Top 5 Rooftop Pools in Singapore for a Swim
Singapore, a bustling city-state known for its iconic skyline and innovative architecture, is home to some of the most stunning...
Read More
TLDR
In 2021, the real estate market saw a surge in demand due to low interest rates and supply chain disruptions. The upcoming hike in interest rates may worry some homebuyers, but historical data shows that well-planned property investments can still yield substantial profits despite interest rate fluctuations. Rising interest rates are often linked to inflation, which can actually drive property prices up. Focusing on other key factors besides interest rates when choosing an investment property is crucial for maximizing returns.
We have all seen in 2021, an amazing year for sellers as we saw property prices hitting new peaks. A pent-up buying demand caused by impacts on tourism and uncertainties in the financial markets during the Covid-19 pandemic has steered many to the real estate market. Adding fuel to the hungry fire, delays in construction and rising costs in materials caused by global supply chain disruption and manpower crunch amplified the heat further.
This huge spike in demand against the depleting supplies has forced many homebuyers to sweep up the unsold inventory causing it to hit a record low of 19,409 in 2Q2021.
Homebuyers were further enticed by the increase in their purchasing power with interest rates hitting an all-time low.
Fast-forward to the present, as the economy is moving towards recovery, there are plans by the US Fed to raise interest rates for the first time since 2018. As most of you might know, Singapore’s interest rates are closely pegged to the movements of the US Fed’s interest rate.
So how will the imminent hike in interest rates affect you?
To better understand this, let’s first take a look at the types of interest rates offered here in Singapore.
Total Debt Servicing Ratio (TDSR)
Total Debt Servicing Ratio is a financial safety mechanism introduced by the Singapore Government to ensure that its people are not overleveraging and have the necessary financial capabilities to pay off their loans.
The Impacts Of Rising Interest Rates
Consumers are afraid of raising interest rates because it affects the eventual amount home buyers have to pay after calculating accrued interest from their home loans.
What if I tell you that whether the interest rate is moving upwards or downwards has minimal effects on your home – if you’ve made calculated considerations on buying your home?
Many would think that it’s a bad time to be thinking about buying a home when interest rates are set to hike, but let the statistics and examples below reveal to you the truth about the relationship between the property market and interest rates.
Looking at Figure 1 below, property prices have been on an incline over the past 20 years. In fact, since 2010Q1, interest rates have been relatively flat except for 2015Q1 when they started surging and then slumming again when the pandemic came.
Figure 1: PPI vs Interest rates (2002Q1 to 2021Q3)
Does it mean that people who bought properties between 2015Q1 and the pandemic suffered losses when the interest rates flattened over the last 2 years?
You will be very surprised to find out that not only did they not suffer a loss, but many buyers made extremely lucrative returns.
Just as buyers of Twin Vew in Figure 2 below, who bought their property at one of the peaks for interest rates in 2018, and managed to make close to a whopping half a million dollars when they sold it in 2021.
Interest rates for mortgages may be one of the most important concerns you may have when purchasing a property. However, few realised that it should not be the most important factor to consider when it comes to choosing the right property for reaping good profits. The case study above clearly illustrates that rising interest rates did not hinder the growth of a well-planned and selected property.
Figure 2: Historical profitable transactions for Twin Vew
Here’s another example for you, Treasure @ Tampines in Figure 3 below, the unit that was bought when the interest rates were high in 2019Q2 also managed to make tremendous returns of $416,000 in just less than 3 years.
This could be you if you knew exactly what to buy and when, instead of worrying about interest rates. Ultimately, the growth of property prices greatly overshadows hiking interest rates. 
Figure 3: Historical profitable transactions for Treasure @ Tampines
To understand the rationale of why hikes in interest rates are not causing the property market to crumble or stagnate, one has to understand the reason why interest rates are increasing.
In fact, we all know that inflation has caused the increase in prices of almost everything money can buy – that includes property. And in order for the monetary authority to mitigate inflation, increasing the interest rate is one of the most effective tools to do so. So even if there isn’t any growth in the real estate market over the next few years, we will possibly see property prices escalate solely fuelled by inflation.
What does this mean for homebuyers?
Focusing on the wrong thing may incur a heftier opportunity cost. The rising interest rates and other trigger factors* should be an indication for investors or homebuyers to start taking swift action.
It is monumentally tough for anyone to time the market but there is always a way to sift out the ideal investment property that could reap the best possible rewards.
Hit me up and I shall share with you the other factors* to look out for when choosing the ideal investment property.
You May Also Like …
Singapore’s Property Market: Will the Newly Proposed 2023 Cooling Measures, Including a 60% Foreigner ABSD, Make Waves or Mere Ripples?
TLDR The recent surge in Additional Buyer's Stamp Duty (ABSD) rates in Singapore targets mainly foreigners and entities, with rates...
Read More
Top 5 : Key Reasons to Invest in Industrial Property in Singapore
Singapore, a small yet densely populated country, has emerged as a significant player in the global industrial property market. Its...
Read More
5 Things to do When You Go For A Property Viewing In Singapore
5 Things to do When You Go For A Property Viewing In Singapore Here are 5 things to keep in...
Read More
Top 5 Reasons : Why Jayson Ang is the Best Property Agent in Singapore. And Why You Should Engage Him Today
In the bustling city-state of Singapore, the real estate market is highly competitive and constantly evolving. Finding the perfect property...
Read More
5 Homeowners Share Their Biggest Regrets Delaying Their Property Purchase in Singapore
In the fast-paced and ever-evolving property market of Singapore, making a timely decision to purchase a property can make all...
Read More
What Impact Will Decreasing US Interest Rates Have on Homeowners in Singapore?
TLDR The Fed’s recent 0.5% rate cut is likely to lower Singapore’s SORA-based home loan rates, benefiting those with bank...
Read More
I Bought a Mega-Home : Hear 7 Homeowners Spill their Heartfelt Remorse
TLDR The article discusses various challenges faced by residents living in massive condo complexes in Singapore. From long elevator wait...
Read More
2024 Will Be A Buyers Market
TLDR 2023 saw a roller-coaster ride in the real estate market, with various challenges like high interest rates and geopolitical...
Read More
Common Misconceptions About Buying Property in Singapore’s Core Central Region (CCR) in 2025
TLDR Singapore’s Core Central Region (CCR) is often seen as a safe, luxurious, and exclusive property segment. However, this view...
Read More
5 Reasons Why Districts 9 and 10 are the Next Big Thing in Singapore Real Estate
Singapore is renowned for its thriving real estate market, with many desirable neighborhoods and top-notch properties. However, when it comes...
Read More
How Can You Prepare for Retirement in an Expensive Real Estate Market? Discover Your Options Now!
TLDR The article discusses the challenges of investing in a second property for retirement amidst Singapore's real estate market conditions....
Read More
Are Million-Dollar HDB Landed Homes Still Worth A Look In 2025 Despite Their Age?
TLDR Old HDB landed homes, like those in Whampoa, are rare and now fetch over $1.5 million, but their value...
Read More
Top 5 : Regret Buying An Old Condo in Singapore
In the bustling city-state of Singapore, the real estate market is a dynamic and ever-evolving landscape. As of 2023, new...
Read More
An Essential Guide to Buying a Home in Singapore 2023
TLDR When navigating the complexities of purchasing a property in Singapore, ensure you meet eligibility criteria, consider affordability factors, and...
Read More
Learning Hard Truths in Property Investment: Timing the Market Can Hurt
TLDR The blog post delves into the complexities of market timing in property investment, highlighting the risks and challenges associated...
Read More
Finding Your Dream Home In The Near Future. Exciting Upcoming Property Launches In The First Half Of 2024
TLDR The real estate sector in 2023 saw significant policy shifts affecting both private and public housing, with various changes...
Read More
Discover the 3 Top Factors Impacting HDB Resale Valuation in Singapore: What Every Buyer Must Know!
TLDR The blog post discusses the increased demand for HDB resale flats and the impact on prices. It emphasizes the...
Read More
Will Property Owners Earn More By Keeping Residential Properties For An Extended Period?
TLDR In Singapore, holding a residential property longer typically yields higher profits—averaging $665,000 after 20 years, versus $200,000 for 5–10...
Read More
SP Utilities Guide – Quick Guide To Setting Up Utilities In Singapore For Your New Home
TLDR Setting up utilities in Singapore for a new home is hassle-free. Contact SP Services for electricity and water accounts,...
Read More
