Top 5 : Best Karting Circuits in Singapore
Singapore, a bustling city-state known for its modern architecture, cleanliness, and vibrant culture, is also home to a thriving karting...
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 …
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
Top 5 Factors : Singapore Real Estate Investing vs Stocks and Bonds: Which is Better?
Investing is an essential aspect of wealth creation and financial planning. With a plethora of investment options available, it can...
Read More
5 Biggest Mistakes I Made When Starting Out In Singapore Property Investing
Investing in Singapore property can be an excellent way to generate passive income and build long-term wealth. However, like any...
Read More
Top 5 Tips : Finding the Right Property: Location, Size, and Price in Singapore Real Estate
Singapore, known for its diverse culture, strong economy, and excellent infrastructure, is a popular destination for real estate investments. The...
Read More
The Top 5 Renovation Tips For Increasing The Value Of Your Singapore Property Investment
When it comes to increasing the value of your Singapore property investment, strategic renovations can make a significant difference. Here...
Read More
Four Things to Avoid When Renting Out an HDB Flat
TLDR Renting out an HDB flat in Singapore can be a lucrative source of secondary income. Key considerations include adhering...
Read More
Want To Buy A Property? Read Me First!
TLDR Understanding the key factors involved in buying property in Singapore is crucial for making informed decisions. Consider your investment...
Read More
Top 5 : What Are The Key Factors That Drive Foreign Investment In Singapore’s Real Estate Market
Singapore, a thriving city-state in Southeast Asia, has become a magnet for foreign investors looking to capitalize on its booming...
Read More
Top 5 Factors To Consider When Choosing Between A Resale Condo And A New Launch In Singapore
The decision to invest in a condominium in Singapore can be a challenging one, especially when faced with the choice...
Read More
The Top 5 Features to Look for When Buying a Luxury Property in Singapore – Expert Insights!
Singapore, a thriving financial hub and one of the world's wealthiest nations, has become an attractive destination for luxury property...
Read More
A Executive Summary Guide to the Singapore Real Estate Market 2023 and Beyond …
TLDR The Singapore real estate market is vibrant, driven by a strong economy, stable business climate, and attractive investment opportunities....
Read More
Top 5 Places to Buy Local Art in Singapore
Singapore, a melting pot of cultures and traditions, is not only known for its breathtaking cityscape, delectable food, and shopping...
Read More
Top 5 Must-Do Experiences in Singapore for First Timers
Singapore, a vibrant city-state known for its diverse culture and rich history, offers an array of unique experiences for first-time...
Read More
What Factors Contribute To Singapore’s Real Estate Market Exhibiting Less Volatility Than Other Major Cities?
TLDR The Singaporean real estate market has remained stable due to government cooling measures. These include Additional Buyer's Stamp Duty...
Read More
Top 5 Mistakes to Avoid When Buying Property in Singapore – Expert Insights!
Purchasing a property in Singapore can be an exciting and rewarding experience, especially for those looking to invest in the...
Read More
5 Things to Know About Singapore’s Urban Redevelopment and Landscape Changes
As one of the world's most densely populated cities, Singapore has undergone significant urban redevelopment over the past few decades...
Read More
Are You Ready to Take on the Singapore Property Market in 2023? 12 Reasons to Be Hopeful (Or Wary)!
2022 sure was a rollercoaster ride for the property market, and the world! From war in Europe to skyrocketing interest...
Read More
Top 5 Places to Watch Fireworks in Singapore
Singapore is known for its stunning skyline and vibrant celebrations, especially during events like National Day and New Year's Eve....
Read More
Could It Be Wise to Sell Your Property After Just 3 to 4 Years?
TLDR In this blog post, the writer delves into the Singapore property market, particularly focusing on the effectiveness of quick...
Read More
