6 Indicators and Measures to Determine if Your Home Has Unrecognized Profits
TLDR The booming real estate market presents opportunities for homeowners to profit from selling their properties. Two key signs that...
Read More
TLDR
When considering whether to buy a new development or a resale property, it can be challenging. In the blog post mentioned, various aspects of investing in condos in Singapore are discussed, covering topics such as leasehold versus freehold. It provides insights into the real estate market in Bedok, Changi, Pasir Ris, and Tampines in 2023, along with considerations for purchasing a condo despite high PSF. The post also highlights the impact of Singapore’s development on real estate markets and explores buying mega development condos while addressing overlooked issues. Moreover, it delves into cash over valuation in HDB resale flats and offers a simplified guide to buying landed property in Singapore. Additionally, it shares lessons from homebuyers’ experiences in the unpredictable Singapore housing market and lists frequently overlooked questions for new condo buyers to avoid regrets in the future.
Investing in property is a more secure, long-term choice compared to more speculative options like stocks, and remains a popular choice in Singapore – despite the restrictions and cooling measures that make it harder for property investors to make a profit.
But before you commit to your next property, you should ask yourself these five questions to ensure you make the right decision.
1. Am I Eligible To Buy?
Before you purchase another HDB flat, eligibility is a must. If you live in a new or resale HDB flat, or an Executive Condominium (EC), you are obligated to abide by the five-year Minimum Occupancy Period (MOP). This entails that you must stay in your current dwelling for five years before you can acquire your subsequent or second property.
2. What Type Of Property Am I Looking For?
The kind of real estate you plan to purchase will largely influence the further actions you’ll have to take. Examples of real estate types include:
- HDB has a wide range of residential properties to offer, from two-room flexi apartments, to luxurious executive flats, as well as Design, Build, and Sell Scheme (DBSS) flats,
- Executive Condominiums (ECs),
- condos,
- apartments,
- semi-detached or terrace houses, and even
- Good Class Bungalows (GCBs)!
Considerations before buying a second HDB flat
Be sure to confirm your eligibility for an HDB flat under the Ethnic Integration Policy and Singapore Permanent Resident quota!
Upon receiving the keys to your second HDB flat, you must sell your previous HDB flat within a six month period.
3. What Are Key Factors To Consider When Choosing The Right Property?
If you’re seeking to purchase a second property – be it for investment or occupancy – there are four key factors to keep in mind!
1. Location
The location of your property can make a world of difference in the type of tenants you’ll attract.
If your property is in a Central Business District (CBD), you’ll be able to draw in expats seeking to rent near their place of work.
On the other hand, if you are an owner-occupier, your second property’s location will dictate your lifestyle and community.
Choosing to live in the bustling city of Orchard brings the hustle and bustle to your doorstep – life at a faster pace.
But if you decide to buy a home in the heartlands, you will be surrounded by a majority of family units, enjoying a slower lifestyle.
2. Surrounding Developments
If you’re an owner-occupier, what amenities are around your second property? Are there transportation links?
These can influence the kind of tenants you attract, but don’t forget to assess whether the surrounding facilities fit your own domestic requirements.
Are there supermarkets close by?
If you’re buying the second property for your elderly parents, are there hospitals and clinics in the area?
If you have kids, you’ll want to know if there are any good schools in the vicinity too.
3. Upcoming Developments
To ensure you are attracting the right tenants to your property, always make sure to check what Urban Redevelopment Authority (URA) has in store for the area it’s located in.
For instance, the URA’s plan to turn Jurong East into a second Central Business District (CBD) is expected to bring a flurry of property buyers.
With the multitude of malls and retail chains, as well as the proposed Kuala Lumpur-Singapore High Speed Railway, it’s no wonder that Jurong is becoming a sought-after area.
4. Rental Rate
When it comes to investments, it is important to consider potential rental yields and capital appreciations, as well as the estimated return on investment.
You can also analyze average rental rates in the area over the span of five to ten years to see if there is any notable decline.
As a general rule of thumb, the rental rate should be at least enough to cover the monthly loan repayments for the property you sold.
4. If It’s An Investment, Is It The Right Time To Buy?
No matter what type of investment, there are associated risks. In light of the government implementing stricter foreign regulations, expats have been departing the nation, resulting in a drop in the number of inhabitants since 2003, consequently pushing rents downwards.
Don’t Forget About The Total Debt Servicing Ratio (TDSR)
If you are looking to invest in another property and considering taking out a home loan, be sure to take the TDSR into account.
This rule, in place for Singaporean loan holders, prevents borrowers from becoming overleveraged with their debts.
5. Can I Afford A Second Property?
Finally, to determine whether you have the financial capability to purchase a second property, you must carefully calculate the associated costs.
Loan-To-Value (LTV) Ratio
Following the unveiling of the most recent property cooling measures, banks now limit Loan-to-Value (LTV) to 75% when taking out a loan for purchasing property.
For those looking to buy a second property, the maximum LTV stands at 45%, or 25% for loan tenures over 30 years.
Additional Buyers’ Stamp Duty (ABSD)
In December 2021, the Singaporean government, in response to the growing number of transactions and escalating prices, implemented a series of new property cooling measures.
For locals, the Additional Buyer’s Stamp Duty (ABSD) for a second property purchase was set at 17% of the purchase price or value (whichever is higher), while Permanent Residents faced a 25% duty, and foreigners, a 30% duty.
Starting on May 9, 2022, new regulations will come into effect for residential properties transferred into a living trust :
The extra Buyer’s Stamp Duty (ABSD) of 35% now applies when a residential property is transferred into a living trust – even if there isn’t a discernable beneficiary.
By shutting down this loophole, ABSD (Trust) has to be paid upfront when the transfer takes place.
Property Tax
At the Singapore Budget on February 18, 2022, the authorities declared that the Property tax rates for both owner-occupied and non-owner-occupied residential properties will be increased in two phases from 2023.
Homeowners with an annual value greater than $30,000 will see a rise ranging from 5 to 23 percent in 2023, and 6 to 32 percent in 2024.
When buying your second home in Singapore, it pays to be financially prudent, as the taxes on non-owner-occupied properties, such as investment properties, are set to rise.
The current 10-20 percent tax will go up to 11-27 percent in 2023 and 12-36 percent in 2024.
To ensure you are on the right track with your purchase, it is a wise idea to create a clear plan with a financial planner, so you don’t end up in any unexpected financial difficulties.
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 …
Singapore’s Property Insights : Where to Find 5 Hidden Gems?
Singapore's Property Insights : Where to Find 5 Hidden Gems? With its booming economy, vibrant culture and attractive regulations, Singapore...
Read More
2024 Will Be A Buyers Market
TLDR 2023 saw a roller-coaster ride in the real estate market, with various challenges like high interest rates and geopolitical...
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
Top 5 Must-Try Foods in Singapore
Top 5 Must-Try Foods in Singapore Singapore, a melting pot of cultures and cuisines, offers a diverse and tantalizing array...
Read More
Singapore’s HDB Projects: From Unique Landmarks to Just Another Brick in the Wall?
Take a look at this chill spot in Yew Tee. Someone's gone all out to make it feel like an...
Read More
Why Can’t More People Own Private Property?
TLDR The blog post discusses the aspirations of individuals like Siti and Mr. Tan regarding property ownership in Singapore. Siti...
Read More
Sell High Buy High : Will This Still Make You a Profit?
TL;DR Summary: Timing of Property Sale: Selling high and buying high may seem counterintuitive, but understanding market dynamics can...
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
Rising Interest Rates : A Cause for Concern?
TLDR In 2021, the real estate market saw a surge in demand due to low interest rates and supply chain...
Read More
Top 5 Places to Try Durian in Singapore
Durian, often referred to as the "King of Fruits," is a unique and polarizing delicacy in Southeast Asia. With its...
Read More
Introducing Top 5 Power Property Tips
Hello, everyone! We are excited to welcome you to our blog posts! On this blog, we will be sharing daily...
Read More
Top 5 Emerging Trends in Singapore Real Estate: What Investors Need to Know
The Singapore real estate market has experienced significant growth in recent years, attracting investors from around the world. As the...
Read More
6 Misleading Claims Property Agents Often Make That Savvy Buyers Are Aware Of
TLDR Real estate agents can sometimes use deceptive tactics to push sales. Be cautious of claims about other interested buyers,...
Read More
Top 5 Best Scenic Drives in Singapore
Singapore, a bustling city-state known for its modern architecture and vibrant culture, also offers some of the most picturesque driving...
Read More
What Has Been The Most Significant Development In The Real Estate Market In 2022
TLDR In 2022, the real estate market saw significant interest rate hikes affecting home loan rates. Despite concerns, the market...
Read More
The Truth About Buying An Old Condo: Homeowners Reveal Their Top 5 Regrets
The Truth About Buying An Old Condo: Homeowners Reveal Their Top 5 Regrets Some homeowners may find themselves regretting certain...
Read More
HDB Loan Vs Bank Loan: Pros & Cons
TLDR When deciding between an HDB loan or a bank loan for purchasing a property in Singapore, consider key factors...
Read More
It Seems Like Less Folks Living In HDB Flats Are Chasing After The Dream Of Owning A Condo
TLDR The Singapore property market is experiencing a decline in condo purchases by HDB flat owners due to multiple property...
Read More
Why The URA Master Plan Matters For Your Property’s Potential
TLDR The URA Master Plan entails significant shifts like the relocation of Paya Lebar Airport or creation of Punggol Digital...
Read More
