Singapore property outlook 2017 and if forecasters got it accurate

Narrative and numbers

Property market outlook

What does the property market hold in store for investors and homeowners in 2017 and 2018?

Who wouldn’t like to know? Singaporeans, and Asians in general, have this obsessive attitude towards property ownership, thinking that it can help them get rich.

Get rich yes. Overnight? Rare unless you happen to own a unit in a development that is going to undergo en-bloc. Over time, likely.

Returns for the property asset class have generally tended to be between equities and bonds over the long term. Figures are usually in the mid to high single digit or low double digit range per annum.

As a recap, equities tend to give higher returns but with higher risk. Bonds provide the least return but with the advantage of lowest risk.

Property or REITs provide a return and risk in between equities and bonds.

With the money to be made in the property market eco-system, many have resorted to forecasting the future.

I’ve always been stumped as to how people know how the property market is going to fare in future. Sure, there are educated guesses, but absolute statements like “the market is in a trough”, “the market will pick up next year” imply a prophetic ability of the speaker to know the future.

With that in mind, I decided to do a google search and see how property market forecasters fare with their forecast.

Summary, about 50/50 of property forecasters or armchair critics got the direction of the market wrong.

Finding out if forecasters get things right

  • Search term in google is “Property outlook sg” on 4 Sept 2017
  • Took the search results where the author, in the title, clearly lists out where the property market is headed for the next year
  • Assume that the property market will pick up from today (I wouldn’t know any better, but we need to make an assumption of the property market direction going forward)
  • Compare these forecasts with where the property market will head in future (prices and sentiment up, as mentioned in bullet point above)


  • 50% of forecasters got it wrong.

This implies if I flip a coin 100 times, and for every time there is a heads, I say the market will improve and vice versa, I would be as good, or as dismally wrong as these forecasters.

Let’s see who got it right and wrong.


Almost right. The Singapore residential property market was still falling in 2016.

Prop market outlook 7

Wrong. Prices have stabilized this year.

Prop market outlook 6

Right. Property market picking up.

Prop market outlook 5

For purposes of the experiment, this is wrong as we are assuming the market is picking up from now. Though nobody knows.

Prop market outlook 4

Right. Property market bottoming out in 2017. Though nobody knows for sure.

Prop market outlook 3

Almost right. Market bottoming out in 2017.

Prop market outlook 2


Prop market outlook 1

Moral of the story

  • Forecasting doesn’t work. Nobody knows the future.
  • People can make educated guesses about the future but I reckon most ‘educated guesses’ are a combination of personal intuition, extrapolations from single data points or few trends and anecdotal evidence, all of which are subject to biases.
  • I second what Damodaran, an NYU professor says – use both numbers and stories in investments (Narrative and numbers and Google Talk)

Excerpt from his book

How can a company that has never turned a profit have a multibillion dollar valuation? Why do some start-ups attract large investments while others do not? Aswath Damodaran, finance professor and experienced investor, argues that the power of story drives corporate value, adding substance to numbers and persuading even cautious investors to take risks. In business, there are the storytellers who spin compelling narratives and the number-crunchers who construct meaningful models and accounts. Both are essential to success, but only by combining the two, Damodaran argues, can a business deliver and sustain value.

Through a range of case studies, Narrative and Numbers describes how storytellers can better incorporate and narrate numbers and how number-crunchers can calculate more imaginative models that withstand scrutiny. Damodaran considers Uber’s debut and how narrative is key to understanding different valuations. He investigates why Twitter and Facebook were valued in the billions of dollars at their public offerings, and why one (Twitter) has stagnated while the other (Facebook) has grown. Damodaran also looks at more established business models such as Apple and Amazon to demonstrate how a company’s history can both enrich and constrain its narrative. And through Vale, a global Brazil-based mining company, he shows the influence of external narrative, and how country, commodity, and currency can shape a company’s story. Narrative and Numbers reveals the benefits, challenges, and pitfalls of weaving narratives around numbers and how one can best test a story’s plausibility.

Narrative and numbers
  • My personal view towards investments is “does this investment work in today’s market” i.e. Will it give me my return of say, 10% per annum, if I buy it at today’s price and rent it out at today’s rental levels