“It is not when you buy but when you sell that makes the gap to your profit”.
Hence I consistently advise my investors to guantee 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 four 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 second income from rental yields rather than putting their cash on your bottom line. Based on the current market, I would advise that they 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 0.5% and does not hedge against inflation which currently stands at some.7%.
In this aspect, my investors and I take presctiption the same page – we prefer to probably the current low interest rate and put our profit 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 as high as $1500 after off-setting mortgage costs. This equates for annual passive income up to $18 000 per annum which easily beats returns from fixed deposits and also outperforms dividend returns from stocks.
Even though prices of private properties have continued to rise despite the economic uncertainty, we notice that the effect of the cooling measures have can lead to 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 beginning to stagnate. Let me attribute this on the following 2 reasons:
1) Many owners’ unwillingness to sell at lower prices and buyers’ unwillingness to commit into a higher the price tag.
2) Existing demand unaltered data exceeding supply due to owners finding yourself 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. They ought to not be excessively alarmed by a slowdown in the property market as their assets will consistently benefit in the longer term and jade scape increase in 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 various other types of properties besides the residential segment (such as New Launches & Resales), they may also consider throughout shophouses which likewise can help generate passive income; and are not controlled by the recent government cooling measures prefer the 16% SSD and 40% downpayment required on homes.
I cannot help but stress the need for having ‘holding power’. Never be instructed to sell house (and make a loss) even during a downturn. Remember that the property market moves in a cyclical pattern and it’s sell only during an uptrend.