Is it a good time to buy properties now?
June 23rd, 2009 by ALVIN SOONG
When total residential investment sales, including good class bungalows (GCBs), plunged by 60.7 per cent in the first quarter of this year from the last quarter of last year, international buyers such as the actor Jet Li bought one at $19.8M. The private property sales also shot up despite the recession, as Kwek Leng Beng in the Edge magazine felt that this could be attributed by many locals who felt that the eventual price would go up since these people who entered the market recently were afraid of missing the boat, having seen how fast prices climbed in 2007. They want to get a good bargain as they believe the market has bottomed.
6 things to note before buying the investment property:
1. Weigh the pros can cons. when the market is declining in price, like now, don’t buy, but wait for the URA quarterly index to rebound
2. Check on financing. We can actually help in terms of mortgage planning and refinancing. This also includes advice if one has geared up too much in debts?
3. Spare more cash to cover renovation and repair costs.
4. Do not rely completely on rental income to help pay the mortgage. Although one may be able to buy a tenanted property, but when the tenancy ends in the next year or two, you may not be able to get the same rent. (Many analysts expect rents to continue falling, though some believe they are stabilising). Also, there may be zero rental when there are no takers.
5. Watch out for top up calls. Sometimes the temporary occupation permit are issued, before they disimburse the loan. If price today is not supported by the banks one or two years down the road, there is a possibility that one may be asked to cough up the difference in cash.
6. Don’t overcommit. Developers are launching more properties. They typically hold preview sales for guests, who may also be offered discounts of around 5 per cent. They then raise their prices slightly at the proper launch. That is when some flippers will offer to sell their units at slightly below the launch price to earn the difference. Always consider the purchase seriously - because either as the flippers or long term buyers/investors, the same risks remain .
