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
TLDR
Understanding the factors influencing property prices in Singapore for 2024 can help in making informed decisions. Despite high rental rates and rising mortgage rates, property prices have continued to climb. The government’s cooling measures have segregated the HDB and private property markets, affecting property valuations. Sellers holding multiple properties are driving the market, while limited options for downgrading to HDB contribute to the high property prices. The market dynamics suggest that buying or selling now depends on individual circumstances, and strategic real estate advice can guide through the process effectively.
As we move into 2024, there is a theory that property prices in Singapore will not drop but instead continue to rise higher and higher. This theory is backed by several situations that have emerged over the past three years.
Despite the interest rate remaining at an elevated level and possibly rising further, we have seen no signs of property prices falling. In fact, property prices have been climbing higher despite the low transaction volume. This signifies that not many are willing to sell off their property at a lower price, and buyers can still afford to buy.
Firstly, we are facing very high rental rates in the market right now, and owners of properties are getting extremely high rental yield. Mortgage rates have been on the rise since January 2022, and three months solar rates have reached 3.029 percent, putting off many home buyers. The rising home interest rate has made home loans much more expensive to service, so buyers feel that it is too expensive to service the loan or are no longer eligible to borrow the same amount of money, causing the number of qualified buyers in the market to drop. This has led to a drop in property transaction volume. With lesser buyers now in the market, one would expect property prices to drop. However, the theory suggests otherwise.
One reason why property prices can continue to rise into the future without dropping at all is that the high rental rates in the market can actually cause property prices to go up. High rental rates must be priced into the property, and since rental rates are very high, it has to be priced into the property as well. With this, rental rates are even higher, and investors are getting high return on their rental properties. There is no urgency to sell their properties, as they are getting a net positive monthly return. The only situation they will consider selling the property is if the rental is being priced into the price of the property.
Private property owners who want to downgrade to an HDB will find that it is no longer an option as part of the recent cooling measure announced by the government. Home sellers can no longer sell their prime property and subsequently buy an HDB unless they are above 55 years old. If they want to do so, they have to wait out a 15-month period, which means that they have to rent a property for 15 months at least, causing rental prices to go up, and this can also cause property prices to go up again. Even if they are 55 years old and above, they can only buy an HDB four rooms and below immediately. This has segregated the HDB and the private property market very clearly, which can cause property prices to remain high.
Today, people who are selling their private property are not likely selling to downgrade to an HDB, but it is more likely that they are either upgrading or downgrading to another private property. If they choose to downgrade, they have to find a place to rent, causing greater demand for rental properties, thereby driving private property prices up. If they choose to buy another condominium, it is kind of zero sum, as when they sell, they buy, and this can also cause property prices to go up.
In conclusion, sellers who are in the market right now are probably people who own multiple properties because they have holding power. They are not scared of price drops or, in other words, are just savvy enough to price in the rental if they even want to sell the property. Rising rental demand causes rising property prices. With interest rates at an all-time high, TDSR at 55, and a high 25% down payment requirement, private property sellers find it hard to downgrade to an HDB.
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 …
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
What Is Cash Over Valuation in HDB (COV)
TLDR Cash Over Valuation (COV) in HDB resale flats occurs when the purchase price exceeds HDB's valuation. COV cannot be...
Read More
Top 5 Factors: Singapore Property Market: Attractive Investment Opportunity Despite Cooling Measures
The Singapore property market has always been a popular investment choice for both local and foreign investors, thanks to its...
Read More
Is Renting Out Your HDB to Live in a Condo a Smart Move? How Rentvesting Can Help You Save Money
TLDR Rentvesting is a strategy where individuals rent a home in their desired location while purchasing investment properties in more...
Read More
Decoding the HDB Classification: The New Prime, Plus & Standard – What It Means for Singaporeans
TLDR The National Day Rally 2023 introduced a new classification for HDB flats, replacing the old 'mature versus non-mature estates'...
Read More
Learning Hard Truths in Property Investment: Timing the Market Can Hurt
TLDR The blog post delves into the complexities of market timing in property investment, highlighting the risks and challenges associated...
Read More
The Top 5 Factors to Consider When Investing in Industrial Property in Singapore – Expert Insights!
Singapore, a thriving hub of business and commerce in Southeast Asia, offers a robust real estate market with various investment...
Read More
Don’t Miss Out: Take Control of Your Life in Your 30s and 40s
TLDR The stages of wealth management vary from ages 30 to 80, with different focuses and considerations at each stage:...
Read More
Discover the Optimal Timing to Invest in Singapore Real Estate: Unveiling Historical Insights
TLDR When considering the best time to buy or sell a property in Singapore, historical data analysis reveals key insights....
Read More
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 : Best Laser Tag Arenas in Singapore
Laser tag has become an increasingly popular activity in Singapore, offering adrenaline-pumping experiences for people of all ages. This exciting...
Read More
Lessons from the Rollercoaster Ride: Homebuyers Share Their Singapore Housing Market Experiences
TLDR The Singapore housing market is a rollercoaster of unpredictable changes. Three homebuyers share their experiences: Tristan waited too long...
Read More
Singapore’s Property Market: Will the Newly Proposed 2023 Cooling Measures, Including a 60% Foreigner ABSD, Make Waves or Mere Ripples?
TLDR The recent surge in Additional Buyer's Stamp Duty (ABSD) rates in Singapore targets mainly foreigners and entities, with rates...
Read More
Top 5 : Advantages of Owning a Luxury Condominium in Singapore for Long-Term Investment
Singapore, a thriving global city-state, has become an attractive destination for real estate investors. Among the various property types available,...
Read More
Property Unpacked: Is GLS Impacting Property Values?
TLDR The Government Land Sales (GLS) program in Singapore is critical for developers to obtain development land, with sites released...
Read More
5 Tips To Spot Winning Investment Properties In Singapore
Investing in real estate is an exciting and potentially lucrative venture. In Singapore, a thriving property market attracts both local...
Read More
Beyond Buying: Innovative Strategies for Property Investment Success
TLDR The world of property investment and real estate trends offers vast opportunities. Stay informed with effective property investment strategies...
Read More
Discover What Else You Can Focus On Beyond PSF – Here’s How!
TLDR When considering real estate investments, factors like property size, location, and PSF play crucial roles in determining affordability. Smaller...
Read More
5 Most Affordable Areas to Invest in Property in Singapore
Singapore is known for being one of the most expensive cities in the world, particularly when it comes to property...
Read More
