In recent weeks, there has been renewed interest in Singapore’s residential property market. For many property investors, this is welcomed news after several years of stagnating property prices on the back of up to 9 rounds of property cooling measures since 2009.
The myriad of news coming out from the industry include government easing some property cooling measures in March, SPH teaming up with Japan’s Kajima Development to secure a new mixed residential and commercial site worth over $1.1 billion in Bidadari estate, enbloc fever coming back on and local real estate firms Propnex and DWG merging to form Singapore’s largest property agency.
If you’re considering getting into the property investing game to earn passive income or start building your wealth, congratulations on taking actions towards a worthy aspiration. However, there many things you have to consider. For instance, you have to take into account downpayments, stamp duty, ABSD payments, renovation cost, agent fees, insurance, maintenance fees, taxes, insurance and so many more expense items that will impact your returns from your investment.
Beyond these usual cost items, there are features about the property that can affect its value over the long term. We cover three lesser known factors that your property agent won’t tell you about but can substantially affect your property value.
#1 Your Neighbours
During your property viewing, you would most likely be concerned with the layout of the home, the renovation works and view you get. Many people fail to even think about how neighbours can actually affect your property’s value or make it an undesirable home to live in.
The first thing you need to look at is the physical condition of your neighbour’s property. There are some red flags that you can look out for and preventive measures you need to observe to ensure you don’t fall into such a trap.
One such cause for concern could be seeing many clothing lines outside the property. This could mean there are many people living in that property, which could make it a (illegal) dormitory of sorts for foreign workers. While this is not a bad thing itself, it may become a problem if there are several of these types of homes in the estate. Apart from being unsightly, many renters, especially with young families, may also prefer not to live in such environments as they may perceive it to be less safe.
Another red flag could be seeing several plants or other equipment that are just on the borderline of infringing on the “space” of the property you are looking at. This could very well mean that you will likely be dealing with a neighbour who may cause unnecessary nuisances.
Even if you live a few doors away or on another floor, if your neighbours end up in the newspapers for such trouble, your property could get a bad reputation which can affect how much people are willing to pay for it even if the banks will give you a fair valuation.
Another thing you should look out for is the noise level. You may need to come back for separate viewings during different times of the day to listen out for this or canvass the estate yourself during different hours of the day and time of the week.
Besides these, neighbours who run into financial problems and are harassed by debt collectors (especially the illegal ones) or are forced by the bank into foreclosure may affect the value of your home. Homes that have also been the subject of crimes or next to those that are could see their values affected as well. These are hard to discern, although your agent or the current homeowner would definitely have inside information regarding this.
#2 “Amenities” Such As MRT Stations, Supermarket And Eateries
We used the apostrophes in “amenities” because these are not things that should positively impact the value of the property you are viewing. Many agents may try to sell you the fact that you will be a “stone’s throw” away from an MRT station, but this should not be viewed as a positive you are required to fork out more for the property.
The government has already stated its plans to make 90% of homes to be within a 10-minute walking distance from an MRT by 2030. As at 2013, 80% of homes are considered to already fulfil this target. So, instead what you should be doing is apply a discount on homes that are not within a 10-minute walk to an MRT.
The same thought process should be applied to other amenities such as supermarkets, wet markets, food courts and hawker centres. Many estates are already close to such amenities and you just have to know where they are rather than be sold that they are so close by.
#3 Superstitious Factors
Even though Singapore is a highly educated country, deep-rooted cultural superstition still holds firm in the country. When it comes to buying and selling properties, there are still a number of people whose superstitions influence them when it comes to placing a higher or lower value on properties.
When translated into Chinese or Chinese dialects, the pronunciation of the number four and fourteen resembles the word “death”. In fact, a news article in 2013 reported that condominium homes with the number four in them were sold at a 1.5% discount to homes that were not. Home addresses that add up to the number four and fourteen are also considered bad luck – these include 02-02 or 13-01.
Conversely, the number eight is considered lucky. And the same report also showed that homes with the number eight in them sold for 0.9% premium.
Other variations of these superstitious numbers include living on the 13th floor, which is considered bad luck in certain western cultures. Other factors include feng shui – which posits that homes which have a wall in front of their doors are unlucky or those that face a water body are lucky. Sometimes, it also pays off to do a little background research on the property you are looking at, many people consider it unlucky to buy properties that are linked to unnatural deaths.
While all this may seem unimportant if you are not superstitious or only want to rent the property out, it could affect your property’s value when you want to sell it off. This means you should receive the discount or pay the premium when buying such homes, as there will be higher or lower demand when you want to sell it off.
Research Your Investment Well
Unfortunately, the onus lies on you to do your research before you invest in a property. The property owner and agent may be privy to more information than you, and it may not be in their interest to share this information with prospective buyers.
When you are looking at buying a property, look at information beyond just your property itself. Try talking to neighbours to get a better gauge of how the estate is really like to live in. If you are really interested in the property, walk around or go to different floors of the estate. Come back during different times of the day on your own to see what a typical day may look like.
Don’t get fooled into thinking certain amenities are bonuses either. Some amenities are a given because of the way estates are planned and designed. It is profitable for supermarkets and food courts to exist where people live, so it should not be a privilege for homeowners to live beside one.
Some amenities, however, could be a privilege if you are living close to a library, a mall or good schools.
Lastly, even if you are not superstitious, you should know that many people are still superstitious here, and property prices can be affected by it. This should be taken into account when purchasing the property as you will either be receiving a similar premium or having to give a proportionate discount when you choose to sell your property.