4 Reasons Why 2021 is the Best Time to Buy a Property!
The COVID-19 pandemic situation has been a huge and unprecedented event that has plagued the entire world. Whether you are rich, poor, or comfortably sitting in the middle class, you are likely to have been affected by the effects of this pandemic in the recent year, and in the following years to come. Industries and businesses have been affected badly, with many shutting down for good, and others heavily in debt.
That said, it is only natural that investments and assets are shifting as well. If you were looking to buy a property in the past year, chances are, you were deterred by friends and family. You probably heard your friends questioning your decision. “Buy a house in THIS economy? Are you out of your mind?”
But we are here to tell you that you are not out of your mind! And here are four reasons why now is a great time to buy and invest in a property!
Reason 1: Decrease in rental prices translating to lower property prices
With COVID-19 playing out right before our eyes, we are all stuck where we are. This means that people are not likely to come into Singapore for work, as out government tightens air travel as well as the restrictions with regards to employment passes and expats travelling to Singapore.
Essentially, the demand for rental houses will decrease, while the supply for rental houses remain largely the same. Current homeowners who are desperate to rent out their homes would have to resort to decreasing the prices of their rent and accepting lower rental rates. In turn, a decline in rental rates affects a market’s demand for investment properties, and therefore, a decrease in property prices, making now a great time to invest in a property!
Reason 2: Low interest rates translating to better loan conditions
As we all know, COVID-19’s effects on the economy can be felt throughout the world, and Singapore is no exception. Locally, Sibor, or Singapore Interbank Offered Rate, which refers to the daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the Singapore wholesale money market, has been on a decline.
Lower Sibor rates is great for property buyers because what this essentially means is that buyers will incur less interest over time with the loan package that they take up. With this favourable loan conditions, you can re-channel your funds into pay off the principal amount of the property, instead of the piling interest rates that is incurred for taking up a loan!
Even better news, interest rates are likely to stay low for the following years! This is great news for potential home buyers, as well as those who are still paying off their house loans!
Reason 3: Learning from SARS impact on the property market in early 2000s
Although it is currently really hard to imagine, things will go back to “normal” one day. Businesses will come back in motion, industries will rebound, and people will get back on their feet. Basically, things will most definitely go back to how they were before. In this sense, people will continue to buy and sell homes and properties.
This also means that after the COVID-19 pandemic blows over, buying sentiments as well as the property market will get back on track. If we learn from what happened during the SARS period in the early 2000s, we will learn that in the aftermath of SARS, a majority of sellers made a huge profit after selling their homes.
Do keep in mind, however, that as with anything, market recovery takes some time! Before jumping into buying a property so that you can buy low and sell high, be prepared to wait. Do make sure that you have the capacity and holding power to do so too!
Reason 4: It will only go up from here
Now that we understand how the property market fared in 2020 and early 2021, let us look forward into the later months of 2021.
In 2021, the real estate market is expected to experience a steady recovery and even set for a price growth with a rebound in the economy. With the positive news of the availability of effective vaccines, buyers would likely gain more confidence to purchase. In turn, housing demand, and therefore housing prices, would likely increase.
In addition, it is expected that there will be a decrease in the number of new housing project launches this year as compared to previous years. With a decrease in supply of property homes, home prices will likely not fall further in the coming year. For those who like to time the market, this only means that prices will likely go up from here, and if you are looking to wait to purchase an investment property, now may be the time you “time the bottom”.
2020 was a year that many will not forget. With COVID-19, it is only natural that most of us will tighten our purse strings. However, if you have found a property that is worthy of your time and investment, don’t be too quick to give up on it. Do your calculations, because the current market conditions may be extremely favourable for you to jump into the property market.
With lower prices, lower rental rates, as well as lower interests among other factors, now may be the best time for you to buy an investment property. Just keep in mind not to make any hasty decisions. As usual, do your homework, and make informed and well-thought-out decisions!
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