Your search results

How Can You Prepare for Retirement in an Expensive Real Estate Market? Discover Your Options Now!

Posted by Jayson Ang on June 30, 2023

| 0

TLDR

The article discusses the challenges of investing in a second property for retirement amidst Singapore’s real estate market conditions. Rising property prices and limited rental income may make this traditional strategy less viable. Instead, diversifying investments into income-generating assets like bonds or REITs is recommended. Another option is right-sizing, not downsizing, to release cash from your current property for retirement savings. Considering government cooling measures and market uncertainties, exploring alternative strategies beyond owning a second property may be more prudent for securing a comfortable retirement.

As you may have heard, the retirement age was bumped up to 63 – yet no need to be surprised, as the amended Retirement and Re-employment Act is going to have us working until 65 by the end of the decade.

With the worry of having to slave away for your retirement, you’ve probably pondered over how to ensure your golden years without the exhausting toil of labour.

Investing in property can lighten the burden of those preparing for their retirement. Yet, for many people, “property investment” is simply a means to gain rental income or capital gain. This may have been a suitable strategy for generations past, yet this is becoming increasingly unrealistic in today’s real estate market.

In today’s real estate market, with property prices at an all-time high and prospective tenants in short supply, a second property venture may no longer be the way to go for your retirement plans. So, what are your other options for securing a comfortable retirement?

This article will explore the potential of investing in a second property and what other real estate choices you have to ensure a golden retirement.

Should You Own a Second Property?

For many, our home is often the largest investment of our money. Indeed, the property owned by Singaporean homeowners makes up a substantial 42% of their total assets, and this percentage is anticipated to grow with the ever-changing market.

In recent years, real estate prices have seen a tremendous appreciation, thanks to the high cost of land and the strong demand for properties. It’s no wonder why people are so eager to purchase a home; real estate acts as an effective hedge against inflation, considering land scarcity in Singapore.

When combined with our booming economy, it’s easy to see why property values are constantly on the rise. While this trend can be quite appealing, it can also be quite disheartening for some…

Worrisome Price-to-Income Ratio

No mistake about it: strong economic growth is definitely a good thing; however, it may not be ideal if you’re looking to purchase another property (unless you have the means to do so).

As illustrated in the chart above, there is a direct correlation between GDP and property prices: slower economic growth tends to have a dampening effect on real estate prices, whereas robust economic growth leads to a surge in property prices.

Singapore’s economy has been showing remarkable resilience, even amidst the pandemic, and is expected to further expand in the years ahead. With bolstered demand for new Build-to-Order (BTO) units, and upgraders keen to upgrade, the property market is all but destined to experience a price hike.

The soaring prices of housing have been further exacerbated by an insufficient rise in income. In our last report, we conducted an in-depth analysis of the price-to-income ratio of Singapore’s property market to assess if a housing bubble was imminent. Sadly, we concluded that, without proper government regulation, housing costs will eventually overtake income growth.

The price-to-income ratio gauges the affordability of properties in the long-term, depending on the cost and income. Unfortunately, if the ratio is high, you may need to budget your money carefully in order to buy the home you desire. Unsurprisingly, the price-to-income ratio for non-landed private residences has grown from 14.7 in 2019 to 15.4 in 2020.

Due to the rapidly increasing cost of property, “buy low, sell high” may not be a viable retirement strategy anymore.

What alternatives are there to make sure you have a comfortable retirement?

What are your Options?

Having a second property can certainly up the risk factor when it comes to planning for your retirement funds, as capital appreciation and rental yields become much more unpredictable.

Despite the expectation of rising property prices, the money invested is not readily accessible, making it largely dependent on the government’s decisions.

With the ever-increasing demand and scarce housing supply, the government has been implementing cooling measures to manage the situation.

For example, December saw the imposition of taxes and lowered loan limits, in a bid to bring the property market under control. Nevertheless, should prices continue to climb, the government may need to take a firmer stance and make some tough decisions that could put a dent in your wallet.

Perhaps it would be wise to reconsider the purchase of a second property, given the various restrictions at play, and explore the alternate suggestions we have provided.

Income Generating Assets

Investing your entire nest egg in an increasingly pricey second home could be a bad move – even worse is investing all your money in an asset that relies on long-term capital growth.

It’s unlikely that you’d have enough years in your twilight years to wait for the asset to appreciate, so a wiser choice might be to diversify your investments and put your money into income-generating assets such as bonds or REITs.

These investment strategies provide a more dependable return and give you quick access to your cash in an emergency.

Aside from the added bonus of not having to worry about selling your property in a down market when you really need the cash, investing in income-generating assets can make all the difference in your financial security.

However, it’s still recommended that you consult your financial advisor for professional advice. Ultimately, this article aims to provide an alternative way of attaining financial security without having to rely on a predetermined exit strategy.

Right-sizing

Are you finding that your house is too big for just you and your partner now your children have moved out? It may be time to consider right-sizing, not to be confused with down-sizing.

This means shifting into a space that more closely fits your current needs, such as a smaller home with better facilities. Doing so can help to release cash proceeds from your previous property, converting it into savings for retirement.

HDB flats are typically designed with the elderly in mind – they feature mandatory ramps and railings both in the flats and around the neighbourhood. To help seniors make the move to right-sizing, various government schemes with various terms and conditions exist to finance their perfect home.

When it comes to finding your perfect home, size isn’t the only thing to consider.

Are medical facilities close by? Do you have to ascend several flights of stairs to get to your front door? How much longer is your lease? These often neglected inquiries should be addressed before making a commitment, as relocating in your later years could be quite a nuisance.

Closing Thoughts

Considering the current state of the real estate market, investing in a second property may not be the most cost-effective choice for retirement planning.

Fortunately, there are plenty of other alternatives to the traditional “buy low, sell high” strategy. From alternate forms of property investments to a review of your current home, this article has suggested ways to help you prepare for retirement.

If you’re unsure of the best path to take, I am here to assist – just contact me and we’ll be happy to guide you through your housing options.

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 …

Mandarin Top 5

5 Impacts Of The Singapore Government’s Cooling Measures On Property Investing

Jayson Ang – May 30, 2024 –

The Singapore government has implemented several cooling measures over the years to regulate the property market and prevent it from...

All Opinion

What Is The Cost Of Constructing A Landed Property In Singapore?

Jayson Ang – February 24, 2025 –

TLDR Building a landed property in Singapore can be a costly endeavor, with prices ranging from $300 to $500 per...

All Buying Tips

Essential Steps for Safely Purchasing Your First Home in Singapore

Jayson Ang – February 20, 2024 –

TLDR When considering buying your first property in Singapore, start by assessing your budget and qualifying for a permissible loan....

All Blog Posts Opinion

How Can Real Estate Investment Help You to Combat Inflation?

Jayson Ang – January 28, 2023 –

TLDR When it comes to real estate investments in Singapore amidst rising inflation rates, consider strategies such as capitalizing on...

All Buying Tips Opinion Selling Tips

Is Price Per Square Foot (PSF) Still a Reliable Metric in Singapore’s Property Market?

Jayson Ang – June 26, 2026 –

TLDR Price Per Square Foot (PSF) is increasingly a poor measure of property value in Singapore due to regulatory changes...

Mandarin Top 5

Maximize Your Property Investment: 5 Questions to Ask Your Real Estate Agent in Singapore

Jayson Ang – March 23, 2024 –

Buying a property in Singapore can be a daunting task, especially for first-time buyers. It is important to have a...

All

The Uncomfortable Truth About Homeownership and Relationships in Singapore

Jayson Ang – July 5, 2025 –

TLDR Property ownership and prenuptial agreements are key for married couples in Singapore. Joint ownership (either joint tenancy or tenancy-in-common)...

All Blog Posts Buying Tips

Discover the Benefits of a SORA Home Loan in 2023: Why Consider SORA Interest Rates

Jayson Ang – May 17, 2023 –

TLDR The article discusses the transition from SIBOR and SOR to SORA as the new benchmark rate in Singapore's banking...

Mandarin Top 5

Top 5 : Must-Do Experiences to Make the Most of Your Singapore Trip

Jayson Ang – January 26, 2025 –

Singapore, a vibrant island city-state located off the southern coast of Malaysia, is a melting pot of cultures and a...

Mandarin Top 5

5 Reasons : Why Investing In Commercial Real Estate Can Offer Stable Long-Term Returns

Jayson Ang – June 26, 2024 –

Investing in commercial real estate has become an increasingly popular choice for investors seeking stable long-term returns. There are several...

All Opinion

A Milestone for Singles: New HDB Rule Prioritizes Proximity to Parents

Jayson Ang – July 17, 2026 –

TLDR The upcoming Family Care Scheme (FCS), launching mid-2025 in Singapore, prioritizes singles applying for BTO flats near their parents,...

All Buying Tips Opinion

Unlock the Secrets of Property Investment and Transform Your Financial Future!

Jayson Ang – September 30, 2024 –

TLDR The Singapore property market has experienced fluctuations, impacting private home prices. Understanding your financial capacity is crucial when considering...

Mandarin Top 5

Top 5 Factors To Consider When Choosing Between A Resale Condo And A New Launch In Singapore

Jayson Ang – June 17, 2025 –

TLDR Choosing between a resale condo and a new launch in Singapore depends on your priorities as an investor or...

All Buying Tips Opinion

Larger Living Spaces: The New Demand Surge Post-Pandemic

Jayson Ang – January 13, 2025 –

TLDR We explore the significant impact of digital marketing strategies on business growth in today's competitive landscape. It highlights the...

All Blog Posts Buying Tips

Avoid These 6 Terrible Property “Tips” in Singapore

Jayson Ang – May 1, 2023 –

TLDR When it comes to property advice, it's crucial to be cautious of common misconceptions. For instance, schemes like the...

All Blog Posts Buying Tips Opinion

6 Compelling Reasons Why 3-Bedroom Condos Might Shrink Further

Jayson Ang – November 15, 2024 –

TLDR Three-bedroom units in Singapore have significantly downsized from 1,700-1,800 sq. ft. in the 1980s to around 1,000 sq. ft....

All Buying Tips Opinion

The Hidden Realities of Mega-Development Condo Living: Five Overlooked Issues

Jayson Ang – August 19, 2026 –

TLDR Mega-developments in Singapore—condos with 1,000+ units—promise affordability, abundant facilities, and lower maintenance fees, but they come with hidden challenges....