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

5 Critical Mistakes to Avoid When Investing in Singapore Property: Insights and Advice from Experts

Jayson Ang – April 1, 2024

Investing in Singapore property can be a lucrative venture for investors, but it's important to avoid common mistakes that can...

All Blog Posts Opinion

Invest During the Bearish & Exit During the Bullish

Jayson Ang – December 27, 2022

TLDR A comprehensive overview of the real estate market trends, emphasizing the importance of strategic property analysis and investment decisions....

All Opinion Selling Tips

Beyond Profit: Singaporean Homeowners Share Stories of Purpose-Driven Property Purchases

Jayson Ang – January 18, 2026

TLDR In Singapore, some homeowners prioritize personal comfort, convenience, and family needs over financial gains in property purchases. YC bought...

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 Buying Tips

Planning for Retirement: Considerations for Downsizing Your Property

Jayson Ang – February 19, 2023

TLDR Downsizing your home for retirement can bring financial security, closer family ties, and new adventures. Consider the benefits of...

All Buying Tips Opinion

6 Unexpected Property Warning Signs That Can Be Negative for Some, But Beneficial for Others

Jayson Ang – February 29, 2024

TLDR When considering property preferences, what may appear as a disadvantage to some buyers could be a unique opportunity for...

Mandarin Top 5

Top 5 : How Does Investing In Luxury Condos In Singapore Compare To Investing In Other Real Estate Asset Classes In Terms Of Long-Term Capital Appreciation?

Jayson Ang – December 9, 2024

Investing in real estate has long been considered a reliable way to build wealth and diversify one's investment portfolio. In...

Mandarin Top 5

Maximize Your Property Investment: 5 Questions to Ask Your Real Estate Agent in Singapore

Jayson Ang – March 23, 2024

Buying a property in Singapore can be a daunting task, especially for first-time buyers. It is important to have a...

All Buying Tips

Should Foreign Buyers Be Deterred By the 30% ABSD?

Jayson Ang – December 7, 2022

TLDR Foreign buyers interested in private residential properties in Singapore is a common sight due to the country's positive reputation...

Mandarin Top 5

The Top 5 Myths About Buying Property in Singapore – Debunked!

Jayson Ang – June 4, 2023

The Top 5 Myths About Buying Property in Singapore – Debunked! Here are the top 5 myths about buying property...

All Buying Tips Opinion Selling Tips

Upgrading to a Condo by Age 35: A Feasible Goal for the Average Singaporean in 2025?

Jayson Ang – September 28, 2026

TLDR Upgrading from an HDB flat to a condo by age 35 is technically feasible for median-income Singaporeans, but only...

Mandarin Top 5

Top 5 : Best Themed Cafes in Singapore

Jayson Ang – November 15, 2024

Singapore, a vibrant and diverse city, is known for its eclectic mix of cultures, cuisines, and attractions. Among the many...

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...