Commentary: Be mindful of cognitive biases when buying your dream HDB home

CNA12-18

SINGAPORE: Even as the “Singapore Dream” evolves, home ownership remains a quintessential component for many. It’s a part of “adulting”, a signpost of maturity and responsibility and widely regarded ...

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It’s a part of “adulting”, a signpost of maturity and responsibility and widely regarded ...</p>\n\n<a href=\"https://www.channelnewsasia.com/commentary/hdb-resale-price-affordable-public-housing-million-dollar-4802876\">Source Link</a>\n\n</div>\n","source":"can_highlight","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Commentary: Be mindful of cognitive biases when buying your dream HDB home</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nCommentary: Be mindful of cognitive biases when buying your dream HDB home\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-12-18 06:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.channelnewsasia.com/commentary/hdb-resale-price-affordable-public-housing-million-dollar-4802876><strong>CNA</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SINGAPORE: Even as the “Singapore Dream” evolves, home ownership remains a quintessential component for many. It’s a part of “adulting”, a signpost of maturity and responsibility and widely regarded ...</p>\n\n<a href=\"https://www.channelnewsasia.com/commentary/hdb-resale-price-affordable-public-housing-million-dollar-4802876\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"SG9999014005.SGD","symbol_name":"United Global Durable Equities Fund Acc SGD","start_time":0,"source_url":"https://www.channelnewsasia.com/commentary/hdb-resale-price-affordable-public-housing-million-dollar-4802876","article_id":"2492349911","we_media_id":null,"thumbnails":["https://onecms-res.cloudinary.com/image/upload/s--0_I4RjMf--/c_crop,h_840,w_1494,x_5,y_98/c_fill,g_auto,h_468,w_830/fl_relative,g_south_east,l_mediacorp:cna:watermark:2021-08:cna,w_0.1/f_auto,q_auto/v1/mediacorp/cna/image/2021/10/28/hdb_blocks_at_night_in_toa_payoh_03.jpg?itok=-zQdUTtN"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2492349911","pubTimestamp":1734472800,"columns":[],"sourceInfo":{"source_id":"can_highlight","name":"CNA"},"weMediaInfo":null,"summary":"Look beyond the robust resale market, there are three underlying cognitive biases that shape how we think and talk about public housing, says RSIS’ Leong Chan-Hoong.","collect":0,"end_time":0,"defaultTopTitle":"channelnewsasia.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"SG9999014005.SGD":"United Global Durable Equities Fund Acc SGD","LU2279701549.SGD":"JPMorgan Funds - Emerging Markets Sustainable Equity A (acc) SGD","SG9999014013.SGD":"United Global Durable Equities Fund Dis SGD","LU1804176565.USD":"EASTSPRING INV GLOBAL GROWTH EQUITY \"A\" (USD) ACC","LU1854104046.USD":"M&G (LUX) POSITIVE IMPACT \"A\" (USD) ACC","BK4588":"碎股","LU0197229882.USD":"富达印度焦点基金","CFA.SI":"NikkoAM-STC Asia REIT","LU1105468828.SGD":"Allianz Total Return Asian Equity AM DIS H2-SGD","LU0231203729.USD":"富兰克林印度基金A (acc)","5OC.SI":"科优","BK6520":"工商业服务概念","BK4207":"综合性银行","LU0918141705.HKD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"AM\" (HKD) INC","LU0630378692.HKD":"HSBC GIF ASIA PACIFIC EX JAPAN EQ HD \"AM2\" (HKD) INC","LU0348814723.USD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"A\" (USD) INC  NC","LU0348744763.USD":"ALLIANZ ASIA PACIFIC INCOME \"A\" (USD) INC","LU2177674079.SGD":"Fidelity Asia Pacific Opportunities A-ACC-SGD (hedged)","LU1282648689.USD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"AMG\" (USD) INC","BK4535":"淡马锡持仓","LU0797268264.HKD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"AT\" (HKD) ACC","LU1805238398.USD":"FIDELITY INDIA FOCUS \"A\" (USD) ACC","LU2008162690.USD":"FIDELITY FUNDS - ASIA PACIFIC OPPORTUNITIES \"A\" (USD) ACC","LU0456842615.SGD":"JPMorgan Funds - Emerging Markets Equity A (acc) SGD","HDB":"HDFC银行","LU1267930656.SGD":"FRANKLIN INDIA \"AS\" (SGD) ACC A","LU0918141887.USD":"安联亚洲实际收益股票基金","LU0868486357.SGD":"JPMorgan Funds - Emerging Markets Opportunities A (acc) SGD-H","LU0630378429.USD":"HSBC GIF ASIA PACIFIC EX JAPAN EQ HD \"AM2\" (USD) INC","LU0536402901.SGD":"FTIF - Franklin India A (acc) SGD","LU0197773160.USD":"HSBC GIF ASIA PACIF EX JAPAN EQ HD \"AC\" ACC","LU0287143357.SGD":"Fidelity India Focus A-SGD","LU0197773673.USD":"HSBC GIF ASIA PACIF EX JAPAN EQ HD \"AS\" (USD) INC","LU0541501648.USD":"ALLSPRING  EMERGING MARKETS EQUITY \"A\" (USD) ACC","LU0348816934.USD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"AT\" (USD)","SG9999014021.USD":"UNITED GLOBAL DURABLE EQUITIES (USDHDG) ACC","LU0708995666.HKD":"FRANKLIN INDIA \"A\" (HKD) ACC","LU0528227936.USD":"富达环球人口趋势基金A-ACC","LU1854103824.USD":"M&G (LUX) POSITIVE IMPACT \"A\" (USD) INC","LU1791710582.SGD":"Fidelity Global Demographics A-ACC-SGD (SGD/USD hedged)","BK4585":"ETF&股票定投概念","BK4523":"印度概念","LU0541502299.USD":"ALLSPRING  EMERGING MARKETS EQUITY \"I\" (USD) ACC","LU1791710400.SGD":"Fidelity Global Demographics A-ACC-SGD","LU0431992006.USD":"摩根大通新兴市场机会A（acc）","BK4566":"资本集团","LU0390134368.USD":"FRANKLIN GLOBAL GROWTH \"A\" (USD) ACC","BK6045":"建筑与工程","LU2226246903.HKD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"AT4\" (HKD) ACC","LU2265009873.SGD":"Eastspring Investments - Global Growth Equity AS SGD-H"},"translate_title":"评论：购买梦想中的组屋时要注意认知偏差","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"5OC.SI":1,"CFA.SI":1,"HDB":1},"content_text":"SINGAPORE: Even as the “Singapore Dream” evolves, home ownership remains a quintessential component for many. It’s a part of “adulting”, a signpost of maturity and responsibility and widely regarded as a retirement egg nest.\nDespite the exuberant post-pandemic property market, a Housing and Development Board (HDB) flat remains affordable to the majority.\nAccording to the 2024 Home Attainability Index published by global nonprofit Urban Land Institute, Singapore’s public housing reported a price-to-income ratio of 4.7, a sharp contrast to similar cities such as Seoul (17.8) and Hong Kong (25.1). The ratio reflects how many years of annual income would be needed to purchase a home.\nThat said, there are also worrying indications that some consider public housing as a vehicle for wealth creation, a foolproof way for quick financial returns. The rise in resale HDB prices – 44 per cent over the past four years – especially at prime locations and the preference for larger apartments that yield greater capital gain are signs that public housing is not regarded as merely a roof over the head by some.\n\n\n\n\n\n\n\n\n\n\n\n\n\nThe residential market is fuelled by many factors, such as the global pandemic and the consequential delay in construction activities. But underneath the robust demand, however, are three interwoven cognitive biases, that shape how we think and talk about housing.\nREPRESENTATION BIAS: ARE MILLION-DOLLAR HDB FLATS THE NEW NORMAL?\nHeadlines on million-dollar HDB transactions have captured imaginations in the past two to three years.\nNotwithstanding that the market value of flats is a positive reflection of economic progress, social and mainstream media coverage of these cases often creates what psychologists call a representation bias, where readily available information dominates the decision-making process.\nIn this case, buyers and sellers come to view million-dollar transactions as the norm. This inadvertently sets a benchmark of desired outcomes that do not reflect the broader and more varied market of typical home values.\nBased on a check of publicly available HDB data at the time of writing, it concerns a small fraction (3.66 per cent) of more than 26,000 resale transactions this year. And it pales in comparison to the pool of 21,225 new units launched in 2024. \n\n\n\n\nOPTIMISM BIAS: IS THE HOUSING BOOM A NEVER-ENDING PARTY?\nThere is a prevailing belief that housing prices will only continue to climb due to the post COVID-19 residential shortages. This view is reinforced by market players whose narratives emphasise continuous growth, playing up representation bias in their favour in marketing brochures.\nIn unpacking home buyers’ motivation, it is therefore critical to examine assumptions of the longer-term outlook. Specifically, the sense of optimism bias, where buyers are confident that property at any price point today is a sound investment for the future.\nBut there have been sombre periods for home buyers caught in cyclical adjustments. In the last 30 years, public housing registered more than four consecutive quarters of negative or flat quarter-on-quarter price growth during three periods: nine quarters of decline from 1997 to 1999, five quarters from 2000 to 2002 and 24 quarters most recently from the third quarter of 2013 to the second quarter of 2019.\nIt is a timely reminder to be financially prudent amid economic uncertainty.\n\n\n\n\n\n      File photo. A new flat classification by land pricing is now in place to curb buyers from speculative practices and social stratification. (Photo: TODAY/ Ili Nadhirah Mansor)\n    \n\n\n\n\nLOSS AVERSION BIAS: IS WAITING AN “OPPORTUNITY COST”?\nThe last cognitive frame to unshackle is loss aversion. We are more sensitive to the prospect of losing than gaining a good bargain.\nWith buoyant resale prices, home buyers may feel pressured to commit quickly for fear of missing out. Waiting for more affordable options becomes an “opportunity cost” and some may accept asking prices that push the boundaries of their affordability, if they are convinced prices will only go up.\nIn Singapore’s urbanised and land scarce environment, there is both a competitive and comparative element, especially for units located in prime locations.\nThe concoction of the three psychological processes makes the housing resale market tricky to navigate, especially when everyone involved – sellers, buyers and realtors – have a vested interest in an extended bullish market to preserve their prospective return on investment. \nOVERCOMING OUR PSYCHOLOGY\nWhile these biases shape decision-making, bad choices are not inevitable. A 2021 OCBC survey suggests that more Singaporeans are learning to look beyond instant gratification and adopt healthier financial habits, such as making retirement plans earlier and simpler.\n\n\n\n\nThis adjustment in attitude is a function of policy and public education. And these tools can also be applied in the context of public housing.\nFirst, a new flat classification by land pricing is now in place to curb buyers from speculative practices and social stratification. The New Flat Classification Framework (Standard, Plus, Prime) comes with additional subsidies and restrictions, such as subsidy clawbacks and a longer minimum occupation period, that aim to keep HDB flats in more attractive locations affordable, fair, and inclusive.\nSecond, real estate advertisements that provide misleading information, promise unrealistic resale prices, or selectively highlight outlier transactions should be actively and decisively tackled by the authority. This acts to rein in misinformation and misrepresentation of the market.\nThird, it pays to moderate expectations and prepare buyers for possible income fluctuations in the years ahead. Singapore’s major global partners, such as the US, have retreated to a more protectionist frontier. It helps that buyers appreciates how tectonic geopolitical changes may impact their financial resilience.  \nLast, buyers need to remember the potential downsides of overextending financially. Drawing lessons from past market cycles can encourage a more grounded approach, and help buyers weigh the risks of stretching mortgages, which may lead to lifestyle constraints or financial stress in the long run.\nThe high proportion of home owners is unique to Singapore. This remarkable achievement is a result of our calibrated approach to public housing.\nHDB estates are microcosms of our multicultural society and are designed with the principles of stability, security and inclusion in mind. While it is crucial that residential real estate remains healthy, it is even more important that it is sustainable and inclusive.\nDr Leong Chan-Hoong is Head of Social Cohesion Research Programme at the S Rajaratnam School of International Studies (RSIS), Nanyang Technological University.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2492349911"}