Top 5 Vegetarian Restaurants in Singapore
Singapore, a melting pot of cultures and cuisines, offers a diverse range of dining options for food enthusiasts. For vegetarians,...
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 …
Why Chinese Investors Should Not Be Deterred by ABSD: 5 Reasons
Why Chinese Investors Should Not Be Deterred by ABSD: 5 Reasons Here are the top 5 reasons why Chinese investors...
Read More
Top 5 Places to Learn About Singapore’s History
Singapore, a thriving metropolis with a rich history and diverse cultural heritage, offers numerous opportunities for visitors and locals alike...
Read More
5 Key Factors that Affect Singapore’s Property Prices
Singapore, a thriving city-state known for its impressive skyline and robust economy, has one of the most dynamic and competitive...
Read More
Finding Your Dream Home In The Near Future. Exciting Upcoming Property Launches In The First Half Of 2024
TLDR The real estate sector in 2023 saw significant policy shifts affecting both private and public housing, with various changes...
Read More
2024 Residential Property Market Outlook
TLDR The market outlook for 2024 suggests continued uncertainties affecting housing demand and risk appetite due to geopolitical tensions, macroeconomic...
Read More
Top 5 Reasons : Why Singapore’s Property Market Is a Safe Haven for Investors in Uncertain Times – Insider Analysis!
In today's uncertain global economic climate, investors are constantly on the lookout for safe havens to park their wealth. Amidst...
Read More
What’s The Difference Between An Offer To Purchase And An Option To Purchase?
TLDR Understanding the crucial difference between an Offer to Purchase and an Option to Purchase (OTP) is vital when buying...
Read More
5 Impacts Of The Singapore-Malaysia High-Speed Rail On The Property Market
The proposed Singapore-Malaysia High-Speed Rail (HSR) is a joint project between the two countries that aims to improve connectivity and...
Read More
Making Sense of 99-Year Landed Home Investments in Singapore
TLDR Investing in a 99-year leasehold landed property in Singapore can be a lucrative venture due to the country's land...
Read More
Experience The Best Of Southeast Asia: 5 Must-See Destinations After Singapore
Singapore is a great starting point for travelers looking to explore the region. From Singapore, there are many great destinations...
Read More
Subscribe to Jayson Ang’s Singapore Property Newsletter
TLDR Jayson Ang's Singapore Property Newsletter offers valuable insights on real estate investments, market trends, and expert advice. The newsletters...
Read More
5 Proven Strategies for Increasing the Value of Your Singapore Property
In Singapore's competitive real estate market, adding value to your property can be the key to making a profitable investment....
Read More
Singapore’s Urban Landscape Transformation: 5 Key Things You Need to Know
Singapore's urban landscape has undergone significant changes over the years, with the city constantly evolving to create a sustainable and...
Read More
5 Disastrous Property Transaction Nightmares (and How to Avoid Them)!
TLDR When attempting to sell your property, various worst-case scenarios can hinder the sale process significantly. These scenarios include buyers...
Read More
From Garden City to Smart Nation: Singapore’s Top 5 Goals Building a Sustainable and Livable City
Singapore is a small island city-state with a population of over 5 million people. Its urban landscape is constantly evolving,...
Read More
Singapore Property Investing: Is It Better To Flip Or Hold?
Investing in Singapore property can be a profitable venture, but investors must choose the right strategy to maximize their returns....
Read More
Unveiling the Truth: Why Freehold is Not Always the Optimal Choice for Property Investment
TLDR When it comes to investing in real estate in Singapore, traditional beliefs may not always hold true in today's...
Read More
I Regret Buying A DBSS: 5 Homeowners Share Their Biggest Regrets
TLDR Singapore's DBSS scheme faced challenges such as design flaws, developer responsiveness issues, and restrictions on selling. Residents reported various...
Read More
A Step-by-Step Guide To Upgrading From an HDB Flat To Your a Private Property
TLDR Understanding the complexities of upgrading from an HDB flat to a private property in Singapore involves selling your HDB...
Read More
