Singapore’s Best Property Buys of 2012

By Ryan Ong in Housing & Property | Jan 14, 2012 

 

2012 is an exciting time to be buying property. And by “exciting”, I mean the same kind of excitement you’d get if you were locked in a secluded house with Hannibal Lecter. With the new stamp duties and multiple recessions, you might have a harder time tracking the game than a Malaysia Cup referee. Lucky for you, MoneySmart and Smartloans have got it figured. Thanks partly to experience and mostly to retentive kiasu-ism, we’ve tracked the best property buys of 2012:

Nature's way of reminding us who to vote for, if we want those flats.

This year looks great for first time home owners; with new stamp duties, they face lower competitive bidding for their units. Foreign buyers and property investors will have a harder time, with some units already being returned. Still, it’s not all dark clouds for investors, because…

Actually, wait, it is all dark clouds for investors. This year will suck for for them. Well, they can try to make up for their losses by going for high yield rental units (assuming anyone will sell).

Overall, good buys this year are:

• Private property for first time home owners
• Executive Condominiums for first time home owners
• Units with existing tenants
• Units purchased to rent
• Older resale HDB Flats

1. Private Property for First Time Home Owners

"I'm sure I bought one of these flats. It would help if they didn't ALL LOOK THE SAME."

If you want to buy private property, now is the time to act.

From around 2008 to late 2011, private property prices were soaring. Foreign buyers accepted just about any quote, leading to an upward spiral. But with recently imposed cooling measures, many of these buyers have backed out. Merrill Lynch has also predicted a decline in equity, which almost ensures property agents will settle for less.

Don’t make the mistake of waiting: developers have a lot of holding power, so there’s little chance of a sharp drop in two or three years. In fact, prices for private homes continued to rise toward the end of 2011, albeit at a much slower rate. Do some quick shopping at SmartLoans.sg, and see what’s in your range.

2. Executive Condominiums for First Time Home Owners

Either The Rainforest EC, or the Night Safari looks really different in daylight.

Can you qualify for an EC? If you can, it’s worth a shot.

The Rainforest EC got a lot of attention. Not so much for the location (Choa Chu Kang? Don’t they still use bullock carts there?) but the price: as low as $700+ per square foot for some of the units. Booking closed on 11th January, but look out for other opportunities, like the Tampines Trilliant.

Also look out for resale ECs. On average, these units currently cost 13% less than private properties in the same area. This makes them attractive to foreign buyers, but locals should muscle in on the act. If location is your main concern (and it should be), then resale ECs are a strong alternative. The amenities are good, and the property is lighter on your wallet.

3. Units with Existing Tenants

"The best part is, the existing tenants know the police so well. The cops are there every night."

This is something of an “evergreen”. If you’re an investor, getting a unit that’s currently rented is like finding the Holy Grail in your glove compartment. Along with rising rental yields in 2012, these units are now in the “buy-on-sight”category.

By getting a unit with an existing tenant, there’s no “vacancy period” when it’s sitting empty. You can start collecting rent immediately, once the papers are signed. It might also mean the landlord has little or no holding power, and is open to quick, low negotiations.

Of course, there are some caveats: check to see when the existing tenant’s lease will end, and that their rental isn’t too low. Likewise, ask if there’s anything wrong with the location. When a landlord parts with this kind of property, it’s worth being suspicious.

4. Units Purchased to Rent

Go ahead. You'll make a bundle renting it…as a training school for exorcists.

Foreign buyers are rethinking their purchases, but they still need a place to stay. This has resulted in many choosing to rent for now.

To some degree, recessions in Europe and America play a part in this. Companies are downsizing, and expatriate packages are no longer assured. The risk of re-assignment or even retrenchment is high, and few people would buy houses under these circumstances.

As of now, increased demand has seen a rise of about 5% in rental yields. If you want to be a landlord, get in on the ground floor now. Don’t just look at units in town; units in District 7 or District 8 (near Middle Road or Little India) will see high occupancy. As the rental rates in town rise, new tenants will seek alternatives that are in close proximity.

5. Older Resale HDB Flats

To keeping an old flat looking trendy, make sure there are 50 Interior Designers across the street.

For those on a tight budget, consider older resale HDB flats. The government’s Home Improvement Project (HIP, a hilarious acronym for a subject that could bore potted plants to death) is being allocated more funds this year.

The money is being used to upgrade flats built before ’87, which currently resemble museum exhibits. They’re not pretty, but the upgrading means improved amenities and a very good budget buy. About 50,000 flats are under the HIP scheme, which has been going since 2007. With increased funds, the pace should be picking up this year.

If you live in one of these older flats, the government will subsidise any optional improvements, varying based on the size of the flat.

Conclusion

It’s hard for first time buyers to go wrong in 2012. Government controls have tipped the scales heavily in their favour. The only complication should be finding the right home loan package; get that wrong, and your “best buy” can still be a serious headache.