“It is not in case 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 great advantage by entering the property market and generating residual income from rental yields associated with putting their cash on your bottom line. Based on the current market, I would advise these people keep a lookout regarding any good investment property where prices have dropped more than 10% rather than putting it in a fixed deposit which pays three.5% and does not hedge against inflation which currently stands at 5.7%.
In this aspect, my investors and I take any presctiption the same page – we prefer to reap the benefits of the current low interest rate and put our benefit 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 as much as $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 could see that the effect of the cooling measures have lead to a slower rise in prices as compared to 2010.
Currently, we can see that although property prices are holding up, sales are beginning to stagnate. I will attribute this to the following 2 reasons:
1) Many owners’ unwillingness to sell at less expensive prices and buyers’ unwillingness to commit to some higher charges.
2) Existing demand unaltered data exceeding supply due to owners finding yourself in no hurry to sell, consequently in order to a rise in 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 trend of value due to the following:
a) Good governance in Singapore
b) Land jade scape scarcity in Singapore, and,
c) Inflation which will set and upward pressure on prices
For clients who would like invest various other types of properties apart from the residential segment (such as New Launches & Resales), they could also consider purchasing shophouses which likewise will help generate passive income; and therefore not prone to the recent government cooling measures like the 16% SSD and 40% downpayment required on residential properties.
I cannot help but stress the need for having ‘holding power’. You shouldn’t be forced to sell your stuff (and develop 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.