all have a non-negative net worth so some values above the top 65.4% might be out of tune.

For those who are technically savvy, this script is written entirely in Javascript.  As such, no net worth info is transmitted via the Internet.  All the processing is done locally on your machine.

To use it, just enter your net worth in USD and click the submit button.  A percentile figure will be shown below the text box.  If the figure is 10%, you’re at the richest 10% of the world adult population.

Compassion Meditation (aka Metta)

Compassion Meditation (aka Metta) Tutorial from 10% Happier by Dan Harris

At first blush, most rational people find the below off-putting in the extreme.  Trust me – or, better, trust the scientists – it works.

1. This practice involves picturing a series of people and sending them good vibes.  Start with yourself.  Generate as clear a mental image as possible.

2. Repeat the following phrases: May you be happy, May you be healthy, May you be safe, May you live with ease.  Do this slowly.  Let the sentiment land.  You are not forcing your well-wishes on anyone; you’re just offering them up, just as you would a cool drink.  Also, success is not measured by whether you generate any specific emotion.  As Sharon says, you don’t need to feel “a surge of sentimental love accompanied by chirping birds.”  The point is to try.  Every time you do, you are exercising your compassion muscle.  (By the way, if you don’t like the phrases above, you can make up your own.)

3. After you’ve sent the phrases to yourself, move on to: a benefactor (a teacher, mentor, relative), a close friend (can be a pet, too), a neutral person (someone you see often but don’t really ever notice), a difficult person, and, finally, “all beings.”

Walking Meditation

Walking Meditation Tutorial from 10% Happier by Dan Harris

1. Stake out a stretch of ground roughly ten yards long. (That’s somewhat arbitrary – whatever length you’ve got will work.)

2. Slowly pace back and forth, noting: lift, move, place with every stride.  Try your best to feel each component of every stride. (Don’t look at your feet, just look at a neutral point in the distance.)

3. Every time your mind wanders, gently bring it back.

4. There is a temptation to denigrate walking meditation as less serious or rigorous than seated meditation, but this is wrong.  Just because your legs are crossed doesn’t mean you’re meditating more effectively.  As a noted teacher once said, “I’ve seen chickens sitting on their eggs for days on end.”

C# Left / Right / Mid String Functions (as in Visual Basic.Net)

Visual Basic’s left, right, mid functions are nifty tricks that can be easily implemented in C#.

using System;
using System.Collections.Generic;
using System.Linq;
using System.Text;

namespace ConsoleApplication1
    public class Test
        public static String left(String input, int len)
            return input.Substring(0, len);

        public static String right(String input, int len)
            return input.Substring(input.Length - len);

        public static String mid(String input, int index, int len)
            return input.Substring(index - 1, index + len - 1);

        public static String mid(String input, int index)
            return input.Substring(index - 1);

    class Program
        static void Main(string[] args)
            String str1 = "left string";
            Console.WriteLine("Test left str: " + str1);
            Console.WriteLine("Test left str: " + Test.left(str1, 4));

            String str2 = "right string";
            Console.WriteLine("Test right str: " + str2);
            Console.WriteLine("Test right str: " + Test.right(str2, 6));

            String str3 = "mid string";
            Console.WriteLine("Test mid str: " + str3);
            Console.WriteLine("Test mid str: " + Test.mid(str3, 2, 6));

            Console.WriteLine("Test mid str: " + str3);
            Console.WriteLine("Test mid str: " + Test.mid(str3, 5));

Test left str: left string
Test left str: left
Test right str: right string
Test right str: string
Test mid str: mid string
Test mid str: id stri
Test mid str: mid string
Test mid str: string