property investment
Are you gaining from Singapore’s property investment market?
4/04/2018 10:18:00 AM
Singapore property
market is always the hot topic of the town that indicates the
Singapore’s economic situation. Thanks to the economic boom after
Singapore get it’s own independence, most elderly folks love
investing in properties and the property prices soared, much to the
delight of many property owners. It is not difficult to find any
Singaporeans around with successful investment and finance that
revolves around property. There are many stories around of how
Singaporeans made lots of money from buying residential properties at
low prices and selling it for more than what’s expected, be it HDB
or condominium, today’s property prices has really shocked us all.
So, is property investment in Singapore is really a good capital gain
growth in today’s world?
Can you lose money
on your investment?
During the economic
crisis or slowdown, we could see a “direct loss” where the
property you owned has priced lower than your initial purchase price.
Besides, the economic slowdown has indirectly affected your finances
which may cause some property investors to lose their property due to
their incapability to service the mortgage. Yet, in the downturn of
economy, some property owners do sell it off at a lower price and
still make profits but still they don’t get to enjoy the high
profits like they used to when the economic was prospering.
The expenses
incurred
Investing in bonds
and shares are straightforward, you pay for the number of shares you
invested in with the processing fees. When you transacted for profit,
most of your profits enter your pocket and all you need to pay is the
transaction fees.
However, not for
property investments, there’s expenses incurred like some form of
leverage when buying a property. For instance, a $1 million dollar
property, $600,000 might be loaned from bank and this loan would be
incurring interest payment in the coming years.
How about renovation
cost? For example, you own a HDB
unit in Yishun and you would like to increase your HDB unit
value, so you will need to renovate your HDB unit to make it more
appealing for your potential buyer. Did you see the costs that will
be incurred? Renovation
and refurbishment costs where the transformation of the unit
happens from shabby to wonderful. Not forgetting when you managed to
sell of your property, you will need to pay your agent fee for at
least 1% of the sales price.
Do all properties
price appreciate?
In Singapore, it has
come to a point where the asset prices are soared to the top than it
is to the bottom. We have reached to a point where a HDB flat used to
sell it $7,000 to now whereby resale flat prices have reached a
million dollars. All properties will appreciate over time should be
debunked that’s if the developing country continue to open doors
for foreign investments and good governance. Well, in today’s
situation, we won’t be seeing many examples where property values
jump into multiple folds.
The ‘today’s
situation’ that we are referring to is the current situation of
cooling measures that was implemented back to back since year 2013.
You can see the private property values stay stagnant ever since.
Though, there are some minor depreciation, but the line shows
stagnant ever since. However, in year 2017, Singapore government
eased the property investors by reducing
the Seller Stamp Duty by 4%. Yet, what’s happening around is
that the supplies are higher than demands which is dampening the
rental yields as the situation right now favors renters more. Here’s
something for thoughts, the current market situation not only sees
the abundance supply of new residential properties but what’s
worrying is that Singapore’s population growth is outstrip by the
abundance supply. The trend is more likely to continue over the next
few years.
Do you listen to
analysts?
People who produce
articles in newspapers and articles explaining technical analysis are
called analysts. Often, their articles could be one sided with the
main intentions to sell their ‘paid’ publications. Their views
are often blind-sided, and it can be taken as an indication of what
will happen in the future. True investors will go to the ground and
make their technical analysis the sentiment on the market. It is
rather contradicting to why people listen to analysts more than the
property agents that are always on the ground dealing with
transactions. It would be wiser for property investors to hang around
with people who are far more familiar with property investments that
has gone through the processes. Do think twice before you make your
property investment decisions based on analyst’s thoughts. You
wouldn’t want to be the one regretting with the choices you made
for not making further judgements and on-the-ground analysis.
