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 …

Mandarin Top 5

Top 5 Singaporean Dishes to Try

Jayson Ang – July 30, 2024

Singapore, a melting pot of diverse cultures and flavors, is known for its rich culinary heritage. With influences from Chinese,...

All Blog Posts Buying Tips Opinion

I Decided to Pay the Additional Buyer’s Stamp Duty to Purchase a Condominium While Retaining My HDB: My Reasons

Jayson Ang – October 15, 2024

TLDR Despite a 20% Additional Buyer’s Stamp Duty (ABSD) for second properties in Singapore, Yang chose to hold onto his...

Mandarin Top 5

Top 5 Shopping Malls in Singapore for Luxury Shopping

Jayson Ang – March 5, 2024

Singapore, a bustling city-state known for its stunning architecture and diverse culture, is also a paradise for luxury shopping enthusiasts....

All Buying Tips Opinion

The Sneaky Role of Property Appraisals in Shaping Singapore’s Home Prices

Jayson Ang – January 20, 2024

TLDR When it comes to the real estate market in Singapore, understanding property valuations and the impact on mortgage loans...

All Blog Posts Buying Tips

6 Must-Know Factors to Consider When Purchasing a Resale HDB in 2023

Jayson Ang – February 5, 2023

TLDR When buying a resale flat in Singapore, make sure to walk around the neighborhood to assess actual distances, check...

All Blog Posts

SP Utilities Guide – Quick Guide To Setting Up Utilities In Singapore For Your New Home

Jayson Ang – April 16, 2023

TLDR Setting up utilities in Singapore for a new home is hassle-free. Contact SP Services for electricity and water accounts,...

Mandarin Top 5

Top 5 Live Music Venues in Singapore

Jayson Ang – May 20, 2024

Singapore, a vibrant and multicultural city-state, is well-known for its diverse food scene, stunning architecture, and bustling shopping districts. However,...

All Blog Posts Opinion

Singapore Property Price Set to Explode Upwards in 2024?

Jayson Ang – March 10, 2023

TLDR Understanding the factors influencing property prices in Singapore for 2024 can help in making informed decisions. Despite high rental...

Mandarin Top 5

Singapore’s Top 5 Property Investment Hotspots for 2024

Jayson Ang – April 4, 2024

As one of the world's leading financial centers, Singapore has always been a popular destination for property investment. With a...

Mandarin Top 5

5 Impacts Of The Singapore-Malaysia High-Speed Rail On The Property Market

Jayson Ang – June 10, 2024

The proposed Singapore-Malaysia High-Speed Rail (HSR) is a joint project between the two countries that aims to improve connectivity and...

All Blog Posts Opinion

Singapore Property Bubble Ahead? My Friends Share My Market Predictions

Jayson Ang – March 12, 2023

TLDR The author delves into various opinions on the Singapore property market for the year 2023. Experts have differing views...

All

Four Things to Avoid When Renting Out an HDB Flat

Jayson Ang – February 23, 2024

TLDR Renting out an HDB flat in Singapore can be a lucrative source of secondary income. Key considerations include adhering...

All Buying Tips Opinion

My 6 Factors to Consider When Buying a Property in 2023

Jayson Ang – March 11, 2023

As the housing market shows no signs of slowing down, many of us may feel left behind, questioning whether it...

Mandarin Top 5

Top 5 Tea Rooms in Singapore for High Tea

Jayson Ang – July 16, 2024

Singapore, a melting pot of diverse cultures and culinary delights, offers an exquisite high tea experience that caters to both...

All Buying Tips Selling Tips

Could It Be Wise to Sell Your Property After Just 3 to 4 Years?

Jayson Ang – February 5, 2024

TLDR In this blog post, the writer delves into the Singapore property market, particularly focusing on the effectiveness of quick...

Mandarin Top 5

Discover the Best Breakfast in Singapore: Top 5 Must-Try Spots!

Jayson Ang – February 28, 2024

Trying out some of the best breakfast places, I've put together a list of the top 5 must-try breakfast spots...

Mandarin Top 5

5 Tips for Renting Property in Singapore

Jayson Ang – March 15, 2024

Renting property in Singapore can be a challenging task, especially for those who are new to the country. With Singapore's...

All Blog Posts Buying Tips

5 Facilities Selling Points Condo Sellers Should Emphasize To Entice Potential Buyers

Jayson Ang – May 23, 2023

TLDR When selling a condo, focusing on highlighting key facilities like gyms, swimming pools, family-friendly amenities, community gardens, and clubhouse...