HOW MUCH RENT IS ENOUGH?
News today announced the fall in both HDB and private properties rentals. The harbinger of bad news to the growing number of landlords in Singapore further allowed that year on year, rents of these government-subsidized flats and non-landed private apartments were down over 5% according to flash estimates by SRX Property.
Well guess, we property owners who depend on rental income to pay our bills and living expenses would just have to tighten our belts and swallow the bitter pill of reality. This is because authorities are less likely to be on the landlords' side and offer landlords any assistance for they know we are kinda like a "privileged" bunch who "sponges off" tenants' hard earned money and make a tidy profit due to Singapore's generally high rents by global standards. However we do not have to rant over these doomsday scenarios - for I am dead sure that even with these dips, most rental income still more than covers the mortgage, and then some.
I know of a HDB-owner who is a friend of my ex, she is living the comfortable life jetting to Europe, United States and everywhere to visit friends and her children who are all doing well overseas. She proudly declared her Yishun flat is fully paid off, and after having renovated her flat where only she have access to the kitchen and living room through her master bedroom, she was able to collect S$1500 by renting out the other rooms legally. And yet she laments the recent dip in rent - when all the rent is pure passive income. Just how much rent is enough in our insatiable society?
Yes I would want the government in Singapore to do more to prop up the property market. Why not? The government has conceded that our unemployed forty-something executives would need its help to find jobs FAST to avert a joblessness crisis. So what about us landlords who are suffering rental income depletion - don't we need some aid too? Well until that happens, we as property owners should just count our blessings that we have rental/passive income - albeit 5 to 10% less than a couple years ago.
I used to collect about S$5500 for a unit in town during the hay days of foreign talent influx and booming property market. I still am happy even though the apartment is now collecting S$4500 - a whopping 18% decrease between now and then. This is because I feel that as long as an apartment is rented, it is passive income in your pocket - even at a lower rental which should ALWAYS more than cover your mortgage. If it does not, you have overpaid for the property.
"Rental prices for Housing and Development Board (HDB) flats and non-landed private properties continued their downward trend in March, led by private apartments in the city fringes.
Rental prices for private apartments fell by 1 per cent in March compared to the previous month. Year-on-year, rents were down 5.3 per cent, according to flash estimates by SRX Property."
CNA Online
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| Bing Image of Some Singapore Marina Bay Condos |
What is my point here? My point is go ahead and buy your first HDB or your investment property while prices are languishing - nevermind the low rental market. This is because a savy investor would know that with Singapore being a small market, when the tide turns, the prices soar pretty quickly and then it may be too late for some to play catch up to buy that dream house or investment property. So go buy what you can afford now, collect whatever rent you can get (because what comes down must go up eventually), and when the market goes back up, you would be the first one to benefit even more and laughing your way to the bank.
Hope you'll go Jalan Jalan around the island and make that first step - to buy a property - towards financial independence.
Asing's Other Singapore Property Opinion:
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