“It is not when you buy but when you sell that makes the gap 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 gift by entering the property market and generating second income from rental yields associated with putting their cash in the bank. Based on the current market, I would advise that they keep a lookout any kind of 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 are on 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 with regard to an annual passive income as high as $18 000 per annum which easily beats returns from fixed deposits and also outperforms dividend returns from stocks.
Even though prices of private properties have continued to elevate despite the economic uncertainty, we can 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’m going to attribute this to the following 2 reasons:
1) Many owners’ unwillingness to sell at less expensive costs and buyers’ unwillingness to commit with a higher charges.
2) Existing demand for properties exceeding supply due to owners finding yourself in no hurry to sell, consequently resulting in a rise in prices.
I would advise investors to view their Singapore property assets as long-term investments. Really should not be excessively alarmed by a slowdown in the property market as their assets will consistently benefit in time and increasing amount of value due to the following:
a) Good governance in Singapore
b) Land scarcity in Singapore, jade scape and,
c) Inflation which will place and upward pressure on prices
For buyers who would like invest consist of types of properties in addition to the residential segment (such as New Launches & Resales), they furthermore consider throughout shophouses which likewise will help generate passive income; and therefore not prone to the recent government cooling measures prefer the 16% SSD and 40% downpayment required on homes.
I cannot help but stress the value of having ‘holding power’. You should never be expected to sell house (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.