Quick facts about Singapore
Singapore is both an island and a country. Given that it has an urban population of 100%, it's best description is probably that of city-state. Key industries include the financial services, electronics, chemicals, oil drilling equipment, petroleum refining, ship repair, offshore construction, life sciences, entrepot trade. Singapore is also a multicultural city, and close to one-quarter of its population are expatriates or foreign workers from all over the world. Known for its desire to become the technology hub of Asia, Singapore is the most wired country in the region.
Property trends in Singapore
You would probably see/hear about collective or enbloc sales every other day or bullish bid for government land sales in the local media. This trend started around 2nd quarter of 2018 when developers are in the news for winning land bids at record prices. What are the driving forces behind it?
Let's not go into economics 101. To put it as simply, the underlying factors that cause any fluctuation in prices are due to demand and supply. We all agree that Singapore is a land scarce city state with finite supply of land. Urban renewal, transformation plans in the lion-city, housing demands from upgraders, and last but not least, the unpopular population white paper which will see population soaring to 6.9 million by 2030 are factors affecting demand for property in Singapore. Morgan Stanley is forecasting that Singapore private property prices to rise 10% by end-2018.
As a property owner or investor, or just someone sitting on the sidelines, what does it mean to you? Request for free valuation report below for your property or free consultation to facilitate your next sales and/or purchase decision.
Risk & Rewards of Singapore Property Market
Property buyers who are buying their property for own use tend to be least affected by the property cycle and regulatory risks. This is because they are motivated by getting a unit of their choice, and not about making timing the market to make a gain in future - provided pricing is "right".
To a property investor, they look from a different angle altogether. In Singapore, the property market is strictly not a 'free market'. Government intervention is one the main factor that is artificially affecting property prices and trends.
No property buyers & sellers are identical. Their budget or the objective to achieve in every transaction is different. But most share something in common - ASPIRE TO OWN A 2nd PROPERTY FOR INVESTMENT (Qns: Must it be Singapore property?) With different measures in places such as Total Debt Servicing Ratio (TDSR), Additional Buyer Stamp Duty (ABSD) and Seller Stamp Duty (SSD), many people find it challenging to achieve their dream to own a 2nd property. Taking CPF accrued interest into consideration, many found out that it is IMPOSSIBLE to achieve their dream.
Case Study 1
Couple in their late 40s, who are professionals in their own arena owns a fully paid landed house they bought more than 20 years ago. Given the stability in their income and lifestyle, they are looking to invest in a 2nd property. They managed to purchase a 2nd property at $1million, however, they had to dip into their savings to pay the first 5% of the investment, and on top of that, they had to pay ABSD of 7%.
Case Study 2
Couple in their 30s, both earning a comfortable income and currently owns a partially paid up 4 room HDB flat. They were initially looking to upgrade to a private condominium but were concern that most of their sales proceeds from the HDB flat and savings will be used for the new condominium and they will be left with nothing for rainy day. After a few rounds of discussion, and understanding more about the couple, they agreed to purchase a condominium each (without incurring ABSD), one for own stay, one for rental income and still have some excess cash for rainy days.
Things to ponder...
Why is the first couple, who is more financially stable struggling to purchase a 2nd home, but the second couple made it look all too easy to achieve the dream? What made their situation so different? Are you limited to only Singapore properties? Should you go international?
Let us help you assess your situation and discover different options for you to start building your property portfolio. Please fill up the contact form below for a no-obligation consultation with one of our consultants.