“It is not when you buy but when you sell that makes distinction is the successful 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 will have 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 residual income from rental yields associated with putting their cash secured. 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 0.5% and does not hedge against inflation which currently stands at simple.7%.
In this aspect, my investors and I take presctiption the same page – we prefer to take advantage of the current low price and put our money 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 to an annual passive income as much as $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 go up despite the economic uncertainty, jade scape we could see that the effect of the cooling measures have result in a slower rise in prices as when compared with 2010.
Currently, we are able to access that although property prices are holding up, sales are beginning to stagnate. I will 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 price.
2) Existing demand unaltered data exceeding supply due to owners finding yourself in no hurry to sell, consequently leading to a rise in prices.
I would advise investors to view their 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 over time and boost 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 buyers who would like invest some other types of properties in addition to the residential segment (such as New Launches & Resales), they could also consider buying shophouses which likewise might help generate passive income; that are not at the mercy of the recent government cooling measures prefer the 16% SSD and 40% downpayment required on residential properties.
I cannot help but stress the importance of having ‘holding power’. Never be required to sell your stuff (and create a loss) even during a downturn. Remember that the property market moves in a cyclical pattern and really sell only during an uptrend.