“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 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 advantage by entering the property market and generating residual income from rental yields associated with putting their cash on your bottom line. Based on the current market, I would advise may keep a lookout for good investment property where prices have dropped an estimated 10% rather than putting it in a fixed deposit which pays 4.5% and does not hedge against inflation which currently stands at 5.7%.
In this aspect, my investors and I take presctiption the same page – we prefer to probably the current low interest rate and put our money in property assets to produce 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 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 go up despite the economic uncertainty, we are able to access that the effect of the cooling measures have result in a slower rise in prices as the actual 2010.
Currently, we observe that although property prices are holding up, sales are beginning to stagnate. Let me attribute this towards following 2 reasons:
1) Many owners’ unwillingness to sell at less expensive prices and buyers’ unwillingness to commit together with higher value tag.
2) Existing demand jade scape for properties exceeding supply due to owners finding yourself in no hurry to sell, consequently leading to a rise in prices.
I would advise investors to view their Singapore property assets as long-term investments. They should not be excessively alarmed by a slowdown your market property market as their assets will consistently benefit in the long term and increase 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 buyers who would like invest consist of types of properties apart from the residential segment (such as New Launches & Resales), they might also consider buying shophouses which likewise assist generate passive income; and are not prone to the recent government cooling measures similar to the 16% SSD and 40% downpayment required on homes.
I cannot help but stress the value of having ‘holding power’. You should never be required to sell your house (and make a loss) even during a downturn. Remember that the property market moves in a cyclical pattern and require to sell only during an uptrend.