“It is not when you buy but when you sell that makes learn 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 will 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 passive income from rental yields compared to putting their cash in the bank. Based on the current market, I would advise they keep a lookout for good investment property where prices have dropped a great deal more 10% rather than putting it in a fixed deposit which pays two.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 probably the current low fee and put our benefit 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 all the way 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, jade scape we could see that the effect of the cooling measures have lead to 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’m going to attribute this towards following 2 reasons:
1) Many owners’ unwillingness to sell at less expensive prices and buyers’ unwillingness to commit to a higher value tag.
2) Existing demand for properties exceeding supply due to owners being in no hurry to sell, consequently in order 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 each morning property market as their assets will consistently benefit in over time and increasing amount of 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 besides the residential segment (such as New Launches & Resales), they could also consider inside shophouses which likewise assist generate passive income; and thus not subject to the recent government cooling measures such as the 16% SSD and 40% downpayment required on homes.
I cannot help but stress the importance of having ‘holding power’. Never be expected to sell your stuff (and create a loss) even during a downturn. Be aware that the property market moves in a cyclical pattern and it’s sell only during an uptrend.