Real estate is a topic very close to my heart, to the extent that I even visit showflats as a hobby. This explains why I am more than happy to review the book “Behind the Scenes of the Property Market” by Vina Ip. The book is broken down into 5 short and easy to follow chapters.
1. How To Lose Money In Properties
In a refreshing approach, Vina starts the book by showing how one can lose money in properties. This is vastly different from other books which only focus on educating investors on how to make money from investing in properties. Here are some of the pitfalls commonly made by amateur property investors:
- You have no clue
- You follow the herd
- You buy out of paiseh
- You buy into the hype
One particular segment “You think the grass is greener” resonates closely with me. I have previously shared that my dad lost a significant chunk of the household money by investing in 2 commercial units in Malaysia. If only he had possessed some of the knowledge stated here, perhaps he might not have made that fateful decision that would forever change my household’s financial destiny.
2. Lies, Lies and More Lies
In this chapter, Vina used real-life case studies to teach readers how to be more astute in reading news. She highlights the tension between the different stakeholders could often lead to skewed outcomes preferred by the paymasters. This is my own example of how one needs to analyse closer beyond eye-catching headlines to realise that the devil often lies in the details.
Another interesting segment is on “How to tell if your property agent is good?” Despite my knowledge in real estate, I hold the belief that I still need to have good property agents on my side advising my every move. There could always be blind spots and a middleman could add serious value by highlighting the dangers that lie ahead in an objective and unbiased manner. This is similar to my approach towards insurance agents, another middleman role that often invites mixed responses from the public.
3. Caution! High Risks Ahead
I think all of us probably heard of the story of [insert next of kin] who bought a HDB flat at <$100,000 and sold it at 6 or 7 times its original cost. Vina highlights that those stories happened because Singapore successfully transformed from an emerging market into a developed country during that golden period. I appreciate that Vina sets the context right once and for all as there are still property investors out there today who hold dearly onto the belief that this will be repeated once again.
Continuing from the previous chapter, Vina also highlights some of the biggest fallacies in property investment and popular property statements that don’t hold water. She also used Japan’s lost decade as a firm reminder that it is NOT always the case that property prices will surpass its previous high. Instead, they can stay depressed for a longer time than property investors can afford to stay in the market.
Vina also shared the lessons learnt from ageing HDB flats, a topic that I have written about as well. I highlighted the perils of paying over the top prices for HDB flats with leases that are unable to cover the home owners till their death. Furthermore, I do not hold the belief that Voluntary Early Redevelopment Scheme (‘VERS’) is the panacea to this very tricky issue.
4. The Road To Property Wealth
“Can you really afford it?” is a timely and good reminder for me. Readers would know that I deliberately opted for a HDB BTO with only 2 bedrooms and would have to upgrade to a bigger-sized unit if my family household expands further. As I deliberate on the options available to me, it is good to get reminded on Vina’s famous 3-3-5 housing affordability rule.
When I applied her 3-3-5 rule, I came to the realisation that buying a bigger HDB resale flat is a more realistic option and one that is more aligned with my goal of achieving financial freedom before age 40. Opting for a private property could take a hefty toll on my household’s finances as well as emotional well-being.
5. Property Trends And What’s Next?
Of all the chapters in the book, I like this chapter the most. Vina highlights 3 population trends that we all probably already know and astutely show what their implications would be on the residential market. This is critical as real estate investment is a long-term commitment and knowing whether there will be future rental and resale demand is a big part of the battle won.
There is also a last-minute but timely insertion of the “Impact of Covid-19 on the real estate market”. The pandemic has made people realised the importance of liveable space in a home and in my opinion, probably also sounded the death knell of shoebox units.
Finally, “what will real gems look like in the future”? This is probably the closest to Vina giving a hot tip away. The truth is that her insights here are really useful as they vindicate some of my personal real estate investment beliefs and help shape my long-term investment objectives in this asset class.
Behind the Scenes Of The Property Market by Vina Ip is available both online and at Kinokuniya and Popular bookstores.