Committing to Singapore Properties
“It is not when you buy but when you sell that makes principal 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 for the 4-year Seller’s Stamp Duty (SSD) that they will need to pay if they sell their property before four 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 passive income from rental yields rather than putting their cash on your bottom line. Based on the current market, I would advise they will keep a lookout regarding any good investment property where prices have dropped a great deal more 10% rather than putting it in a fixed deposit which pays two.5% and does not hedge against inflation which currently stands at simple.7%.
In this aspect, my investors and I are on the same page – we prefer to make the most of the current low interest rate and put our money in property assets to generate a positive cash flow via rental income. I myself have personally seen some properties generating positive monthly cash flow of as high as $1500 after off-setting mortgage costs. This equates to an annual passive income all the way to $18 000 per annum which easily beats returns from fixed deposits as well outperforms dividend returns from stocks.
Even though prices of private properties have continued to elevate despite the economic uncertainty, we can easily see that the effect of the cooling measures have caused a slower rise in prices as in comparison to 2010.
Currently, we look at that although property prices are holding up, sales start to stagnate. I’m going to attribute this into the following 2 reasons:
1) Many owners’ unwillingness to sell at lower prices and buyers’ unwillingness to commit into a higher the price tag.
2) Existing demand unaltered data exceeding supply due to owners being in no hurry to sell, consequently leading to a improve prices.
I would advise investors to view their jade scape singapore property assets as long-term investments. They should not be excessively alarmed by a slowdown each morning property market as their assets will consistently benefit in time and boost in value because of the following:
a) Good governance in Singapore
b) Land scarcity in Singapore, and,
c) Inflation which will set and upward pressure on prices
For clients who would like invest some other types of properties apart from the residential segment (such as New Launches & Resales), they furthermore consider inside shophouses which likewise can help generate passive income; and are not controlled by the recent government cooling measures prefer the 16% SSD and 40% downpayment required on homes.
I cannot help but stress the significance of having ‘holding power’. You shouldn’t ever be expected to sell your house (and make a loss) even during a downturn. Always remember that the property market moves in a cyclical pattern and you will need to sell only during an uptrend.
