“It is not when you buy but when you sell that makes the gap to your profit”.
Hence I consistently advise my investors to be sure they have gone through their financial plans thoroughly as they will be entering into a 4-year commitment – after with 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 a second income from rental yields instead of putting their cash on your bottom line. Based on the current market, I would advise they keep a lookout any kind of 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 5.7%.
In this aspect, my investors and I take any presctiption the same page – we prefer to take advantage 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 of up to $1500 after off-setting mortgage costs. This equates with regard to an annual passive income of up to $18 000 per annum which easily beats returns from fixed deposits plus outperforms dividend returns from stocks.
Even though prices of private properties have continued to rise despite the economic uncertainty, we can see that the effect of the cooling measures have cause a slower rise in prices as the actual 2010.
Currently, we observe that although property prices are holding up, sales start to stagnate. I am going to attribute this to the following 2 reasons:
1) Many owners’ unwillingness to sell at affordable prices and buyers’ unwillingness to commit to some higher the price tag.
2) Existing demand unaltered data exceeding supply due to owners being in no hurry to sell, consequently in order to 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 in the property market as their assets will consistently benefit in 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 in other types of properties aside from the residential segment (such as New Launches & Resales), they could also consider buying shophouses which likewise will help generate passive income; and therefore not subject to the recent government cooling measures like the 16% SSD and 40% downpayment required on residential properties.
I cannot help but stress the significance of having ‘holding power’. You shouldn’t be made to sell your property (and jade scape develop a loss) even during a downturn. Remember that the property market moves in a cyclical pattern and you should sell only during an uptrend.