“It is not when you buy but when you sell that makes principal to your profit”.
Hence I consistently advise my investors to be certain 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 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 passive income from rental yields rather than putting their cash on your bottom line. Based on the current market, I would advise these people keep a lookout regarding any good investment property where prices have dropped an estimated 10% rather than putting it in a fixed deposit which pays 4.5% and jade scape does not hedge against inflation which currently stands at some.7%.
In this aspect, my investors and I take any presctiption the same page – we prefer to make the most of the current low interest rate and put our money 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 up to $1500 after off-setting mortgage costs. This equates with regard to an annual passive income all the way to $18 000 per annum which easily beats returns from fixed deposits as well outperforms dividend returns from stocks.
Even though prices of private properties have continued to increase despite the economic uncertainty, we can see that the effect of the cooling measures have lead to a slower rise in prices as when compared with 2010.
Currently, we look at that although property prices are holding up, sales start to stagnate. I’m going to attribute this to the following 2 reasons:
1) Many owners’ unwillingness to sell at less expensive prices and buyers’ unwillingness to commit to some higher the price tag.
2) Existing demand unaltered data exceeding supply due to owners finding yourself in no hurry to sell, consequently resulting in a increase prices.
I would advise investors to view their Singapore property assets as long-term investments. They should not be excessively alarmed by a slowdown within property market as their assets will consistently benefit in the long term and boost in value as a result of 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 consist of types of properties apart from the residential segment (such as New Launches & Resales), they could also consider inside shophouses which likewise can help generate passive income; are usually not prone to the recent government cooling measures a lot 16% SSD and 40% downpayment required on residential properties.
I cannot help but stress the value of having ‘holding power’. You should never be instructed to sell 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.