MAS makes commentators look foolish again

by Property Soul

Last Thursday, Managing Director of Monetary Authority of Singapore (MAS) Ravi Menon mentioned at the annual report media conference that it is “not time yet to ease the cooling measures”, “they remain necessary” and “easing the measures now would send a wrong signal”.

Sorry, cooling measures are to stay

Menon cited two reasons for the decision: 1) Good pick-up of recent project launches under low interest rate environment; and 2) Increased tightening of property buying restrictions in other countries.

Menon emphasized that “property prices should be aligned with broader income trends in the economy and the government will not let “property prices increase faster than nominal GDP growth”.

Private residential property prices have climbed 60 percent over 17 quarters, but only declined less than 12 percent in the last 14 quarters.

Menon restated that MOF, MND, and MAS were all very clear in the March announcement that the adjustments “were made for very specific reasons and purposes” and the government has never changed its position on the TDSR structure, Additional Buyer’s Stamp Duty and Loan-to-Value limits.

“The calibrated adjustments by the government earlier this year do not signal the start of an unwinding of the property cooling measures, as some commentators have suggested.”

Oops, MAS just gave industry stakeholders who speculated further relaxation of cooling measures a real slap on the face!

The market tends to make us look foolish most of the time, isn’t it?

Those who recently bought on deferred payment scheme or stay-then-pay programme should now realize that the wait may not be just one to two years’ time.

Edmund Tie & Co told the media last month that one investor takes ABSD in buying properties as the COE in buying cars, if the government is not lifting ABSD.

What the investor fails to see is: All car owners have to pay COE to drive a car. But not all property owners have to pay ABSD to buy a home. It depends on when they buy it and whether they are buying their first property.

Next time when he is competing with other owners of similar units in the same project for tenants or buyers, he will realize that they are not competing on equal footings because of the ABSD he has paid.

Why some commentators still don’t get it?

In fact, the commentators are not being slapped once but again and again by the government.

Every time when there was market speculation on relaxation of the cooling measures, the government would not hesitate to come upfront and put it straight.

A contrarian’s view? Who bothers?

You can’t blame industry stakeholders who assured you that the government will lift ABSD soon; or Morgan Stanley who predicted that Singapore property prices to double by 2030; or JLL who claimed that residential market will likely to recover by early 2018 – when home buyers are taking the plunge fearlessly; when new launch projects are selling like hot cakes; when developers are bidding hungrily for new sites like there’s no tomorrow.

All these analysts are predicting that the property market will recover any time soon. We haven’t seen such positive market sentiments for a long time.

Who bother to be a contrarian here?

I did have a few blog posts with a different view:

1) It’s not bottoming-out. It’s dead cat bounce.

2) 3 reasons why adjustments to property measures is not a good sign

3) Who said property cooling measures may never be lifted?

I am not saying that the property market will crash soon. I just believe that the market is going to be different from what the local media and industry stakeholders are predicting.

Ken Fisher said in his book Beat the Crowd that a contrarian doesn’t have to hold an “opposite view” from the majority. A contrarian just holds a “different view”. If most people believe that this is what‘s going to happen in the market, the contrarian simply believes that something else will.

History tells us that the market likes to make most of us look foolish most of the time. It always gives us an anti-climax at the maximum point of optimism.

“The contrarian looks for things the herd and curmudgeons ignore – they branch out. Or they look at the same things but see them differently. Both actions let them find the risks and opportunities most others miss.”

“A 60% or 70% success rate keeps you well ahead of most … if you’re right 70% of the time in this realm, you become an absolute living legend.”

You see, I am only targeting 60 percent or at most 70 percent of the time to be right. I said it about Iskandar and Malaysia properties 3 years ago in 2014. I said it about market slowdown and some other things as well. It’s not too difficult to be 60 to 70 percent of the time correct, isn’t it?

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