“It is not when you buy but when you sell that makes principal 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 must 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 residual income from rental yields compared to putting their cash in the bank. Based on the current market, I would advise these people keep a lookout for any good investment property where prices have dropped upwards of 10% rather than putting it in a fixed deposit which pays 4.5% and does not hedge against inflation which currently stands at simple.7%.
In this aspect, my investors and I take prescription the same page – we prefer to make the most 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 as many as $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 go up despite the economic uncertainty, we are able to access that the effect of the cooling measures have cause a slower rise in prices as in comparison to 2010.
Currently, we can see that although property prices are holding up, sales start to stagnate. I will attribute this towards following 2 reasons:
1) Many owners’ unwillingness to sell at lower prices and jade scape buyers’ unwillingness to commit together with higher promoting.
2) Existing demand for properties exceeding supply due to owners being in no hurry to sell, consequently resulting in a improve 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 associated with property market as their assets will consistently benefit in time and boost in value due to the following:
a) Good governance in Singapore
b) Land scarcity in Singapore, and,
c) Inflation which will place and upward pressure on prices
For clients who would like invest some other types of properties aside from the residential segment (such as New Launches & Resales), they could also consider buying shophouses which likewise assist generate passive income; that are not subject to the recent government cooling measures such as the 16% SSD and 40% downpayment required on residential properties.
I cannot help but stress the need for having ‘holding power’. You should never be required to sell your 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.