Edit 9Jul 10am: Here at bigfatpurse we listen to our readers. The title has been changed in response to a reader’s comment that the previous one led people to salivate but eventually left them high and dry. We hope this one works better. For you only, Jack!
I am often met with expressions of curiosity and even disbelief when people find out that I am renting instead of owning and living in my own apartment. Given the fact that we have one of the highest level of property ownership in the world, renting is definitely not the norm and it makes a great conversation starter. More often than not the line of questioning would end up this way. Why are you renting? Why did you sell your house? How much did you sell your unit for? What are you going to do after your lease is up?
Of course this will sooner or later lead to a discussion on property prices in Singapore. I am of the view that driven by the confluence of cheap credit, relative stability of the domestic economy and an influx of hot money, properties are overbought and will correct in time to come. I am also of the view that the Government is capping the upside through whatever means they could muster. Not too long ago I was at the receiving end of a tirade trying to convince me that my view of the market is myopic and unfounded. The person I am conversing with smugly and indignantly remarked that with the majority of Singaporeans owning their own flat, allowing prices to fall will do more harm than good and our pragmatic Government will never ever allow that to happen.
Here's our mistakes. Don't do the same.
We asked 14 Singapore finance bloggers to share what they would do if they could go back in time and invest their first $20,000. They can no longer rewind time, but you can learn from their experience and hopefully start with a better footing.
Let us give that some thought.
I fly airplanes for a living (another great conversation starter!). To many people a pilot’s job is glamourous, and involves waltzing through airport terminals in exotic locales with the entire set of flight attendants in tow. To some piloting requires extreme skill beyond that of the normal man in the street. Yet others think of flying as elementary as sitting in our comfy chairs, pushing buttons, turning knobs and letting the autopilot do our job. None of them could be further than the truth.
The sky is a particularly unforgiving place and aviation is inherently dangerous. What makes it safer though, is the implicit understanding of that fact by everyone involved in aviation. Aircraft manufacturers build in multiple layers of redundancies such that should there be a fault in any system of the aircraft, be it a valve, pump, processing channel or the computer itself, another would always be on standby to take over. Aviation authorities require airlines to comply with strict maintenance regime and safety audits. Pilots have to be licensed and relicensed every six months for as long as they fly. No other industry and profession in the world is subjected to this level of regulation.
If I ever have to condense everything I do day in day out, it would have to be the following – Risk Management. My job is to fly my passengers and cargo safety from point A to point B and in order to be able to do that, I would need to understand all the factors that can prevent me from doing so. Many of them are within my control. For example, if we are made aware of possible air traffic congestion or if bad weather is forecasted at our destination, we could possibly carry more fuel. That would allow us to hold until our turn to land or till the weather has cleared and in turn, prevent a potentially hazardous approach in marginal weather.
Yet for every thing that is within my control, there are many others beyond. Despite the many layers of back up systems in the aircraft, we cannot control when a technical malfunction will occur. We cannot predict weather with certainty; clear air turbulence and windshear are always formidable forces to be reckoned with and can cause great damage. We can never expect rational human behavior, and there will always be terror cells all around the world plotting to bring down an aircraft to achieve their political and religious aims. Our training teaches us to react to emergencies instinctively. Our training also teaches us that despite all the efforts to mitigate risks and trap errors, there are many factors beyond us and to think otherwise would be dangerous and foolhardy.
It is in the Government’s greatest interest to keep the property market buoyant and healthy, just like it is in every pilot’s best interest to keep his aircraft flying safely and within limits. That is indisputable. The Government retains a high level of control, but likewise with the weather they cannot predict every storm on the horizon. There are many layers of redundancies to prevent fraud but as we have seen with the example of Lehman collapsing, one failure could trigger off a major sell off. And as with terrorism, there are many profit seeking elements staging and seeking a chance to profit financially from a catastrophe in the markets.
To claim that property prices in Singapore will never come down because the Government will not permit it to, is akin to saying that planes will never crash because pilots are flying them. And we all know that is furthest from the truth.
Note: At the time of writing, Asiana Airlines OZ214 crashed while attempting to land in San Francisco International Airport. The tail section became detached and a fire burned through the roof after coming to rest on the runway. The cause is unknown at this moment. The incident serves as a stark reminder of the fragilities of aviation. Our thoughts go out to the family of the passengers and crew.