Developers are very Price Sensitive at this moment
It is an open secret that Singapore is extremely land scarce. Even our neighbour country, Malaysia is complaining about our land reclamation projects. Land scarcity and an ever-increasing population target of 6.5m by 2030 will only increase the demand.
You have seen in the past that developers of new launch condominium projects have been raising the prices as the project progresses. At this moment, developers are taking a more conservative approach of not raising prices. Instead, they are pricing the units at prices that are more attractive to the general public. Prices in the prime districts (district 9, 10, 11 or core central region) are already priced very reasonable even before the COVID-19 Circuit Breaker was implemented, this was partly due to the introduction of the additional cooling measures in July 2018. Just imagine if there was no cooling measures, no virus, no circuit breaker, what will the prices be?
Developers are more open to discussion on the conditions of the sale
You have always wanted to buy a condominium of your dreams but have not done so. Now is a good time to explore the possibility of having an open discussion with the developer on the conditions of the purchase. You may need that extra time to sell your existing property before you can purchase a new launch condominium which you always wanted but you are concerned about the prices increasing. If you have this burning desire, then you should not wait any longer.
Get an agent to assist you on this matter and negotiate terms with the developer that would allow you to sell your current property before committing. Certain developers can accede to your request on a case by case basis. Therefore, it is important to raise any concerns you have to the agent you are working with. He/She will be in the best position to advise you.
The cheaper units will not wait for you.
Base on the past crisis, be it whether it is virus pandemic or economic reasons, the cheaper units will still have buyers that will snap them up. If you are still thinking that developers will lower the prices, think again, do you have deep enough pockets to weather the wait? With the recent ABSD remission support measures rolled out by the government to support the property market, it is unlikely that the developer will go into a panic mode and sell off their remaining inventory. Developers have the financial muscle to begin with, otherwise, they will not be granted the license by the government to develop new condominium projects. The financial support from the banks also ensures that the developers will be able to pull through the projects.
So even if you wait for the prices to go down by 5-10%, you may still end up buying a more expensive unit on the higher floor. This may be a problem when you intend to sell your property because your neighbours would be able to exit at a lower price than you could. (Higher floor units are priced a lot more than just 5-10%).
Mortgage loan for your real estate purchases is key for financing your property. Be it whether you are buying for investment or for your family own stay, having a lower interest rate to finance your property is always a big welcome for many. We notice a sharp decrease in the SIBOR interest rate in April this year, partly due to the Fed’s rate cut in the USA.
For example, about 1 year ago, the mortgage interest rate was at 2.5%. Now mortgage interest rate is hovering around 1.5%. Let’s take a look below for a comparison.
Base on $750,000 bank loan to finance a $1,000,000 property. Previously, you would need to pay $2963 per month, now with a decrease of interest rate, you are only paying $2588. This adds up to $22,500 of savings over 5 years. These savings could also mean a well-deserved holiday when the COVID-19 situation improves.
Covid19 will not last forever
How long do you think the Covid19 pandemic will last? 6 months…1 year…2 years? If you are thinking that this crisis is going to last forever… WAKE UP! It is unlikely that this pandemic will last forever if it does, then probably the world is really coming to an end.
Humans are created with the ability to adapt and improve. We have weathered countless crisis in the past and recovered from every major crisis that has happened. The various country Governments are more experienced and well prepared to weather this storm. So if you think that this is going to last forever, then you will probably be getting ready for doom’s day. When the COVID-19 situation is over, be prepared that the market will rally up real strong and the prices of real estate will be skyrocketing. Just make sure that you have taken a position before that day comes. Nobody can predict the bottom of the property market. It may just be tomorrow.
It is proven that the real estate market has weathered countless storms over the years. One thing we know is that the new low will always be higher than the previous low and the new high will always be higher than the previous high.
Making the right decisions requires the right knowledge and understanding of the market. Still not sure whether you should buy or hold back to purchase? You have 2 options, make an appointment for a FREE non-obligatory consultation with me where I will go in-depth to share with you more about the property market trends or just continue to wait and see while the rest of the people are buying.