Your search results

Want To Buy A Property? Read Me First!

Posted by Jayson Ang on December 7, 2022

| 0

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 …

All Buying Tips Opinion

Why Some New Condo Releases Outperform Others

Jayson Ang – July 9, 2024

TLDR When it comes to the real estate market, familiarity plays a crucial role in the success of larger condo...

All Blog Posts Buying Tips Opinion Selling Tips

6 Indicators and Measures to Determine if Your Home Has Unrecognized Profits

Jayson Ang – November 11, 2024

TLDR The booming real estate market presents opportunities for homeowners to profit from selling their properties. Two key signs that...

All Opinion Selling Tips

Ouch! How Owning a Million-Dollar Home Can Sting with a Whopping $300K Interest in Just a Decade!

Jayson Ang – November 28, 2023

TLDR When considering property investments in Singapore, it's crucial to monitor home loan interest rates closely. Even a slight increase...

All Blog Posts Buying Tips Opinion

Freehold Properties vs Leasehold Properties: Which is Better?

Jayson Ang – June 26, 2023

TLDR When it comes to property investments in Singapore, understanding the differences between leasehold and freehold properties is crucial. This...

All Blog Posts Opinion

What Has Been The Most Significant Development In The Real Estate Market In 2022

Jayson Ang – December 24, 2022

TLDR In 2022, the real estate market saw significant interest rate hikes affecting home loan rates. Despite concerns, the market...

Mandarin Top 5

Singapore’s Urban Landscape Transformation: 5 Key Things You Need to Know

Jayson Ang – March 17, 2024

Singapore's urban landscape has undergone significant changes over the years, with the city constantly evolving to create a sustainable and...

Mandarin Top 5

5 Cons Of Buying A Resale Property

Jayson Ang – March 7, 2024

Luxury properties in Districts 9 and 10 of Singapore are highly coveted, and for good reason. From stunning views and...

All Buying Tips Selling Tips

Discovering the Response of Private Property Owners towards the 15-Month Wait-Out Phase

Jayson Ang – August 25, 2023

TLDR The blog post discusses the impact of the 15-month wait-out period cooling measure on private property owners in Singapore....

All Buying Tips Opinion

I Regret Buying A DBSS: 5 Homeowners Share Their Biggest Regrets

Jayson Ang – January 16, 2024

TLDR Singapore's DBSS scheme faced challenges such as design flaws, developer responsiveness issues, and restrictions on selling. Residents reported various...

All Buying Tips

Single, Over 35, and Searching for a Home? Here’s Your Guide to Choosing Between an HDB and a Condo!

Jayson Ang – January 21, 2025

At the age of 35, a single Singaporean starts a significant year, highlighted by the long-awaited chance to buy their...

Mandarin Top 5

Top 5 Instagram-Worthy Spots in Singapore

Jayson Ang – February 21, 2024

Singapore, a beautiful city-state known for its stunning architecture, lush greenery, and vibrant culture, is a photographer's paradise. The island...