Executive Condos in Singapore: Have They Outgrown the “Sandwich Class” Label?
TLDR The Executive Condominium (EC) scheme, once intended as affordable “sandwich class” housing, is now acting more like a lottery...
Read More
TLDR
Understanding the key factors involved in buying property in Singapore is crucial for making informed decisions. Consider your investment objectives, financial capabilities, and market conditions before diving into house hunting. Evaluate the property based on location, entry price, and urban transformation potential. Stay updated on market trends, housing policies, and urban development plans to make sound investment choices. Proper research, financial planning, and prudent decision-making are essential for a successful property investment journey.
Buying on impulse is seldom a good idea. And for a big-ticket item like a property, entering the market without doing in-depth research and analysis is downright unwise. No matter how good the investment opportunity may seem to be, it is not advisable to go in blind, so to speak. In fact, if it is too good to be true, all the more it warrants a deeper look.
So, where do we start?
Before you embark on house hunting, consider this: why am I buying this property? It sounds simple enough, and it is good to be clear-minded about why you are entering the property market.
For instance, do you plan to move in yourself, or do you intend to rent it out, if you own an existing property, what are you going to do with it?
If you intend to hold on to your existing property, be prepared to pay the additional buyer’s stamp duty (ABSD) on your second property purchase.
Be Realistic, Be Prudent
Next, what is your budget – what can you realistically afford and what would be somewhat of a stretch?
Proper financial planning and building in a financial safety net is absolutely critical because properties are illiquid and cannot be sold quickly when you are in a bind. Should you fall on hard times and need to sell or rent your unit desperately, you can be certain that it will not fetch an attractive price/rent.
Prudence is also key. If you think you can comfortably afford a $1.4 million condo, you may still not want to max out that budget, because there are other costs to consider, including the ABSD for second property (at 12% of the property price for Singaporean buyer), legal fees etc.
Then, there is the matter of home financing. Do note that the Total Debt Servicing Ratio (TDSR) of 60% and prevailing loan-to-value (LTV) limits will affect the amount you can borrow to fund your home purchase. If you already have an existing home loan, the LTV drops to 45% (or 25% if the loan tenure is more than 30 years or extends past age 65).
Remember this: property investment is a mid- to long-term commitment, make sure you have the financial holding power to tide over least 3 to 5 years.
Key Criteria When Evaluating Property Buying Opportunities
So, you have sorted out your investment objective, evaluated your financial position, and considered the possibility of using leverage, now what? Well, here comes the research and analysis.
There are a lot of information and data out there about the Singapore property market and its performance. Follow the news closely, as well as announcements regarding housing policies and urban development. Do not be swayed by emotions when it comes to property purchase; always do sufficient homework as savvy investors do.
There are 3 important criteria in evaluating property investment opportunities. It is important that each of the 3 factors are considered thoroughly as they could impact the property’s rentability and capital growth potential in the future.
1. Location
In real estate, location is paramount. Location influences desirability of the property, and this desirability then helps to boost demand, and high demand will drive pricing.
These are some main factors to think about when it comes to location:
- Central or outskirts: Is it in the city, at the city fringe, or is it in the suburbs?
- Transportation and accessibility: How far is the property to an MRT station or the bus interchange and bus stop? Is it easily accessible to main roads and the expressway?
- Neighhourhood: What are the amenities available around the property? Are there shops and food places, supermarkets, or recreation facilities such as parks or sports hall?
- Schools: What are the schools in the area? Would you consider enrolling your child to any of the schools nearby? (Note: When you enrol your child to primary school in Singapore, if the chosen school has more applicants than vacancies, priority admission will be given based on your child’s citizenship and the home-to-school distance)
- Lot/unit location: Is it on a high floor? Does the unit face the main road, or the bin centre, or does it face the pool or a park?
- Mature or non-mature estate: Consider whether there are other development sites in the area which could mean more supply of units and potential competition for buyers and tenants when you plan to sell or lease your units in the future
- Population catchment/hinterland: How big is the estate and is it in or near a regional centre where there are lots of business and commercial activities?
2. Entry Price
This relates to whether you are buying the property at market rate, below market price, or are you overpaying compared to the surrounding properties?
Overpaying will limit the upside potential, if you had substantially overpaid for a property, your future capital gain may be low or even nil – unless the property market runs up significantly over a period of time.
So, be sure to assess your entry price against the recent transacted prices of comparable properties in the vicinity, as well as the prices of transacted units within the same development.
Find out if the prices or rents of nearby properties have been climbing over the last few years, and whether the prices have gone up markedly since the project was launched?
If you are looking at a new launch project, at which stage of the launch are you buying into? Developers tend to offer star-buys at the initial stage of the launch to get the sales momentum going. You may end up paying slightly more for a unit – compared to those who bought in the first weeks of a project launch – if you buy at a later stage when the developer has already sold more than 70% of the units in the development.
3. Urban Transformation
Get acquainted with the Urban Redevelopment Authority’s Master Plan, which is a statutory land use plan that guides Singapore’s development over the next 10 to 15 years. Among many things, it shows the permissible land use, development densities, and urban transformation plans in Singapore.
If you have shortlisted some potential properties to invest in, be sure to consult the Master Plan on what are the upcoming plans for the area.
For instance, is there a vacant plot nearby that has been zoned for commercial use but is yet to be developed? Will the property benefit from large scale urban renewal/transformation initiatives, such as the Greater Southern Waterfront, or the second CBD in Jurong Lake District, or the development of Woodlands as a regional commercial hub? All these will likely have a positive impact on capital values over the long-term.
All property purchases carry some form of risks, but having done the necessary site and entry price evaluation and proper financial planning, you are likely on your way to a smoother investment experience. 👍🏻
You May Also Like …
Is It Wise to Make a Partial Prepayment on Your Home Loan in 2024? Here’s How to Make Your Decision
TLDR Partial prepayment of your home loan means paying off a chunk of your mortgage early to lower future monthly...
Read More
5 Tips : How To Choose The Right Property Agent To Help With Your Singapore Property Investment
Choosing the right property agent is crucial to the success of your Singapore property investment. A good agent can provide...
Read More
5 Factors Affecting A Property’s Resale Value
The real estate market is a complex and ever-changing landscape, with various factors influencing the value of a property. When...
Read More
6 Secrets Foreign Investors Are Rarely Told About Singapore’s Real Estate Market
TLDR The Singapore property market presents unique characteristics that foreign buyers should consider. From the high rate of homeownership to...
Read More
6 Myths About Using Your CPF For Housing
TLDR When it comes to purchasing a house in Singapore using CPF funds, there are several myths that need to...
Read More
5 Reasons : Why Investing In Singapore Property Is The Best Decision I Ever Made
Investing in property is a great way to build wealth and secure a stable source of passive income. When it...
Read More
Top 5 Best Alternative Music Venues in Singapore
Singapore, a vibrant and bustling city-state, is known for its diverse culture and thriving arts scene. The city's love for...
Read More
Top 5 Luxury Dining Experiences in Singapore
Singapore, known as the Lion City, is a melting pot of cultures, cuisines, and luxury experiences. With its rich history,...
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
HDB Owners Missing Out on the “Ultimate Upgrade” to Landed Living
TLDR Over the past two decades in Singapore, the trend of HDB residents upgrading to landed properties has fluctuated. While...
Read More
Revival of Singapore Luxury Housing Market in 2023
TLDR The property market in Singapore has witnessed significant shifts in the past two years, with a surge in prices...
Read More
Learn the Essentials of Renting Property in Singapore as a Foreigner
TLDR Renting in Singapore offers various options for foreigners, such as HDBs, Condos, and even unique properties like heritage homes....
Read More
Are You Worried About Overpaying On Your Property? Here’s The Secret To Finding Out Its Perfect Purchase Price!
TLDR Understanding property valuations and their impact on mortgage loans is crucial in the Singapore real estate market. By considering...
Read More
5 Qualities to Look for in an Agent to Ensure a Smooth Transaction
5 Qualities to Look for in an Agent to Ensure a Smooth Transaction Here are 5 qualities to look for...
Read More
Top 5 : How Does One Choose Good Property In Singapore?
Choosing a property in Singapore can be an exciting yet challenging endeavor. With the city-state's dynamic real estate market, it...
Read More
5 Things to do When You Go For A Property Viewing In Singapore Part 2
5 Things to do When You Go For A Property Viewing In Singapore Part 2 Here are 5 more things...
Read More
Unforgettable Vacation: The Ultimate Guide To Singapore’s 5 Best Hotels
Unforgettable Vacation: The Ultimate Guide To Singapore's 5 Best Hotels It's 五新房产, Singapore is a vibrant and exciting destination, known...
Read More
Top 5 : Must-Do Experiences to Make the Most of Your Singapore Trip
Singapore, a vibrant island city-state located off the southern coast of Malaysia, is a melting pot of cultures and a...
Read More
Top 5 Singapore Must-Dos: Unforgettable Experiences Await!
Singapore, a vibrant city-state known for its diverse culture and world-class attractions, offers an array of unforgettable experiences for both...
Read More
