“It is not when you buy but when you sell that makes learn to your profit”.
Hence I consistently advise my investors to take care that 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 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 advantage by entering the property market and generating second income from rental yields instead of putting their cash staying with you. Based on the current market, I would advise they keep a lookout for any good investment property where prices have dropped upwards of 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 use the same page – we prefer to take advantage of the current low price and put our money 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 as high as $1500 after off-setting mortgage costs. This equates for annual passive income all the way to $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 are able to access that the effect of the cooling measures have result in a slower rise in prices as the actual 2010.
Currently, we are able to access that although property prices are holding up, jade scape sales are beginning to stagnate. Let me attribute this on the following 2 reasons:
1) Many owners’ unwillingness to sell at more affordable prices and buyers’ unwillingness to commit together with higher the price tag.
2) Existing demand for properties exceeding supply due to owners finding yourself in no hurry to sell, consequently resulting in a enhance prices.
I would advise investors to view their Singapore property assets as long-term investments. They ought to not be excessively alarmed by a slowdown associated with 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 set and upward pressure on prices
For buyers who would like invest in other types of properties in addition to the residential segment (such as New Launches & Resales), they could also consider buying shophouses which likewise can help generate passive income; and are 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 need for having ‘holding power’. You shouldn’t be forced to sell your property (and create a loss) even during a downturn. Always remember that the property market moves in a cyclical pattern and it’s sell only during an uptrend.