Investing in Singapore Properties

“It is not when you buy but when you sell that makes the difference 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 taking into consideration the 4-year Seller’s Stamp Duty (SSD) that they would have 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 great advantage by entering the property market and generating passive income from rental yields compared to putting their cash in the bank. Based on the current market, I would advise that 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 ideas.7%.

In this aspect, my investors and I use the same page – we prefer to reap the benefits the current low interest rate and put our make the most property assets to generate a positive cash flow via rental income. I myself have personally seen some properties generating positive monthly cash flow of of up to $1500 after off-setting mortgage costs. This equates for 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 rise despite the economic uncertainty, we could see that the effect of the cooling measures have result in a slower rise in prices as in comparison to 2010.

Currently, we look at that although property prices are holding up, sales are starting to stagnate. I will attribute this towards following 2 reasons:

1) Many owners’ unwillingness to sell at affordable prices and buyers’ unwillingness to commit together with higher charges.

2) Existing demand for properties exceeding supply due to owners being in no hurry to sell, consequently leading to a improve prices.

I would advise investors to view their Singapore property assets as long-term investments. They should not be excessively alarmed by a slowdown associated with property market as their assets will consistently benefit in time and increased value due to the following:

a) Good governance in Singapore

b) Land scarcity in Singapore, jade scape and,

c) Inflation which will set and upward pressure on prices

For clients who would like invest various other types of properties aside from the residential segment (such as New Launches & Resales), they could also consider throughout shophouses which likewise might help generate passive income; are usually not controlled by the recent government cooling measures similar to the 16% SSD and 40% downpayment required on homes.

I cannot help but stress the importance of having ‘holding power’. You should never be forced to sell house (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.