“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 certain they have gone through their financial plans thoroughly as they will be entering into a 4-year commitment – after for the 4-year Seller’s Stamp Duty (SSD) that they will want 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 advantage by entering the property market and generating residual income from rental yields associated with putting their cash in the bank. Based on the current market, I would advise they keep a lookout regarding 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 some.7%.
In this aspect, my investors and I use the same page – we prefer to reap the benefits of the current low rate and put our take advantage property assets to generate 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 to an annual passive income as much 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 despite the economic uncertainty, we can see that the effect of the cooling measures have lead to a slower rise in prices as in comparison to 2010.
Currently, we are able to access that although property prices are holding up, sales are starting to stagnate. I am going to attribute this towards following 2 reasons:
1) Many owners’ unwillingness to sell at lower prices and buyers’ unwillingness to commit with a higher price.
2) Existing demand jade scape 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 each morning property market as their assets will consistently benefit in the long run and increasing amount of value due to the following:
a) Good governance in Singapore
b) Land scarcity in Singapore, and,
c) Inflation which will set and upward pressure on prices
For clients who would like invest some other types of properties in addition to the residential segment (such as New Launches & Resales), they might also consider throughout shophouses which likewise assist generate passive income; are usually 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 value of having ‘holding power’. You shouldn’t ever be expected to sell your property (and develop a loss) even during a downturn. Remember that the property market moves in a cyclical pattern and it’s sell only during an uptrend.