There are a lot of information available on the property market today. How do we make sense of all the information? Especially when there are conflicting information?
Let us explore what is information here:
Definition of Information
Facts provided or learned about something
We can observe daily in the news different kinds of information provided and we are presented with property information every day. For example,
The property prices have increased by 3% or rental rates has decreased by 2%.
These are factual numbers.
The information presented to us are based on past results of how the property market has been performing.
By observing the individual piece of information alone may not give us insights into the property market. So, what is insight?
Definition of Insight:
An accurate and deep understanding.
From the definition of both information and insights, what are the differences between them?
While property information gives us a clear indication of how the property market had been performing, it does not give us a deep understanding on how the property market will be projected to move in the future. It does not explain why the market is heading up or down according to the numbers represented in the information.
Therefore, property insights are a deeper understanding of why the market is moving the way the information is being presented. For example, if the property market is moving up, what are the reasons that caused the market to move up? Only with good property insights then we can draw meaningful conclusions on why the market is behaving the way it is.
With good property insights, we can make a better projection on how the market will be expected to be moving in the future. Of course, no one can be absolutely sure of how the market will move in the future. However, with property insights, it can give us a clearer indication of the probability the marketing moving up or down in the future.
Let us use the URA price index as an example.
Here we can see from the information given that the price index is going down. However, we cannot understand from this property index why did the market is moving down. Furthermore, we cannot predict the future trend from this information alone.
Another example, you are being told that a property has certain rental yield. Looks attractive. But can it be rented out? We need insights to understand rentability.
So, how do we gain property market insights? In order to do so, we need to see a much bigger picture. We need to combine the various property information and develop the relationships between all those numbers and facts. For example, during the same period that the prices are going down, there is a very thin volume of transaction or demand for property purchase. This can partly explain that perhaps during that period, the supply is more that demand (volume of transaction) therefore the prices moved down.
If we want to develop good insights, we will have to look at other information like volume of transaction, future developments of the area, GDP, bank loan interest rates, government policies, rental yields, government land sales prices etc. After discovering the relationship between all the information can we then form meaningful insights.
Only with a wholistic picture of the entire property market that we can gain fruitful insights of the property market.
If you like to know the insights to the property market today, you can contact us