“It is not in case you buy but when you sell that makes principal 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 with 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 instead of putting their cash in the bank. Based on the current market, I would advise they keep a lookout any kind of good investment property where prices have dropped very 10% rather than putting it in a fixed deposit which pays two.5% and does not hedge against inflation which currently stands at 5.7%.
In this aspect, my investors and I use the same page – we prefer to probably the current low price and put our profit 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 as high as $1500 after off-setting mortgage costs. This equates with regard to an annual passive income as high as $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 go up despite the economic uncertainty, we notice that the effect of the cooling measures have result in a slower rise in prices as in order to 2010.
Currently, we can see that although property prices are holding up, sales are starting to stagnate. I am going to attribute this on the following 2 reasons:
1) Many owners’ unwillingness to sell at lower prices and buyers’ unwillingness to commit into a higher value tag.
2) Existing demand for properties exceeding supply due to owners being in no hurry to sell, consequently resulting in a improve prices.
I would advise investors to view their Singapore property assets as long-term investments. Really should not be excessively alarmed by a slowdown each morning property market as their assets will consistently benefit in the long term and trend of value because of the following:
a) Good governance in Singapore
b) Land scarcity in Singapore, and,
c) Inflation which will set and upward pressure on prices
For clients who would like invest some other types of properties aside from the residential segment (such as New Launches & Resales), they might also consider purchasing shophouses which likewise will help generate passive income; and are not subject to the recent government cooling measures such as the 16% SSD and 40% downpayment required on homes.
I cannot help but stress the significance of having ‘holding power’. Never be required to sell house (and jade scape make a loss) even during a downturn. Be aware that the property market moves in a cyclical pattern and it’s sell only during an uptrend.