Are you gaining from Singapore’s property investment market?

4/04/2018 10:18:00 AM

Singapore property market is always the hot topic of the town that indicates the Singapore’s economic situation. Thanks to the economic boom after Singapore get it’s own independence, most elderly folks love investing in properties and the property prices soared, much to the delight of many property owners. It is not difficult to find any Singaporeans around with successful investment and finance that revolves around property. There are many stories around of how Singaporeans made lots of money from buying residential properties at low prices and selling it for more than what’s expected, be it HDB or condominium, today’s property prices has really shocked us all. So, is property investment in Singapore is really a good capital gain growth in today’s world? 
Can you lose money on your investment?

During the economic crisis or slowdown, we could see a “direct loss” where the property you owned has priced lower than your initial purchase price. Besides, the economic slowdown has indirectly affected your finances which may cause some property investors to lose their property due to their incapability to service the mortgage. Yet, in the downturn of economy, some property owners do sell it off at a lower price and still make profits but still they don’t get to enjoy the high profits like they used to when the economic was prospering. 
The expenses incurred

Investing in bonds and shares are straightforward, you pay for the number of shares you invested in with the processing fees. When you transacted for profit, most of your profits enter your pocket and all you need to pay is the transaction fees.

However, not for property investments, there’s expenses incurred like some form of leverage when buying a property. For instance, a $1 million dollar property, $600,000 might be loaned from bank and this loan would be incurring interest payment in the coming years.

How about renovation cost? For example, you own a HDB unit in Yishun and you would like to increase your HDB unit value, so you will need to renovate your HDB unit to make it more appealing for your potential buyer. Did you see the costs that will be incurred? Renovation and refurbishment costs where the transformation of the unit happens from shabby to wonderful. Not forgetting when you managed to sell of your property, you will need to pay your agent fee for at least 1% of the sales price. 
Do all properties price appreciate?

In Singapore, it has come to a point where the asset prices are soared to the top than it is to the bottom. We have reached to a point where a HDB flat used to sell it $7,000 to now whereby resale flat prices have reached a million dollars. All properties will appreciate over time should be debunked that’s if the developing country continue to open doors for foreign investments and good governance. Well, in today’s situation, we won’t be seeing many examples where property values jump into multiple folds. 
The ‘today’s situation’ that we are referring to is the current situation of cooling measures that was implemented back to back since year 2013. You can see the private property values stay stagnant ever since. Though, there are some minor depreciation, but the line shows stagnant ever since. However, in year 2017, Singapore government eased the property investors by reducing the Seller Stamp Duty by 4%. Yet, what’s happening around is that the supplies are higher than demands which is dampening the rental yields as the situation right now favors renters more. Here’s something for thoughts, the current market situation not only sees the abundance supply of new residential properties but what’s worrying is that Singapore’s population growth is outstrip by the abundance supply. The trend is more likely to continue over the next few years.

Do you listen to analysts? 
People who produce articles in newspapers and articles explaining technical analysis are called analysts. Often, their articles could be one sided with the main intentions to sell their ‘paid’ publications. Their views are often blind-sided, and it can be taken as an indication of what will happen in the future. True investors will go to the ground and make their technical analysis the sentiment on the market. It is rather contradicting to why people listen to analysts more than the property agents that are always on the ground dealing with transactions. It would be wiser for property investors to hang around with people who are far more familiar with property investments that has gone through the processes. Do think twice before you make your property investment decisions based on analyst’s thoughts. You wouldn’t want to be the one regretting with the choices you made for not making further judgements and on-the-ground analysis. 


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