“It is not when you buy but when you sell that makes principal to your profit”.
Hence I consistently advise my investors to ensure that 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 gift by entering the property market and generating a second income from rental yields regarding 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 very 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, jade scape my investors and I take any presctiption the same page – we prefer to take advantage 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 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 elevate despite the economic uncertainty, we can see that the effect of the cooling measures have caused 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. Let me attribute this towards following 2 reasons:
1) Many owners’ unwillingness to sell at more affordable prices and buyers’ unwillingness to commit together with higher value tag.
2) Existing demand for properties exceeding supply due to owners being in no hurry to sell, consequently leading to a embrace 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 in the property market as their assets will consistently benefit in the long run and increased value as a result of following:
a) Good governance in Singapore
b) Land scarcity in Singapore, and,
c) Inflation which will place and upward pressure on prices
For buyers who would like invest in other types of properties besides the residential segment (such as New Launches & Resales), they could also consider buying shophouses which likewise can help generate passive income; that are not subject 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 required to sell house (and develop a loss) even during a downturn. Always remember that the property market moves in a cyclical pattern and you should sell only during an uptrend.