Top 5 Factors : Buying Resale vs New Launch Property in Singapore: Which is Better?
The decision to invest in a property in Singapore can be both exciting and daunting, especially when faced with the...
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 …
Unveiling the Secrets: How Foreigners Can Buy Property in Singapore – 6 Essential Steps to Follow
TLDR Foreign investors find Singapore attractive due to its stable governance and transparent business practices. Foreigners, including Permanent Residents (PRs),...
Read More
The 5 Hottest Neighborhoods in Singapore for Real Estate Investment
Hey everyone! Today I want to share with you the 5 hottest neighborhoods in Singapore for real estate investment. These...
Read More
Top 5 Mistakes to Avoid When Investing in Singapore Real Estate
Investing in Singapore's real estate market can be a lucrative venture, given the city-state's status as a global financial hub...
Read More
When Should You Consider Lowering the Price of Your Property That Has Been on the Market for Months?
TLDR Selling a property can be challenging without the right price strategy. Adjust your asking price to attract more buyers...
Read More
Increase in ABSD April 2023
TLDR The impending rise in ABSD (Additional Buyer's Stamp Duty) is expected to suppress investment demand, allowing local homebuyers to...
Read More
Invest During the Bearish & Exit During the Bullish
TLDR A comprehensive overview of the real estate market trends, emphasizing the importance of strategic property analysis and investment decisions....
Read More
5 Things to Know About Singapore’s Freehold & Leasehold Properties
5 Things to Know About Singapore's Freehold & Leasehold Properties Here are 5 things you need to know about Singapore's...
Read More
Exploring the Resale Condo Market? Here’s What to Watch Out For!
TLDR The impact of COVID-19 on Singapore's real estate market has been significant, leading to a surge in demand for...
Read More
Building A World-Class Nation: Top 5 Facts About Singapore’s Developed Infrastructure
Building A World-Class Nation: Top 5 Facts About Singapore's Developed Infrastructure Singapore is known for its high standard of living,...
Read More
Top 5 Reasons : Why Investing In Singapore’s Property Market Is Recession-Resistant
Singapore's property market has long been considered a safe haven for investors, even during times of economic uncertainty. The city-state's...
Read More
Top 5 Best Secret Gardens in Singapore
Singapore, a bustling city-state known for its modern architecture and vibrant culture, is also home to a plethora of hidden...
Read More
Top 5 Things to Do in Singapore on a Rainy Day
Singapore, the beautiful island city-state, is known for its sunny weather and stunning attractions. However, even in this tropical paradise,...
Read More
Checklist for First-Time Homebuyers in Singapore: A Guide to Viewing Condos
TLDR The checklist provides essential steps for first-time homebuyers in Singapore to consider when viewing a condo. It includes aspects...
Read More
Top 5 Places to Watch the Sunset in Singapore
Singapore, a bustling city-state known for its modern architecture and vibrant culture, is also home to some of the most...
Read More
Is the Singapore Property Market Set for a Dip in 2024?
TLDR The Singapore property market is experiencing shifts with Morgan Stanley adjusting its outlook on major developers. A forecast predicts...
Read More
What Will Happen When Your 99-Year Housing Lease Expires?
TLDR We delve into the challenges faced by Singaporeans with expiring 99-year housing leases. It explores the types of leases...
Read More
Top 5 : Common Characteristics Of Singapore Condos That Make Them An Attractive Investment Opportunity For Foreign Buyers
Singapore, a thriving hub of business and commerce in Southeast Asia, has become an attractive destination for foreign investors looking...
Read More
What Happens To Your Housing Loan Once You Sell Your House?
TLDR When selling your home in Singapore, ensure you pay off your outstanding home loan, refund any CPF monies used,...
Read More
Buy a $1M Resale HDB or a $1M Resale Condo?
TLDR When comparing a million-dollar HDB flat to a private property of the same value, the HDB flat offers more...
Read More
