“It is not when you buy but when you sell that makes the gap to your profit”.
Hence I consistently advise my investors to take care 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 need 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 boon by entering the property market and generating residual income from rental yields regarding putting their cash secured. Based on the current market, I would advise they keep a lookout for any good investment property where prices have dropped an estimated 10% rather than putting it in a fixed deposit which pays three.5% and does not hedge against inflation which currently stands at some.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 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 up to $1500 after off-setting mortgage costs. This equates for annual passive income of up to $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 despite the economic uncertainty, we can easily see that the effect of the cooling measures have lead to a slower rise in prices as the actual 2010.
Currently, we look at that although property prices are holding up, sales are starting to stagnate. I will attribute this on the following 2 reasons:
1) Many owners’ unwillingness to sell at less expensive prices and buyers’ unwillingness to commit together with higher charges.
2) Existing demand unaltered data exceeding supply due to owners being in no hurry to sell, consequently resulting in a enhance 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 your market property market as their assets will consistently benefit in time and trend of value due to the following:
a) Good governance in Singapore
b) Land scarcity in Singapore, and,
c) Inflation which will set and jade scape upward pressure on prices
For buyers who would like invest some other types of properties aside from the residential segment (such as New Launches & Resales), they may also consider purchasing shophouses which likewise will help generate passive income; and are not at the mercy of 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 ever be expected to sell your house (and create a loss) even during a downturn. Always remember that the property market moves in a cyclical pattern and really sell only during an uptrend.