You may have heard of the excuse agents use for a slow August:

“Oh yes, it was the Hungry Ghost Festival, that’s why”

For those who don’t know, the “Ghost Festival” (“GF”) falls on the seventh month of the lunar calendar (i.e. from August) and usually lasts for one month (i.e. say until September).

It is believed that individuals should avoid making major decisions (such as buying a home) during this time or else they may experience bad fortune in the future.

While our society is more westernized now, the practice of ritual offerings around our estates (and formerly Getai) to appease our “good brethren” is still somewhat prevalent.

Therefore, this superstitious belief remains relevant in Singapore. Although it is shown that during a hot market like 2021, sales in August actually continued to rise – contrary to popular belief.

That said, it’s also no surprise that developers generally avoid launching their developments during Hungry Ghost Month.

However, in recent years we see some significant developments that have turned the tide in recent years (see Table 1 below), which saw encouraging sales due to their attractive prices at the time.

The strength in sales was also partly due to the dwindling supply of new homes and construction delays due to the pandemic, which led to pent-up demand from homebuyers, as evidenced by rising underwriting rates.

It also shows that the developers are shrewd, capitalizing on prevailing market sentiment while ignoring superstition, which has brought them good turnouts and margins.

Table 1: Project launches during the GF and corresponding participation rate

As such, should we avoid our superstitious beliefs and jump at opportunities like developers? Let us reveal our findings to you!

Notes on this study

Before presenting our results, we would like to point out a few caveats/points in our data set, which are similar to our previous article on Chinese numerological superstition on house prices, except for the last point on the categorization of data.

• Since the sale and resale of public apartments is tightly regulated by the Housing and Development Board (e.g. subject to ethnic integration policy and SPR quota, foreign ownership restriction), we have focused this study of private real estate transactions over the past 26 years, where preferences for out-of-home real estate purchases before or after the GF are more likely to be fully revealed, as there are fewer restrictions and more data available.
• Our dataset does not include personal details such as age, race, nationality and education level of property buyers, which prevents us from establishing a more meaningful correlation between certain variables and the propensity to be superstitious (e.g. non-Chinese may be less concerned with buying properties during the GF).
• Our study attempts to find out if there are significant economic gains or losses for those who bought/sold during the Ghost Festival period and is based on actual transactions. It does not take into account other factors such as holding period, seniority or year of sale.
• Two categories of houses were used for this study as given below –
  • GF_Months – refers to transactions that took place during the GF; and
  • Non-GF_Months – refers to transactions that took place outside of the GF.

Main findings

We have gathered some key findings based on the insights we gleaned from the data and summarized them as follows:

• Homes sold during GF months in all regions saw better gains, albeit slightly than those that occurred during non-GF months, bucking the locally ingrained superstitious culture.
• Gains on all home sizes in GF months exceeded gains in non-GF months, albeit by a very marginal amount.
• There is no strong evidence to suggest that developments with “auspicious” names provide higher returns (eg Napier 8, Mackenzie 88) during non-GF months.
• Homes sold during GF months saw better gains in most transaction types (eg, undersales, resales), albeit marginally.

1. Homes sold during Ghost Festival months saw slightly better gains in all regions (not statistically significant)

Yes, there was no typo in the header.

Although it has been postulated that Ghost Festival months see fewer transactions due to the traditional taboo, we were surprised to find that the number of transactions per month during this period was actually higher on a monthly basis. in recent years, disproving conventional belief (see tables two and three). We don’t know if this suggests that people are becoming less responsive to real estate transactions, as further research would be needed to uncover the reasons for this observation.

Moreover, the average profitability between those who sold during the Ghost Festival months and those who sold outside of this window does not differ much. While average profitability is higher in all three regions during the Ghost Festival period, the gains are so marginal that they are considered to be of no significant significance.

Perhaps if volume were significantly lower during those Ghost Festival months when the “most desperate” are selling their homes, the economic significance would likely be observed. Yet the volume tells us otherwise, leading this author to believe that the month of Ghost Festival makes little difference in the economic impact on the seller.

2. Earnings for all house sizes during Ghost Festival months were slightly higher

In our previous study, we shared that larger homes (i.e. four bedrooms and above) had higher profits if they had “auspicious” numbers, which can be interpreted as a form of “ostentatious spending”, whereas those who can afford bigger houses would. also probably paying a premium to own one with “auspicious” numbers.

However, we also noticed that almost all house sizes (except one-bedrooms) with “inauspicious” numbers performed as well, if not better, than their counterparts with “auspicious” numbers. By extension, buyers of the latter might also not mind buying homes during an “inauspicious” time.

Consistent with the previous finding of this study, we saw that higher profits were recorded during GF months for all house sizes (see Table 4), although the difference was subtle at around 1% or slightly less. . Again, we noticed that the number of transactions per month that took place during GF months was higher than during non-GF months, contradicting the ingrained taboo in our society.

3. No solid evidence to suggest that developments with “auspicious” names offer higher returns during Ghost Festival months

As noted in our previous research, we did not find strong evidence that the buildings offer better returns, as most of these developments are boutique in nature and have not been transacted frequently.

Similarly, there was no clear advantage of sellers in non-GF months over those in GF months (please see Table 5 below), although the same trend of a higher number of transactions per month during the GF months has persisted. It could also imply that building names carry less weight than house numbers in terms of the degree of superstitious belief.

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4. Homes sold during the Ghost Festival months earned slightly higher profits across all transaction types

By now you may have noticed the recurring trend that real estate transactions recorded in GF months have a higher volume. This is true even for all trade types, with only undersell to undersell trades having the same average volume on a monthly basis.

Although it seems that the Ghost Festival months have taken an advantage over the Non-Ghost Festival months on almost all types of transactions, except for underselling to reselling, the gains are only slightly different. Therefore, there is not much economic impact on whether it is sold or not during the non-ghost festival period.

Conclusion

This study provides another revelation that superstitious belief does not impact the benefits of properties that may seem to be a popular belief among many. Whether this is the result of a more educated, globalized and westernized society is beyond the scope of my conclusions.

However, one thing is certain – the fact that the volume of transactions was not significantly different during the Ghost festival period compared to the Non-Ghost festival period shows that Singaporeans, in general, are not fazed by this superstition regarding their property. buy/sell decisions.

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They can do something as simple as rolling a pineapple on the floor on move-in day, but postponing a big decision like delaying the sale of your property just so it falls outside of that “inauspicious” time seems too much to bear.

This is especially true that you wouldn’t turn down a good offer just because it falls within this period, or that you would tolerate the inconvenience if you were in the rush to move.

And just as one Straits Times author wrote “…it could be called Bedbugz or D’Roach or La Casa Firetrap and its units would still be sold at 200,000 markup” – if you could sell your property at market value or more during the Ghost Festival, why does it really matter anyway?

So take a leap of faith and set aside your superstitious beliefs when it comes to making rational decisions like buying a home! After all, superstition, until proven by science, is more of a fear of the unknown. Only when we overcome our fear can we achieve true wisdom (and sometimes, wealth).

As an extension of this article, we’ll be looking at those who bought during the Ghost Festival period to see if there are any economic differences when they sell later. Stay informed!

This article first appeared in Stackedhomes.