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 Blog Posts Buying Tips

When Is The Best Time To Buy A New Launch?

Jayson Ang – January 13, 2023

TLDR When it comes to new property launches, timing is crucial. Early buyers often secure the best prices due to...

All Blog Posts Buying Tips

What Hidden Costs Are There When Selling Your House?

Jayson Ang – July 7, 2023

TLDR When selling your house, be prepared to cover expenses such as outstanding home loans, legal fees, property agent commissions,...

Buying Tips Mandarin Top 5

5 Things to do When You Go For A Property Viewing In Singapore Part 2

Jayson Ang – June 8, 2023

5 Things to do When You Go For A Property Viewing In Singapore Part 2 Here are 5 more things...

All Buying Tips Opinion

6 Hot Property Market Trends in Singapore 2024: What Buyers Should Anticipate

Jayson Ang – May 27, 2024

TLDR When diving into Singapore's property market, expect a rollercoaster ride as trends shift drastically in 2024. Landlords and tenants...

All Blog Posts Buying Tips

5 Must-Know Questions Before Investing in Real Estate

Jayson Ang – June 15, 2023

TLDR When considering whether to buy a new development or a resale property, it can be challenging. In the blog...

Mandarin Top 5

Top 5 Tips : How Does One Choose Good Property In Singapore?

Jayson Ang – November 11, 2024

Singapore, a thriving city-state known for its impressive skyline and robust economy, has always been an attractive destination for property...

Mandarin Top 5

5 Singapore Property Trends to Watch in 2023: Expert Weigh In

Jayson Ang – May 20, 2023

5 Singapore Property Trends to Watch in 2023: Expert Weigh In Top 5 Singapore Property Trends to Watch in 2023...

Mandarin Top 5

Top 5 Seafood Restaurants in Singapore

Jayson Ang – April 3, 2024

Singapore, a melting pot of cultures and culinary delights, is well-known for its diverse food scene. With its strategic location...

Mandarin Top 5

Top 5 Coffee Shops in Singapore for Coffee Lovers

Jayson Ang – August 17, 2024

Singapore, a bustling city-state known for its diverse culture and vibrant food scene, has also become a haven for coffee...

All Buying Tips Opinion

Property Unpacked: Is GLS Impacting Property Values?

Jayson Ang – March 2, 2025

TLDR The Government Land Sales (GLS) program in Singapore is critical for developers to obtain development land, with sites released...

All Buying Tips Opinion

Are Early Bird Discounts At New Launches Genuine Or A Marketing Gimmick?

Jayson Ang – November 20, 2023

TLDR When considering investing in new property projects, understanding developers' pricing strategies is crucial. Early bird discounts are not just...

Mandarin Top 5

Top 5 : Questions Should Investors Be Asking Before Investing In Singapore’s High-End Rental Market

Jayson Ang – February 1, 2025

Singapore's high-end rental market has been a hot topic of discussion among investors worldwide. With the city-state's robust economy, excellent...

All Opinion

How Budget 2024 Impacts Singapore Homeowners: Exciting Property Tax Updates and ABSD Benefits

Jayson Ang – June 16, 2024

TLDR The 2024 Budget introduces changes to property tax bands, aiming to ensure fair taxation based on Annual Value (AV)...

Mandarin Top 5

Top 5 Case Study : The Dark Side of Property Investing in Singapore: Scams, Fraud, and Risks

Jayson Ang – October 1, 2024

Singapore's property market has long been considered a lucrative investment sector, attracting investors and speculators looking to profit from the...

All Blog Posts Buying Tips

How Can Decoupling Help You in Buying a Second Property?

Jayson Ang – July 1, 2023

TLDR Decoupling property ownership in Singapore can help you avoid hefty Additional Buyer's Stamp Duty fees when purchasing a second...

Mandarin Top 5

Building A World-Class Nation: Top 5 Facts About Singapore’s Developed Infrastructure

Jayson Ang – July 23, 2023

Building A World-Class Nation: Top 5 Facts About Singapore's Developed Infrastructure Singapore is known for its high standard of living,...

Mandarin Top 5

Top 5 Reasons Why Singapore’s Luxury Property Market Is Booming – Expert Analysis!

Jayson Ang – October 17, 2024

Singapore's luxury property market has been experiencing a significant boom in recent years, attracting the attention of investors and high-net-worth...