What Is The Cost Of Constructing A Landed Property In Singapore?
TLDR Building a landed property in Singapore can be a costly endeavor, with prices ranging from $300 to $500 per...
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 …
6 Essential Tips for Singaporean New Homebuyers
TLDR Best practices for first-time homebuyers, the key points include setting clear and detailed goals, planning a realistic housing budget,...
Read More
3 Property Owners Reveal Their Major Mistakes: The Pitfalls of Ill-timed Home Sales
TLDR When it comes to navigating the ups and downs of the Singapore property market, timing is crucial. Three real-life...
Read More
A Guide to Purchasing a New Launch Condo in Singapore in 2023
TLDR When buying a new launch condo in Singapore, start by planning your finances to determine loan and property limits....
Read More
5 Factors : Why Singapore’s Property Market Is A Good Hedge Against Inflation
As inflation becomes a growing concern for investors worldwide, the stability of Singapore's property market has become an attractive option...
Read More
What Is The Best Location To Purchase A House To Ensure Your Child Has The Highest Probability Of Attending A Well-Renowned Primary School?
TLDR Parents often seek homes within 1km of desired primary schools to increase enrollment chances. Consider oversubscription rates and population...
Read More
How Much You Need to Earn to Afford a Condo 2023
TLDR When considering investing in a private property in Singapore, it's important to understand your borrowing capacity. Financial experts recommend...
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
5 Tips : How To Negotiate A Good Deal When Buying A Singapore Property
When looking to buy a property in Singapore, it's essential to know how to negotiate a good deal. Here are...
Read More
Top 5 Reasons : Why Does Singapore Have Such Extensive Restrictions On Foreigners Purchasing Residential Property?
Singapore, a thriving city-state in Southeast Asia, is known for its stable political climate, strong economy, and strategic location. As...
Read More
Singapore Private Residential Market Outlook 2023
TLDR The Singapore residential property market has shown resilience in 2022, with price growth in both private housing and HDB...
Read More
5 Points : Singapore’s Property Market vs. Stock Market: Which is the Better Investment Option?
Investing is an important aspect of personal finance and can be a valuable way to grow wealth over time. However,...
Read More
5 Most Iconic Landmarks In Singapore’s Landscape
Singapore's landscapes is renowned for its innovative and dynamic approach to urban development, boasting some of the most iconic landmarks...
Read More
5 Critical Mistakes to Avoid When Investing in Singapore Property: Insights and Advice from Experts
Investing in Singapore property can be a lucrative venture for investors, but it's important to avoid common mistakes that can...
Read More
Methods to Beat ABSD and Own Multiple Properties in 2024 (Updated)
TLDR Navigating the Additional Buyers Stamp Duty (ABSD) in Singapore can be daunting for property investors. To save on ABSD...
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
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
Should You Be Upgrading To A Condo In 2023?
TLDR The 2022/23 property market is experiencing high prices, making it challenging for individuals to decide whether to upgrade their...
Read More
Singapore’s Housing Phenomenon: A Success Tale Calling for Tweaks – Insights from the Experts
TLDR Singapore's housing system has been praised for its effectiveness in meeting citizens' homeownership desires. The public housing program by...
Read More
Avoid These 6 Terrible Property “Tips” in Singapore
TLDR When it comes to property advice, it's crucial to be cautious of common misconceptions. For instance, schemes like the...
Read More
