“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 must 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 great advantage by entering the property market and generating a second income from rental yields compared to putting their cash in the bank. Based on the current market, I would advise these people keep a lookout any kind of good investment property where prices have dropped an estimated 10% rather than putting it in a fixed deposit which pays 4.5% and does not hedge against inflation which currently stands at some.7%.
In this aspect, my investors and I are on the same page – we prefer to make the most of the current low price and put our benefit 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 a good annual passive income all the way to $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 elevate despite the economic uncertainty, we could see that the effect of the cooling measures have lead to a slower rise in prices as when compared with 2010.
Currently, we look at that although property prices are holding up, sales are starting to stagnate. I will attribute this to the following 2 reasons:
1) Many owners’ unwillingness to sell at affordable prices and buyers’ unwillingness to commit into a higher promoting.
2) Existing demand for properties exceeding supply due to owners finding yourself in no hurry to sell, consequently in order to a embrace 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 time and increase in value because of the following:
a) Good governance in jade scape singapore
b) Land scarcity in Singapore, and,
c) Inflation which will set and upward pressure on prices
For clients who would like invest in other types of properties apart from the residential segment (such as New Launches & Resales), they might also consider purchasing shophouses which likewise support generate passive income; are usually not prone to the recent government cooling measures like the 16% SSD and 40% downpayment required on homes.
I cannot help but stress the value of having ‘holding power’. You shouldn’t ever be made to sell your house (and create a loss) even during a downturn. Remember that the property market moves in a cyclical pattern and you should sell only during an uptrend.