Sunday, November 2, 2014

Correction to "Random thoughts: The singapore property cycles." Post

I made a error in my calculation, and I think I need to point it out. Thank you to Chan Yuan, who leave comments that alert me to the error and generate more discussions. My apologies. Will be more careful with numbers.

I mentioned a growth rate of 2% on non resident population with means 320k more residents every year. The correct figure should be 32k

I also state there is a supply of about 30k units without buyers in the pipeline, that will come on the market over the next few years. 

There is also a link provided by him.
http://population.sg/resources/population-composition/#.VFX564rXfCR

Of which he think only 25% of the residents will get a unit. I assume he use EP, S pass and students.

It is a significant error as the verdict is different. In my original post, I think 30 k surplus over a few years can be absorbed by real demand.

Now, assume all the 25% buy Condo, or become rental demand for condo, and 10% of newly wed go for condo, there is only a 10.7 k real demand to be absorbed. 

If u ask me, how likely is s pass holder buying a condo, I think it is highly unlikely.

So 25% seems generous.

So we need the HDB upgraders ( as pointed out by Chan Yuan) and investors 
To pick up the rest. 

Highly unlikely that there will be no more GLS over the next few years too. 

So supply should be higher than projected, investment and speculative demand should be kept in check due to rising interest rate, and already above average vacancy rates.

I personally know of many people that lament it is tougher to be PR now, so the PR equation will not be significant IMO, given the low base, and the HDB as a first absorber. 

Elections is due latest by 2016. Do not think they will do a U turn anytime soon in terms of letting in PR and workers.

So yes, I now agree that 30K is a concern

6 comments:

  1. Hi,

    Last year the growth is 70k at 1.6%.

    1.6% x 5.3MM = around 70k. Hope you can recount again.

    ReplyDelete
  2. Hi anonymous,

    The 70k growth mentioned in your projection includes the entire population (SC+PR+ Foreign residents). Sillyinvestor (green rookie)'s 30k supply concern here is targeting the private condo's segment which depends greatly on foreign resident's growth.The local population (SC + PR) growth is absorbed by the increase in HDB flat supplies (which currently stands at 26k new homes annually for the next 3 years).

    ReplyDelete
  3. HiChan Yuan and AM,

    Thank you for your thoughts. Chan, you explained it. LOL. Thanks

    Actually, the problem with such simplistic projection is the highly questionable "investment demand", we all know of SIngaporeans that have more than 1 property.

    I tried to used those age 35 to 45 as potential upgraders, but it is hard to determine the growth rate on this group

    ReplyDelete
  4. Sillyinvestor,

    It's very comforting that your readers practice "trust but verify".

    Imagine some readers start going round quoting your figures as "authority"...

    There are parrots.

    Can quote but can't explain their understanding if you poke them ;)

    ReplyDelete
    Replies
    1. Hi SMOL,

      That's right, and I benefited from their discussion too.

      Also, I think it is easier when one is not famous or reputable. People will take our small words with a bigger dose of salt.

      The yin and the yang of everything. LOL

      U know what, I was doing the "I am poor" mindset tuning so well, that ya, i did not indulge in any snacks at all, in fact, I took left over dinner for lunch and saved a lot of expenses on food.

      But that "proverty" comes together with the low esteem of comparing with others. I was feeling very low when I read bloggers talk about their portfolios. Something I got over years ago.

      U can't have the cake and eat it. But now, there is one plus point about being a nobody, that is u need not worry about being a poor influence or impact on others.

      LOL

      Delete
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    ReplyDelete