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5 Must Knows for Property Investment in Singapore

For many Singaporeans, it is well ingrained in our minds that properties are one of the most attractive options for investment. Not only is it relatively safe, but the rates where property prices rise can also be significant. In addition, it is also one way where you can spend your CPF savings, making it all the more popular in both a booming and shrinking economy.

If you are also considering to invest in a second or third property, here are some tips that you should keep in mind.

How does property investment work?

When you purchase a property, the property investment works in two ways. The first way would be through capital appreciation, where the value of the property increases over the years. This is especially so in the recent years, where the land cost and building material costs are increasing steeply, further pushing the property value up.

How does capital appreciation work in your favour? Well, if you buy your property at $700,000 and after a couple of years it is now $1,000,000 - then you can say that your investment has increased by $300,000. When you sell your property, you gain the $1,000,000 and enjoy an investment growth of over 40%!

This is also the reason why the investment potential of a property is important – be it the developing MRT stations, shopping malls, schools or government’s master plan in the district, these are key indicators of how much your property will increase in value. If you require a detailed analysis of where you should invest in (and what unit you should look at to maximise your yield), reach out to an experienced property expert for more information.

In addition, another way property investment work would be through rental income. Many of you would be aware of how property investors would purchase properties and rent it out, using the rental income to pay off the mortgage or to invest in other short-term investments for greater investment yield.

To know how well your property is performing in terms of its rental yield, you can make a rough calculation by taking annual rental income / property value to know the percentage. If your property is $700,000 and your rental income is $42,000 a year, this means that your rental yield = $42,000 / $700,000 and is therefore 6.00%.

Measuring property prices

Evidently, one of the key aspects to maximising your property investment is to ensure that your property price increase – that way, you can sell your house at a higher price, or charge a higher monthly rental.

To have a good grasp of your property’s prices, here are a few factors to note:

  • Property condition – The first factor is rather specific to the unit that you are purchasing. Are you buying a new launch condominium unit or a resale unit? The amount of wear and tear can greatly affect the price it is able to command. Potential buyers would take into account the amount of maintenance and renovation fees they would have to invest in your unit, so this can reduce its market price.

  • Lease term – Continuing from the first factor, if your house is a resale unit, you need to be conscious of its remaining lease as well. Most of Singapore’s properties are leasehold properties. This is also the case for private properties, with the exception of the handful of freehold properties. As time passes, the value of your property decreases, making it harder to get an attractive offer.

  • Location and nearby amenities – Lifestyle options are important for both the potential buyers and tenants as well. This means that the proximity to MRT stations (be it existing or developing new ones), schools, shopping malls, dining spots are all important factors determining the value of your property. If your property is the closest to the MRT station in the district, you can best believe it will also be in a stronger position to command better prices too.

  • Property measures – At any one time where the economy is overheating or the property prices are rising too steeply, government would step in to cool down the market. This was what happened late last year, where we saw an adjustment to the Loan-to-Value (LTV) limits and Additional Buyer’s Stamp Duty (ABSD) that make purchases more costly. This deters property purchase, especially those looking for a home upgrade.

  • Interest rates – A low interest rate for loans makes it easier for everyone to borrow funds for investments, be it to fund a home loan or car loan. This encourage everyone to purchase big ticket items, and also easier for more buyers to be interested to look into the property market. Naturally, with more eyes on the property market, the property prices will increase as well.

  • Economic climate – In a booming market where economic growth is strong, the general sentiment is positive and more people are willing to party with their money or make bigger investment in bit ticket items like houses. This will increase the property prices, as more people turn their increase funds to invest in properties. The reverse holds true for a shrinking economy as well, where less people are willing to buy houses from a decrease in income.

Property Measures – what are they?

You may have heard of property cooling measures and restrictions, which are put in place to deter opportunistic behaviour in the property market that drives the prices up too high. It makes it harder for people to invest and keep only demand from those that actually need a home within the market.

As these measures may put a significant cost on your property, here are the property measures that you should be mindful of.

  • Loan to Value (LTV) Ratio – LTV

  • Total Debt Servicing Ratio (TDSR) – TDSR is the ratio where new mortgages cannot cause borrowers’ total monthly loan repayment to exceed a certain percentage of their total gross income. In the past, it was at 60%. However, with the recent tightening of TDSR, the threshold has decreased from 60% to 55%.

  • Additional Buyer’s Stamp Duty (ABSD) – As the name suggests, this cost only applies to those that are buying an additional property. For those that are not Singapore citizens, you will also have to pay for this as well.

Source: IRAS website
  • Seller’s Stamp Duty (SSD) – Another aspect you must consider would be the seller’s stamp duty, which is the rate where you have to pay on top of your purchase price if you did not hold the property for more than 3 years. Naturally, the shorter you hold the property, the greater the SSD rate.

Source: IRAS website

Property Tax – what are they?

If you thought property measures were everything, here’s another one – Property Tax. In Singapore, property tax is incurred based on the annual value of your property. Do note that the rates for owner-occupiers and non-owner-occupiers are different. This means that the property tax incurred on your residing home and your investment properties will be different. As for commercial and industrial buildings, those will incur property tax at a rate of 10% of the annual value every year.

Finding the right property – where to find them?

Now that you have got a better picture of what are the costs behind buying and investing in a property, the next step is to delve deep into the property market to find the right unit.

Some of the property sites you can consider are:


  • Property guru

  • SRX


Otherwise, you can also consider new sales launches, where new sale units are released across different districts over the year. The purchase process of a new launch unit may be longer and complex since the property is not completed yet. If property investment through rental income is what you have in mind, then buying a property that is still incomplete might not be suitable for you.

However, scrolling through endless lists of properties can gets tiresome, or you may simply not have the time to dig through the multitude of options available in the market. If that is the case, consider getting yourself connected with an experienced property agent. He will be in the best position to give you the right advice and tailor a list of potential units based on your preferences. In addition, other than providing you with the standard information from the newspaper outlets and official property websites, an experienced property agent will be in the best position to give you detailed analysis of the unit’s investment potential.

Knowing how to manage property investment or home purchasing risks can be difficult, especially if you don’t have the most up-to-date market information. If you need guidance and help from someone with the right experience and knowledge, reach out to us to find out more.

The information provided is for generation information purposes only and does not have regard to specific investment objectives, financial situation and the particular needs of any recipient hereof. No information here should be used as legal, taxation or investment advice.


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