“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 with the 4-year Seller’s Stamp Duty (SSD) that they would have 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 gift by entering the property market and generating a second income from rental yields compared to putting their cash secured. Based on the current market, I would advise that they keep a lookout for good investment property where prices have dropped more than 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 prescription the same page – we prefer to reap the benefits of the current low pace and put our profit 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 of up to $1500 after off-setting mortgage costs. This equates for annual passive income as high as $18 000 per annum which easily beats returns from fixed deposits plus outperforms dividend returns from stocks.
Even though prices of private properties have continued to elevate despite the economic uncertainty, we could see that the effect of the cooling measures have caused a slower rise in prices as in comparison to 2010.
Currently, jade scape we look at that although property prices are holding up, sales are starting to stagnate. I will attribute this into the following 2 reasons:
1) Many owners’ unwillingness to sell at lower prices and buyers’ unwillingness to commit into a higher charges.
2) Existing demand for properties exceeding supply due to owners being in no hurry to sell, consequently leading to a improve 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 your market property market as their assets will consistently benefit in the long run and increase in value because of the following:
a) Good governance in Singapore
b) Land scarcity in Singapore, and,
c) Inflation which will place and upward pressure on prices
For clients who would like invest some other types of properties aside from the residential segment (such as New Launches & Resales), they could also consider throughout shophouses which likewise assist generate passive income; are usually not subject to the recent government cooling measures similar to the 16% SSD and 40% downpayment required on homes.
I cannot help but stress the value of having ‘holding power’. You shouldn’t ever be forced to sell 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.