Is it a good time to consider buying a house in Singapore now, in the midst of a global pandemic, whether it’s a HDB or a private property? There are some of the reasons suggesting why it’s a good time to buy…
1. Taking advantage of low-interest rates
Mortgage Interest Rates are Lower, Presenting More Favourable Loan Conditions
Bank interest rates have plummeted to an all-time low, dropping below 1% at some point of time in 2020. In comparison, it was almost 2% at its peak in 2019.
If you intend to take up a loan of hundreds of thousands of dollars to buy a property, even the slightest difference in interest rates makes a significant difference.
Even with fixed-rate bank loans, after the fixed-rate period of 3-5 years, the interest rate becomes variable and might increase, especially when the economy picks up.
There’s no doubt that it’ll be much easier to pay off your home loan in the short term due to the lower interest rates, but be sure not to over-leverage yourself, and ensure you are prepared in budgeting in some funds as a buffer when doing your financial planning.
2. Property prices are falling?
Economic downturns leave few industries unscathed, and the property sector has inevitably been affected too. But if you look at property prices in Singapore, whether HDB or private property, you’ll notice that prices haven’t actually been that badly affected. Because HDB flats are public housing backed by stringent government policies, prices are bound to remain relatively stable; condo prices are also actually still increasing, albeit at a slower rate than normal.
For the HDB front, because it could take a long time to overcome construction delays of BTO flats because of the pandemic, it’s very possible that many potential buyers would turn to resale HDB flats instead in the near future. Similarly, for condo buyers, Singapore is projected to see a smaller supply of new condo projects after 2020, which could lead to a spiral effect whereby demand for resale condos increasingly exceeds supply.
3. Property is a stable investment
While it’s mostly true, this doesn’t mean one should hurry to invest all of your earnings into property all in the name of stability. The reason is that property is an illiquid asset, which means it can’t be easily accessed or spent as compared to, say, cash in your bank.
Especially during a pandemic-hit period like this, it’s good practice to hold some liquid assets in the form of cash or other assets that can easily be converted into cash. This way, in the case of an emergency or whenever required, you’ve got finances readily available to relieve the pressure.
Because of the pandemic, having a comfortable roof over our heads has become increasingly important. Even though there are reasons to enter the market now, do not let the spur of the moment drive you to make a hasty decision.