This is a round up of interesting things learnt and discovered by Aaron throughout the Covid period, from it starting in end 2019, throughout the CB period and subsequent phases till mid 2021.
Property Prices did not go down
Contrary to popular belief, the property price did not go down significantly due to the pandemic. It was assumed that the economic fallout from a pandemic would cause prices to spiral. However, in the case of Covid, we saw a quick turnaround after a slight dip, with the uptick in prices coming quickly.
Back in 2018, 2019, the market was rife with talk about oversupply, and how buyers then were going to lose money. In 2021, we see that the idea of oversupply was a wrong one. There is no oversupply with the veracious demand and it's hard to find any buyers from the 2018-2019 period actually losing money. Not all properties benefitted from the rise in prices, and this is due to the varying levels of demand in property types. Certain prices are also already high, and there is a preference for certain types of properties.
For example, the increase in prices for 1 and 2 bedders was lower in scale compared to larger units. 1 bedders tend to be reliant on rental yield than capital appreciation. With that said, the location for 1 bedders would also be a prime consideration, whether it is in the core central area or not.
Upgrading blindly from HDBs
There are people who sell their HDB units without a clear plan. The motivation to sell comes from the prices being high. However, these people do not have an idea of what they will do next after selling. Are they going to buy a condo, or another HDB, and at what prices?
If one chooses to sell a HDB and then buy back a HDB or sell a BTO then buy a resale HDB, these moves are redundant. You will just incur costs (lose money) associated with selling even though you might have sold at a high price. In fact, for selling BTO units, the effect is even more significant.
BTO's value will not fall as quickly as a resale flat due to its age, and even though the flats would depreciate, the BTO's value will depreciate at a slower rate compared to a resale unit. Only if you are selling to then buy a bigger or smaller unit, then it would make sense. If you are selling a BTO and then buying a resale at similar size and price, the move is essentially redundant to say the least and potentially financially damaging.
Young First-Timers Mistakes
Most property related mistakes appear to be made by young first-timers. These financial mistakes in property are significant because of the large sums of money involved, thus Aaron particularly hopes for more first time buyers to watch his videos and understand better before making your moves in the market!
Common mistakes include spending an exorbitant sum on newly MOP 5 year old units. First you lay down a large sum on the property price, then another significant amount is poured into the high renovation fees.
Perhaps, the availability of grants make these first timers more willing to pay a higher price, coupled with the belief that being young gives you time to recover from any possible mistakes. It's just important to know that if you take a good and correct first step, things get easier and more beneficial in future, whilst having any setbacks from the start would make it hard to recover financially.
The Singaporean Mindset - Space
A quirk of the Singaporean mindset is the need for space. When upgrading from a HDB property, buyers are looking for the same amount of space in a condo. However, their budget might not be able to accommodate such ideals.
Hence, they look for a big and cheap unit. When you add Big to Cheap, you get: Old.
With the increased demand for such units, these Big and Old units are no longer Cheap, as the demand has driven prices up.
Conclusions
There have been mistakes made buying, mistakes made selling during this period. Considering the veracious appetite and seemingly endless demand, it's still important for buyers and sellers alike to get the best advice available before making their next moves!
Learn from what Aaron has learnt about Singapore property! Get yourself the insights now!