When it comes to human existence, property is up there in importance with the Big Three: eat, pray, and love.
We eat to survive. We pray to achieve self-actualization. We love to give something of ourselves to others.
Property shelters the Big Three. In our homes, we share meals and love with family and friends.
At the kitchen table, we better ourselves through self-reflection, study, family discussions, and prayer.
In the living room, we celebrate family love, whether it’s a holiday gathering or a squabble over something mundane or a rowdy evening of mahjong.
One conversation that frequently comes up at dining tables around the world:
“Did you hear the Jones are selling their home?”
“How much are they asking?”
“<Insert number>.”
“No way. That’s much more than the Lee family just sold their home for and they’re practically the same homes.”
“I bet the Jones are going to get it.”
“You’re crazy.”
“No, the market’s crazy <insert ‘lah’ if in Singapore>.”
When it comes to property, there are two data points that every homeowner in every neighbourhood in every corner of the world tracks: home value and the asking price for neighbouring homes.
In the olden days, it was difficult to gauge the true value of your home. There were few data points known to you and your family as you sat around the dining room table. As such, determining the value of your home was often based on what you heard on the streets. In other words, valuing a home was based on unsubstantiated information which meant the process was speculative and often emotional.
“Honey, did you hear what the Singhs sold their home for? I bet we could get more for ours.”
“But, Love Bunny, have you seen their kitchen? Their stove sparkles. It belongs in a Michelin 3-Star restaurant.”
“Do they even know how to cook?” (Snarky response from spouse.)
“Daddy, my bedroom is so much nicer than Kaira’s.”
“Honey, I think we can get at least 20% more for our home.”
Back then, there wasn’t sufficient access to information for homeowners to measure the value of their home based on fundamentals like location, comparable transactions, asking prices on real comparable units, capital appreciation, rental yield, and turnover.
Now, big data and information technology have changed the way people talk about property value.
“Love Bunny, our agent and I reviewed the X-Value for our home and compared it with five recent transactions, one of which was just transacted just last week. We can get a price for our home that would give us an annualized return of 9%.”
“Honey, then maybe we should think about banking our profit and rolling it into an upgrade.”
“Daddy, when the realtor was over here, he showed me an arbitrage opportunity in the Simei neighborhood. He thinks Melville Park is undervalued when compared with similar projects. I asked him to run a query on his SRX Analyzer and we found five other apartment buildings across three planning areas that look like good deals.”
“Wow, my Little Lamb, you are quite the precocious ten years old.”
You, too, can be precocious if you tap into today’s transparent property information and eat, pray, love, and talk property.