“It is not when you buy but when you sell that makes principal to your profit”.
Hence I consistently advise my investors to be sure 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 would have to pay if they sell their property before four years.
Once they have determined the amount of finances they are willing to outlay, jade scape they will set themselves at a gift by entering the property market and generating a second income from rental yields instead of putting their cash in the bank. Based on the current market, I would advise may keep a lookout any kind of good investment property where prices have dropped an estimated 10% rather than putting it in a fixed deposit which pays .5% and does not hedge against inflation which currently stands at 5.7%.
In this aspect, my investors and I take presctiption the same page – we prefer to reap the benefits of the current low fee 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 up to $1500 after off-setting mortgage costs. This equates a good annual passive income of up 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 despite the economic uncertainty, we can see that the effect of the cooling measures have cause a slower rise in prices as when compared with 2010.
Currently, we observe 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 less expensive costs and buyers’ unwillingness to commit to a higher charges.
2) Existing demand for properties exceeding supply due to owners finding yourself in no hurry to sell, consequently resulting in a embrace prices.
I would advise investors to view their Singapore property assets as long-term investments. Will need to not be excessively alarmed by a slowdown in the property market as their assets will consistently benefit in the longer term and boost in value as a result of following:
a) Good governance in Singapore
b) Land scarcity in Singapore, and,
c) Inflation which will place and upward pressure on prices
For buyers who would like invest in other types of properties apart from the residential segment (such as New Launches & Resales), they might also consider investing in shophouses which likewise will help generate passive income; and thus not prone to the recent government cooling measures such as the 16% SSD and 40% downpayment required on homes.
I cannot help but stress the significance of having ‘holding power’. You shouldn’t be required to sell household (and develop a loss) even during a downturn. Remember that the property market moves in a cyclical pattern and require to sell only during an uptrend.