Top 5 Coffee Shops in Singapore for Coffee Lovers
Singapore, a bustling city-state known for its diverse culture and vibrant food scene, has also become a haven for coffee...
Read More
TLDR
When it comes to real estate investments in Singapore amidst rising inflation rates, consider strategies such as capitalizing on property price increases, adjusting rental rates, opting for fixed-rate mortgages, and investing in revenue-producing properties for retirement savings. Focus on properties with short-term leases, passable price increases to tenants, and those in desirable locations. With the current market conditions and potential future scenarios, it might be the right time to make a well-thought-out plunge into real estate investment.
Inflation rates have risen 2.5% to 3.5% this year, and bank loan rates surpassed HDB’s 2.6% rate. In light of these increasing figures, how can you use real estate to protect yourself against inflation?
Singapore’s core inflation has been on the upswing, with projections suggesting it will peak in the first quarter of 2023 – surpassing its previous forecast range of 2.5% to 3.5%. Meanwhile, supply chain disruptions, restrictive labour market conditions, and higher commodity prices have all contributed to a marked spike in consumer prices. It’s no wonder our wallets feel a bit lighter than usual – and it looks like they’ll stay that way for a while!
Are you worrying about inflation taking a toll on your finances? I’ve found a great solution: investing in real estate to counteract the rising costs of mortgage rates!
What Real Estate Inflation Hedging Strategies Can Benefit You?
The Rise Of Inflation Spurs A Rise In Property Prices
With raw material costs on the rise, property prices are bound to go up. Real estate and rental income have a tendency to remain steady even with inflation, and investors have the potential to reap greater rewards than the market when it comes to inflation.
Rising Inflation Has A Tendency To Push Up Rental Costs
It’s clear that as property prices rise, so does rent. Taking advantage of this, why not charge a higher rent on your property to make your monthly repayments more manageable and cover the cost of upkeep? Even better, if your rental costs exceed inflation, you’ll be earning a steady stream of passive income!
Your Mortgage Payments Will Decrease With Time
When it comes to buying a property, if you opt for a fixed-rate loan, the cost will be based on the property’s value at the time of purchase. On the other hand, if you decide to rent, your costs could rise with the value of the property, but you could save in the long run if you go for a fixed-interest mortgage, as inflation will take its toll.
Your Retirement Funds Can Be Safeguarded From The Adverse Consequences Of Inflation
In a few years, your retirement funds won’t be worth nearly as much as it is today due to inflation; hence, your purchasing power will be hindered. To protect your retirement savings from inflation, owning a revenue-producing property could be a helpful solution.
The Range Between The Bid And Breakeven Prices For New Launches Will Be Greater
As labour costs and raw material prices rise, the difference between the breakeven/launch price and the bidding price of new launches will widen significantly.
Property Values Are Often Seen To Rise In The Long-Run
Property prices in Singapore are expected to keep soaring as residential properties tend to appreciate over time due to population growth, land demand, infrastructure upgrades and other contributing factors. Many investors have identified real estate investments as an ideal way to protect themselves against inflation.
During Inflation, What Kind Of Real Estate Investment Should I Seek Out?
Properties With A Short-Term Lease
Rather than long-term property leases that could miss out on the rewards of inflation, short-term leases have the advantage of often resetting rental rates to prevailing market levels.
Property Owners Can Pass On Price Increases To Their Tenants
Investing in residential properties or any other asset that enables you to capitalize on rising rental rates during periods of inflation is a lucrative endeavour. Conversely, investing in a commercial space in a shopping mall could result in little reward if retailers opt to shut down shop.
Properties Highly Sought-After In Desirable Locations
Having tenants that bring in income, especially on a short-term lease, is essential; and properties located in desirable locations generally don’t have difficulty attracting interested tenants. Therefore, it’s critical to pay attention to the location and durability of your property. It’s a great idea to keep an eye out for the following:
- Where upcoming MRT stations are being located
- Future projects within an area
- The government’s infrastructure plans
Is Now The Ideal Moment To Make A Plunge Into Real Estate Investment?
Due to inflation, those wishing to own a home may now be required to allocate more money for mortgage payments as some banks have raised their fixed-interest rates.
But, when you opt for a fixed-rate loan to purchase a home, it won’t be affected by inflation for the duration of the fixed-period. This could be quite beneficial for you, since you’ll be paying for the value of the home at the time of purchase rather than its potentially inflated cost.
Additionally, you may wish to research other mortgage loan options that feature fixed-interest rates that remain consistent.
Data.gov.sg has highlighted a significant increase in the private property market in the past 10 years, increasing from 53.6% in 2010 to 2020. With such a rise, investors can anticipate the value of their home investments to appreciate.
Even during the pandemic, the property market remained resilient, resulting in the government introducing stricter measures, such as higher ABSD rates, tighter TDSR ceilings and a decrease in the LTV limit for HDB loans.
Necessary steps must be taken to avoid the risk of a destabilising correction in the future. Consequently, borrowers should anticipate a rise in interest rates in the coming years. However, as a buyer, you reap the rewards of investing in a home right now, with many condo developments offering early bird discounts, allowing you to gain even more.
In the long run, investing in real estate is typically a safe bet despite inflation. The key is to select an income-producing property strategically, and be in a financial position to make this a long-term commitment. This could prove rewarding with rental and capital value growth, thereby strengthening your buying power until retirement.
Should You Buy, Sell or Wait?
If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?
It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.
I can bring you a wealth of on-the-ground experience and a data-driven approach to provide clarity and direction. From beginners to experienced investors, our top-down, objective approach will help you on your real estate journey.
I can help you by:
- Offering Strategic Real Estate Advice – I can help create a comprehensive plan to guide you through your property journey.
- Connecting Your Home with the Perfect Buyers – Through stunning visuals, an effective communication strategy, and an in-depth knowledge of the market, we’ll ensure your home is presented in the best possible way to fulfill your goals.
You May Also Like …
Experience Singapore’s Best: 5 Districts with Unmatched Access to Shopping, Dining, and Entertainment
Here are my top 5 picks for districts in Singapore that offer easy access to some of the best shopping...
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
Housing Affordability in 2023: Is Singapore Property Truly Unaffordable?
TLDR Singapore’s property market faces challenges with high prices, especially in private housing. While public housing remains more affordable, the...
Read More
Top 5 Tea Rooms in Singapore for High Tea
Singapore, a melting pot of diverse cultures and culinary delights, offers an exquisite high tea experience that caters to both...
Read More
Dual-Key Condo: Analysing The Pros And Cons
TLDR for "Dual-Key Condo: Analysing The Pros And Cons" When considering dual-key condo units, it's important to weigh the advantages...
Read More
Top 5 Rooftop Pools in Singapore for a Swim
Singapore, a bustling city-state known for its iconic skyline and innovative architecture, is home to some of the most stunning...
Read More
5 Reasons To Invest In UK Property In 2024 Instead Of Saving
TLDR Investing in UK property in 2024 offers significant advantages over saving due to the potential for long-term value growth,...
Read More
5 Reasons : Why Investing In Singapore Property Is The Best Decision I Ever Made
Investing in property is a great way to build wealth and secure a stable source of passive income. When it...
Read More
Freehold Properties vs Leasehold Properties: Which is Better?
TLDR When it comes to property investments in Singapore, understanding the differences between leasehold and freehold properties is crucial. This...
Read More
6 Must-Know Factors to Consider When Purchasing a Resale HDB in 2023
TLDR When buying a resale flat in Singapore, make sure to walk around the neighborhood to assess actual distances, check...
Read More
The Cost of Housing – Affordability vs Premium?
TLDR The blog post discusses the challenges Singapore faces in housing affordability, particularly the rising costs of private homes compared...
Read More
5 Key Insights to Take Away from the Latest 2022 Cooling Measures
TLDR Affordability of HDB Market: Government is focused on ensuring affordable public housing and may increase supply if needed. Long-term...
Read More
What Difference in One Year After the ABSD Hike in April 2023?
TLDR The recent hike in ABSD rates, especially the increase from 30% to 60% for foreign buyers, has dramatically affected...
Read More
Top 5 Tips for First-Time Chinese Buyers Looking to Invest in Singapore Today
Top 5 Tips for First-Time Chinese Buyers Looking to Invest in Singapore Today Here are the top 5 tips for...
Read More
SP Utilities Guide – Quick Guide To Setting Up Utilities In Singapore For Your New Home
TLDR Setting up utilities in Singapore for a new home is hassle-free. Contact SP Services for electricity and water accounts,...
Read More
Top 5 Hawker Centres in Singapore for Local Food
Singapore, a melting pot of diverse cultures and rich culinary heritage, is home to some of the most delectable local...
Read More
Top 5 Reasons Why Singapore’s Property Market Is A Haven For High Net Worth Investors
Singapore's property market has long been a magnet for high net worth investors, both local and international. The city-state's strategic...
Read More
Top 5 : Best Hidden Beaches 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
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
