No place like home

Source : Sunday Times - 26 Oct 2008

As financial markets crashed around the world over the course of the last few weeks, there were plenty of worried people in the newsroom. None more so than a young colleague of mine.

In the face of a looming recession and plunging stock prices, she wasn’t so much fretting about the price of Capitaland shares as the Capitaland apartment she had bought just before the great September meltdown.

The 99-year leasehold two-bedder she bought in the Redhill area was priced at just above $1,000 psf.

It was a carefully researched decision and quite a bargain considering the awesome view from 40 floors up. Yet she couldn’t shake off her unhappiness.

‘When we bought our condo, I was fairly certain prices would hold fairly steady, barring a recession,’ she wrote in her blog, adding that she felt like a Minibond investor.

With the kind of pessimism in the market today, it looks fairly certain that property prices will continue to head south.

And considering that an apartment is the mother of all big-ticket items, it’s an ill-timed purchase that’s not so easy to brush off.

It wasn’t so much a question of losing money, she said, because she didn’t buy the apartment - which is to be her first marital home - for investment.

But with every 10 per cent fall in prices, her fiance and her would have saved as much as $100,000.

And you can really feel like a loser watching your biggest asset drop so much in value so soon after buying it.

‘Sigh… if only we had waited just that little bit longer,’ she complained to me the other day.

‘Don’t be silly,’ I said. ‘If you hadn’t bought the apartment, you wouldn’t be happily discussing colour schemes and furniture layout options now.’

In fact, she would still be reading the classifieds each week, with no real idea about where her dream home will be, or what it will even look like.

Where would you rather be, I asked.

The fact is: When it comes to starting a home, you can never really time the property market.

Prices may be at rock bottom, but that doesn’t mean that you will see a need to swop a current home that you have grown attached to for something bigger.

And like my young colleague, often the moment comes for two people to share their life together, but prices are sky high all over the island.

When I look back at the highs and lows of the Singapore property market over the last decade, I find the arcs and curves of the URA Property Price Index (PPI) impossible to ride on.

From the impossible peaks of close to 200 points in 1996, the index fell to 100 in late 1998. But I had just started work then and couldn’t afford to buy a home.

I was also thinking about ending a four-year relationship and starting life anew with a career switch to journalism, so buying a house was the furthest thing from my mind.

During the mini-bull run around the year 2000 (PPI:140), I was renting an apartment, still trying to manage the monthly cashflow issues that inevitably come with moving out and living alone.

By the time I was financially ready to buy an apartment, it was already the second half of 2002. The PPI had fallen back to 115, but what was more important was that I was ready to start a home with the person I loved.

The Government gave me an extra nudge by changing a CPF rule that reduced by half the cash I needed to put up for the downpayment, so I took a deep breath and bought my current home - a studio apartment in River Valley for about $880 psf in end 2002.

Things on the relationship front turned tumultuous for me in the next few years, but the PPI remained relatively stable until prices started picking up again in 2006.

Then when my love-life stabilised late last year, I was ready again to move to a bigger apartment. So I found myself house-hunting, even though the PPI had shot back up to 170 or so.

The fear that home-buyers often have is that they will end up the fool who bought at the peak, the sucker who played into the hands of greedy property developers.

Yet nearly everyone I know who bought a home for themselves to live in at the peak of the property market never regretted that decision.

One reason is that even if you decide to change homes in a slump and have to sell your property at a loss, chances are you will also be picking up a new house on the cheap. So if you sell and buy at roughly the same time, you become sort of ‘immune’ to the swings of the market.

But most of them just simply loved the houses they saw and didn’t even bother to bargain. The timing and the circumstances were perfect to start a home and they came away from the deal feeling happy and blessed.

The reverse is true as well. Sometimes people sell homes because they cannot bear to live in them anymore, whatever the PPI is at the moment.

A friend of mine recently sold an apartment that he and his partner were supposed to call home. But things didn’t work out and he dreaded coming home to the empty apartment every day.

So he bought the unit just downstairs, even though it was more expensive and the property market was about to turn against him. But I think he’s much happier for it.

In the end, it’s the intangibles of a property purchase that you best remember, not the psf figure you paid or how prices moved up or down after that.

And often, you can’t put any sort of price on the warmth of just settling down in life in a place that you can call your own.

When I was in school, I had a friend who spent much of his childhood moving from one rented house to another because his parents were perpetually waiting for the right time to buy.

It may well have turned out to be a prudent decision financially, but I still wouldn’t have wished that on anyone.

My young colleague says that whenever she gets into a panic about her home purchase, she calls her fiance and he calms her down.

I tell her that it’s not so much where the property index is headed after this that matters, but where the curve of her relationship now goes.

And in the current circumstances, my hope is that never the twain shall meet.