“It is not when you buy but when you sell that makes principal 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 for the 4-year Seller’s Stamp Duty (SSD) that they will want 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 passive income from rental yields compared to putting their cash staying with you. Based on the current market, I would advise may keep a lookout for any 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 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 fee and jade scape 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 up to $1500 after off-setting mortgage costs. This equates to an annual passive income of up 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 can easily see that the effect of the cooling measures have result in a slower rise in prices as in comparison to 2010.
Currently, we can see that although property prices are holding up, sales are starting to stagnate. I’m going to attribute this into the following 2 reasons:
1) Many owners’ unwillingness to sell at less expensive costs and buyers’ unwillingness to commit with a higher charges.
2) Existing demand for properties exceeding supply due to owners being 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. Dealerships will have not be excessively alarmed by a slowdown your market property market as their assets will consistently benefit in the longer term and trend of value because of 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 consist of types of properties apart from the residential segment (such as New Launches & Resales), they might also consider buying shophouses which likewise can help generate passive income; and thus not at the mercy of the recent government cooling measures prefer 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 expected to sell your property (and develop a loss) even during a downturn. Be aware that the property market moves in a cyclical pattern and really sell only during an uptrend.