“It is not an individual have 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 for the 4-year Seller’s Stamp Duty (SSD) that they must 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 advantage by entering the property market and generating passive income from rental yields instead of putting their cash secured. Based on the current market, I would advise they keep a lookout regarding any good investment property where prices have dropped more than 10% rather than putting it in a fixed deposit which pays .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 reap the benefits of the current low interest rate and put our benefit 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 and also 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 result in a slower rise in prices as the actual 2010.
Currently, we look at that although property prices are holding up, sales start to stagnate. I’m going to attribute this for the following 2 reasons:
1) Many owners’ unwillingness to sell at less expensive costs and buyers’ unwillingness to commit to a 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 rise in prices.
I would advise investors to view their Singapore property assets as long-term investments. Really should not be excessively alarmed by a slowdown associated with property market as their assets will consistently benefit in the long term and trend of 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 buyers who would like invest some other types of properties aside from the residential segment (such as New Launches & Resales), they likewise consider buying shophouses which likewise can help generate passive income; and jade scape thus not controlled by the recent government cooling measures such as the 16% SSD and 40% downpayment required on homes.
I cannot help but stress the need for having ‘holding power’. You must never be required to sell your property (and create a loss) even during a downturn. Always remember that the property market moves in a cyclical pattern and it’s sell only during an uptrend.