“It is not in case you buy but when you sell that makes the difference 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 with 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 boon by entering the property market and generating a second income from rental yields rather than putting their cash in the bank. Based on the current market, I would advise that they keep a lookout virtually any good investment property where prices have dropped upwards of 10% rather than putting it in a fixed deposit which pays two.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 make the most of the current low pace and put our money 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 as many as $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 as well outperforms dividend returns from stocks.
Even though prices of private properties have continued to rise despite the economic uncertainty, we can easily see that the effect of the cooling measures have cause a slower rise in prices as in comparison to 2010.
Currently, we cane easily see that although property prices are holding up, sales are starting to stagnate. I am going to attribute this for the following 2 reasons:
1) Many owners’ unwillingness to sell at less expensive prices and buyers’ unwillingness to commit into a higher charges.
2) Existing demand unaltered data exceeding supply due to owners being in no hurry to sell, consequently leading to a rise in prices.
I would advise investors to view their Singapore property assets as long-term investments. Dealerships will have not be excessively alarmed by a slowdown within property market as their assets will consistently benefit in over time and trend of value because of the following:
a) Good governance in Singapore
b) Land scarcity in Singapore, and,
c) Inflation which will place and upward pressure on prices
For jade scape clients who would like invest in other types of properties apart from the residential segment (such as New Launches & Resales), they could also consider inside shophouses which likewise might help generate passive income; and are not depending upon the recent government cooling measures like the 16% SSD and 40% downpayment required on homes.
I cannot help but stress the importance of having ‘holding power’. You should never be made to sell house (and make a loss) even during a downturn. Always remember that the property market moves in a cyclical pattern and really sell only during an uptrend.