“It is not in case 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 taking into consideration 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 advantage by entering the property market and generating residual income from rental yields instead of putting their cash secured. Based on the current market, I would advise they keep a lookout for any good investment property where prices have dropped an estimated 10% rather than putting it in a fixed deposit which pays 0.5% and does not hedge against inflation which currently stands at some.7%.
In this aspect, my investors and I take any presctiption the same page – we prefer to reap the benefits of the current low price and put our make the most property assets to produce a positive cash flow via rental income. I myself have personally seen some properties generating positive monthly cash flow of a whole lot $1500 after off-setting mortgage costs. This equates a good annual passive income up to $18 000 per annum which easily beats returns from fixed deposits furthermore outperforms dividend returns from stocks.
Even though prices of private properties have continued to increase despite the economic uncertainty, we can easily see that the effect of the cooling measures have result in a slower rise in prices as in order to 2010.
Currently, we can see that although property prices are holding up, sales start to stagnate. I’m going to attribute this to the following 2 reasons:
1) Many owners’ unwillingness to sell at less expensive prices and buyers’ unwillingness to commit together with higher charges.
2) Existing demand for properties exceeding supply due to owners finding yourself in no hurry to sell, consequently in order to a increase prices.
I would advise investors to view their Singapore property assets as long-term investments. Really should not be excessively alarmed by a slowdown each morning property market as their assets will consistently benefit in the long term and trend of 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 in addition to the residential segment (such as New Launches & Resales), they may also consider inside shophouses which likewise will help generate passive income; are usually not controlled by the recent government cooling measures such as the 16% SSD and jade scape 40% downpayment required on residential properties.
I cannot help but stress the value of having ‘holding power’. You shouldn’t ever be forced to sell house (and develop a loss) even during a downturn. Be aware that the property market moves in a cyclical pattern and require to sell only during an uptrend.