Committing to Singapore Properties
“It is not in case you buy but when you sell that makes the difference to your profit”.
Hence I consistently advise my investors to be certain they have gone through their financial plans thoroughly as they will be entering into a 4-year commitment – after taking into consideration the 4-year Seller’s Stamp Duty (SSD) that they will want to pay if they sell their property before 4 years.
Once they have determined the amount of finances they are willing to outlay, they will set themselves at a boon by entering the property market and generating a second income from rental yields associated with putting their cash staying with you. Based on the current market, I would advise they keep a lookout regarding any good investment property where prices have dropped an estimated 10% rather than putting it in a fixed deposit which pays two.5% and does not hedge against inflation which currently stands at some.7%.
In this aspect, my investors and I are on the same page – we prefer to reap the benefits the current low pace and put our profit in property assets to produce a positive cash flow via rental income. I myself have personally seen some properties generating positive monthly cash flow of as many as $1500 after off-setting mortgage costs. This equates for annual passive income of up to $18 000 per annum which easily beats returns from fixed deposits and also outperforms dividend returns from stocks.
Even though prices of private properties have continued to rise despite the economic uncertainty, we can see that the effect of the cooling measures have can lead to a slower rise in prices as in comparison to 2010.
Currently, we are able to access that although property prices are holding up, sales are beginning to stagnate. Let me attribute this for the following 2 reasons:
1) Many owners’ unwillingness to sell at less expensive costs and buyers’ unwillingness to commit with a higher the price tag.
2) Existing demand unaltered data exceeding supply due to owners finding yourself in no hurry to sell, consequently in order to a improve prices.
I would advise investors to view their Singapore property assets as long-term investments. They ought to not be excessively alarmed by a slowdown in the property market as their assets will consistently benefit in the longer term and trend of value because of the following:
a) Good governance in Singapore
b) Land scarcity in Singapore, and,
c) Inflation which will set and jade scape upward pressure on prices
For buyers who would like invest various other types of properties besides the residential segment (such as New Launches & Resales), they likewise consider purchasing shophouses which likewise support generate passive income; and thus not prone to the recent government cooling measures such as the 16% SSD and 40% downpayment required on residential properties.
I cannot help but stress the significance of having ‘holding power’. Never be forced to sell your house (and create a loss) even during a downturn. Be aware that the property market moves in a cyclical pattern and it’s sell only during an uptrend.