Buying a house in Singapore – everything a Singaporean needs to know

Buying a house in Singapore – everything a Singaporean needs to know

Singapore's property market is among the most expensive in the world. For many Singaporeans this is a difficult goal to achieve. It does not mean it is impossible though! 

As Singapore continues to attract more and more foreigners, the population of the island is growing. With a limited property supply for foreigners, the demand has grown astronomically.

The government understands the importance of homeownership. Homeownership provides a sense of stability and security to Singaporeans, who have been waiting for years to own their own homes. Homeownership is a way to build personal wealth, and it can also give you more control over your quality of life. However, in recent years, house prices in Singapore have skyrocketed because there are not enough houses available. The government has imposed some restrictions so that Singaporeans still have access to affordable housing in their own country. 

So if you're considering investing in property in Singapore, this article is for you! Here are some basic tips for investing in the Singaporean real estate market if you are interested in taking part.

Establish your objectives

Are you looking to buy a new property for personal use, or are you just looking for a way to diversify your investment portfolio? Your main purchase objective will help determine your approach when researching the market.

If you are buying the house to live in it, the search becomes a more owner-centric journey, taking into consideration your personal needs such as neighborhood, amenities, bedroom number, or house size.

If you are looking to make an investment in real estate and purchase the house either to sell it later or to rent it, your research becomes more market-oriented. You will need to take into consideration if there is a demand for a certain neighborhood and look to invest in that area, as well as what type of homes are easier to sell or rent.


Start by determining your budget

The cost of buying a house extends far beyond the price of the property alone. You need to take into consideration taxes, as well as paperwork, which is going to generate some costs as well. Stamp duties, for example, is one of the costs you need to take into consideration if you already own a property and are looking to buy a second or third one.

Property taxes should also be taken into consideration, especially if you are planning to live on the property you are purchasing. Property tax is determined by your property’s annual value and can differ based on the purpose of the building.

If you are planning to purchase a house and further rent it out, one way to determine if your investment is worth it is by calculating the rental yield. This means comparing the price of the house with the yearly rental income and determining what percentage of the house value it represents. The higher the yield, the faster you will be able to get a return on investment.


What influences property prices?

No matter if you are investing in forex, stocks or real estate, your core goal should be the same: to get as high an ROI as possible. In real estate, this means purchasing a property when prices are low and selling it when prices get higher. But these prices are influenced by several factors that you need to get familiar with. Even if you are purchasing a house to further live in it, knowing these factors will help you determine whether now is the correct time to look for a new home, or if you should wait a while longer.

The Singapore real estate market is influenced by many factors, but the following are believed to be the most important:

Property location:

If the property has amenities such as schools and stores nearby, chances are the prices will be much higher. Transportation is also important, so if the property has an MRT station within walking distance, it will be much easier to further sell or rent it.

Property condition:

New or recently renovated properties will have much higher prices. If you have the money to invest in renovations, you can go ahead and purchase an older property, but only if you are certain renovations won’t cost a fortune.

Interest rates:

Interest rates are an important factor for the real estate market anywhere on the globe. Right now, interest rates are quite low in Singapore, meaning people are more likely to take out a loan and purchase a house. In general, when interest rates grow, potential buyers are much less likely to invest in a new home, meaning prices can start declining.

Economic climate:

If there is a recession, you can expect the demand for properties to decrease, meaning prices will also get lower, which is why you need to keep an eye on the country’s economic climate as well.


Should you hire a real estate agent?

While you are not obligated to hire a real estate agent and you can easily go on this hunt alone, having an expert’s opinion by your side is going to help you get a much better deal. Real estate agents are always up to date with the market news and they will know a lot more about current

prices, good locations, or how to negotiate a good deal for you.

One downside of choosing a real estate agent is that you will need to pay a commission, which is usually 1% of the property value. But considering the fact that they will take care of the entire process for you, the investment is actually worth it.

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