RES exam question on Real Estate Market: Mr Tan, a newly registered salesperson, is preparing notes for first-time investors…
Mr Tan, a newly registered salesperson, is preparing notes for first-time investors on why property does not trade like everyday goods. Before he hands them out at a seminar next week, his team leader checks four of his statements. (i) Property is divisible, so an investor can buy a fraction of a unit just as he would a board lot of shares. (ii) Since each year's completions are large next to the existing stock, new supply quickly sets the price level. (iii) Because homes are heterogeneous, a valuer may take the last sale in the block as the value without adjustment. (iv) Property is lumpy: a buyer takes the whole unit, so purchases are large and depend heavily on financing. Which is/are correct?
- A(iv) only
- B(i) and (iv) only
- C(ii), (iii) and (iv) only
- D(iii) and (iv) only
Show answer & explanation
Answer
A. (iv) only
Explanation
Answer: (iv) only. Only lumpiness is described correctly; the others reverse how property differs from a normal market.(iv) True. Lumpiness makes purchases large and dependent on loans.Rule: Real estate is heterogeneous, immobile, durable, illiquid and indivisible (lumpy), with high transaction costs, imperfect information and a long supply lag. Buildings last decades, so the stock dwarfs each year's new supply, and no two properties are identical, so valuation relies on adjusted comparables.Source: RESPrep /learn/real-estate-market-and-government-intervention, current at 1 Oct 2026
Why the other options are wrong
- (i) False. A direct buyer takes the whole unit. Divisibility is a feature of REIT units and shares, not of the property itself.
- (ii) False. It reverses the rule: completions are small against the stock, so supply cannot quickly set the price.
- (iii) False. Heterogeneity is the reason comparables must be adjusted for floor, size, tenure, condition and time.
Study the concept behind this question: The Property Market & Government Intervention (Singapore)
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