Reasons Why En-Bloc Sales Are Expected to Remain Slow in 2025
TLDR From 2014 to 2024, the en-bloc market has faced challenges due to fluctuating cooling measures and a shift from...
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 …
Tips for Young Adults to Begin Saving for Their Future Home
TLDR When aiming to purchase a home, it is crucial to gain knowledge about the buying process and track your...
Read More
Top 5 : Nationalities Of Prime Property Buyers in Singapore
Singapore, a thriving city-state known for its stable political climate, excellent infrastructure, and strong economic fundamentals, has long been an...
Read More
Powering The Lion City: The Top 5 Industries Driving Singapore’s Economy
Powering The Lion City: The Top 5 Industries Driving Singapore's Economy Singapore is widely recognized as one of the most...
Read More
Is the Singapore Property Market Set for a Dip in 2024?
TLDR The Singapore property market is experiencing shifts with Morgan Stanley adjusting its outlook on major developers. A forecast predicts...
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 Best Alternative Music Venues in Singapore
Singapore, a vibrant and bustling city-state, is known for its diverse culture and thriving arts scene. The city's love for...
Read More
NUS Real Estate Survey Reveals Growing Optimism Among Industry Leaders
TLDR A recent survey by the National University of Singapore (NUS) highlights increasing optimism among real estate industry leaders. The...
Read More
Top 5 Factors : Buying Resale vs New Launch Property in Singapore: Which is Better?
The decision to invest in a property in Singapore can be both exciting and daunting, especially when faced with the...
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
Top 5 Factors to Consider When Choosing a Property in Singapore
The top 5 factors to consider when choosing a property in Singapore. Whether you're a seasoned investor or a first-time...
Read More
Why Can’t We Buy Low, Sell High?
Madam Tan voiced that approximately two years ago, when her apartment hit its minimum occupation period, she and her spouse...
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
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
Top 5 Art Galleries in Singapore for Contemporary Art
Singapore, known for its modern architecture and vibrant culture, has a thriving art scene that showcases the best of contemporary...
Read More
Bayshore: Reinventing the Experience of Living by the Beach
TLDR When deciding on buying or selling property in Bayshore, consider the recent developments and potential future growth. With a...
Read More
Are We Truly Headed For A Slowdown? How Will This Affect Property Prices?
TLDR The pandemic-induced recession has surprisingly boosted property prices in Singapore, defying conventional economic trends. Factors like cost-push inflation, limited...
Read More
When a Property Seller Pulls Out of the Deal : What Now?
TLDR When a property deal is not yet formalized, sellers can withdraw without consequences. However, once an Option to Purchase...
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
5 Most Common Property Investment Scams To Watch Out For In Singapore
Property investment scams are unfortunately prevalent in Singapore, and unsuspecting investors can fall victim to these scams, leading to significant...
Read More
