Wait any further and miss the boat?

While it is true that it is a fool’s errand to try to time the property market, you can certainly buy at a dip. In fact, that is what you are supposed to do: Buy low and sell high. It is very human in a down market to want to buy at the absolute lowest point. The problem, though, is that no one can identify the bottom until after the fact.

How many people have you met who regret not buying in 1998 or 2004 or 2008? A few no doubt did, but most did not. People clearly bought all along the price index, including at the top in 1996, 1999, 2007 and 2013.

The likelihood that prices are going to return to 1998, 2004 or 2008 levels is minuscule and would be historically unprecedented. If they did, Singapore’s economy, leaders, and all of us would have much worse problems than the depreciation of housing values.

In a conversation with Mr Nicholas Mak of SLP International Property Consultants about today’s market, he told me: “People are concerned about asset depreciation. However, it has softened so much that downside is limited. If they wait any further, they can miss the boat.” Upcoming executive condo also include The Visionaire EC, Wandervale EC,  Parc Life EC, Treasure Crest, Northwave EC while existing ones include The Terrace EC, Brownstone EC, Waterwoods EC, Signature at Yishun, Skypark Residences, The Vales EC, The Criterion EC, Bellewaters EC, Bellewoods EC.

Mr Mak’s comments are spot on. According to SRX Property, February 2016 prices are down 7.4 per cent from the recent peak in January 2014. Meanwhile, HDB prices have declined 10.9 per cent compared with its peak in April 2013. Prices did not drop dramatically. They came down very slowly.

While a small minority would like housing prices to come down even more, they cannot come down that much more without wreaking havoc on household net worth and the economy. No one wants the latter to happen. So, Mr Mak is correct in saying that the downside risk is minimal.

What is at risk is the upside potential. If you have the means to invest today, you do not want to look back at 2016 and bemoan, “If only I had invested then…”

When buying during a dip in the market, there are five things you can do to buy with confidence.

First, buy within your budget and make sure that you can afford a more expensive mortgage payment should interest rates increase. This means you can hold onto the property regardless of market gyrations.

Second, buy in a good neighbourhood, where there is strong potential for appreciation.

Third, engage a professional real estate agent to be your buyer’s advocate. It will likely cost you nothing, yet in return, you will get someone who can help you research and navigate the buying process and, most importantly, negotiate on your behalf. (Never negotiate yourself. Prime Ministers and chief executives do not negotiate deals, they engage professionals to do so. You should follow their example.)

Fourth, before making an offer, ask your agent to buy you a valuation and compute the X-Listing Price. Technology has made buying a valuation very inexpensive.

So, get a professional valuer’s advice on the value of the home before you make an offer.

Fifth, temper your expectations. It is better to have bought at a 7.4 per cent discount than to miss the dip completely while holding out for a 10 per cent or 20 per cent discount.

Once the market rounds the curve and starts increasing, the power shifts to the seller and the 7.4 per cent discount will likely disappear also.

When the momentum shifts, sellers know to hold out just like buyers who were reluctant to commit during the down market.

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