Property

Why 2014 Is Going to be the Best Year to Buy Property

13732624843_bebfa7a3a9_b

Jeff Cuellar

0 Comments

10
Shares

You read that right! 2014 will be the year to get that first, second or third property… if you’re looking to get your hands on a suburban condo. Why a suburban condo?  Because they’re cheap now, but they’ll only increase in value once the areas become more developed.

Not only that, Singapore is also expected to see a dip in property prices across the board ranging from 5% to 15%, depending on whether you choose to believe the property analysts or the banks.

Regardless whether prices take a moderate or huge drop, the point is this – it’s a buyer’s market now, and the deals will only get better as prices fall.

Here’s why 2014 will be the year to get your hands on property, particularly a suburban condo:

 

1. Because You Can Afford a Better First Home Than You Realize

The monthly salary needed to get the most out of your property purchase is $10,000 to $12,000. I know, it’s not the easiest number to reach. But if you and your spouse can climb your way to this number, you’ll be in a prime position to afford a fantastic first home.

So how much can you really afford?

According to ERA key spokesman Eugene Lim, depending on whether your income is fixed and your finances are well within the Total Debt Servicing Ration (TDSR) framework, you should be able to afford properties priced between $600,000 and $1.2 million.

Of course, whether you’re a new home buyer or a seasoned investor, figuring out TDSR to find out how much you can afford is a major headache. Thankfully, you can save yourself the Panadol and find your affordability in 10 minutes with this simple tool.

 

2. Because Falling Prices Make the Additional Buyer’s Stamp Duty (ABSD) Less Scary

Nothing scares away property investors more than the Additional Buyer’s Stamp Duty (ABSD). Then again, can you blame them for not wanting to buy a second or third property when the corresponding ABSD is 7% and 10% respectively?

However, if property prices drop by 7% to 10% over the course of 2014, which everyone expects will happen – the pain of ABSD actually gets nullified.

Here’s what a 7% property drop would save you on ABSD:

Year

Property Value

7% ABSD (Second Property)

Total Price

2013

$800,000

$56,000

$856,000

2014

$744,000 (7% drop in value)

$52,080

$796,080

Total Savings From a 7% Drop in Property Value

$59,920

As you can see, falling property prices take the “bite” out of ABSD when it comes to purchasing a second or third property. You’ll even be able to save money, as the example above shows.

If you’re keen on saving even more money on purchasing your second or third property, it helps to choose a home loan with the best interest rate. You can find the top 3 interest rates available here.

 

3. Because You’ll Be Able to Purchase Additional Properties with Little or No Financing

It’s no surprise that because of tighter home loan restrictions, the most you might be able to borrow from a bank is only 20% to 50%, depending on your loan tenure. Not to mention you’ll need to make a 25% down payment on the property.

That means buying that 1.5 million dollar property you’ve been eyeballing is probably about as realistic as landing a date with Jennifer Lawrence. Of course, that doesn’t mean you can’t look at properties in the $600,000 to $800,000 range – which you may be able to purchase with little or no financing.

But there’s another way to purchase property in this buyer’s market – buying property from new launches through the progressive payment scheme.

“In most new launches, units priced below $1 million are usually purchased quickly. That’s because payment for new developments is made progressively, allowing buyers who aren’t severely affected by tighter loan rules to buy smaller units with cash instead of financing larger units,” states Eugene.

 

Do you think this 2014 is the year to buy? Tell us what you think on Facebook! And to find even more useful information on everything personal finance, visit MoneySmart today!

Image Credits:
William Cho

Keep updated with all the news!

Tags: ,

Jeff Cuellar

I'm known by many titles: copywriter, published author, literary connoisseur, ex- U.S. Army intelligence analyst, and Champion of Capua.