Property planning in 2025

Most seniors I have met told me they have fully paid up HDBs. Some have paid up condos and even landed property. Owning a fully paid up property has its advantages, yet it may not be the best way to buy property today. In this article, we uncover what has changed between 3 generations and what to expect moving forward.

Property Prices Changes:

Our seniors had a great run because back then property prices were so affordable. For e.g. a 5 room HDB flat at Ah Hood Road costs $55k then. Compare that to the price of a brand new 5 room BTO at $582k (Punggol) and you realize it is a massive difference!

This is the same for Condo dwellers, back in those days, 1 bedroom Condo at the central areas were selling at $600k or lesser! What is the new launch 1 bedroom price today? It is selling at $1,125k (Tampines), and has doubled, my friend.

Therefore, how can anyone pay it up easily today?

Economic Changes:

The previous Generation were boomers, and they had so many job opportunities available. However, in today's context, many graduates have a hard time securing a job less to say a good paying one. It is increasingly difficult to have career planning unless you are willing to learn new skills, take new degrees according to market demand.

Therefore, for the young generation to pay up their property, it will take them a longer time.

Property Size Changes:

Due to changing demographics and declining birth rates, properties that are built today tend to be smaller in sizes. E.g. An older 5 room HDB could be 1327sqft but today it is merely 1184sqft. Even for Condos, a 1 bedroom built in 2014 is 872 sqft, but today it becomes 580sqft.

The reduction in size is a reflection of the rising property prices and the future trend of space maximization.

Loan to value:

The LTV ratio has also changed drastically over the years. I shall not bore you with the details but you should know that it gets increasingly difficult to get loans and that is because MAS encourages buyers and upgraders to be more prudent in borrowing.

Even if you buy a resales HDB, the amount of loan you can take and the CPF you can use is pegged to the valuation of the property. This means that if you buy at higher prices, you will pay cash over valuation. Based on my experience and knowledge, many buyers cannot afford to pay $60k in COV.

Upgrader's dilemma:

A client told me his colleague was interested to learn more about property upgrading after hearing about his personal journey. His colleague intend to buy an executive condominium. Through the sharing, I found out his colleague had 4 young children, 2 of them are attending childcare and the other 2 in primary school.

The cost of childcare is about $780 minimally each month for 1 child. So in this case, the cost is about $1600 for the 2 of them. Add the additional costs needed for the other 2 children and living expenses for the entire family, I can understand it is going to be a tight situation. It can be tricky to pay a high mortgage fee, along with the living expenses for the young family.

Interestingly, this colleague has a relative who is an agent. She has been pushing them to upgrade, which made him feel uncomfortable. Usually such cases are a bit tricky because I will have to understand the family financial planning better so as to help them secure the upgrade in a logical manner.

Given that financial responsibilities will only increase as their children grow older (education expenses, allowances and etc.). The dilemma is real because I am truly concerned about the client's well being. I told them if the numbers are too tight, then they need to wait a bit longer.

Is property upgrading only for the elite?

For a family with 2 children, property upgrading usually happens when they are growing up and want personal space and privacy of having their own rooms. Living space becomes a problem because the condo bedroom can only fit a small bed and wardrobe.

The only solution is to get a bigger condo unit or to buy a resales HDB. For such cases, the size of property becomes a need. They truly needed a bigger space in order to live well.

In recent years, property buying requires dual incomes. Both husband and wife will jointly pay for the mortgage fees. Based on statistics, it is doable for even the average family to upgrade their HDB from time to time.

Property ownership trends:

During the covid19 period, a few prominent groups of property investors emerged and started to buy properties as a group to create passive income. They conduct masterclass and encourage people with limited budget to join hands and buy property together so as to rent it out and generate rental income. This trend is still growing today.

Some people may even tell you they own 30 properties, but the reality is they own 1% of each of them. Technically speaking, they are not lying. But this model is not for everyone and be warned that there may be complications due to terms and conditions of co ownership.

The Other trend that is prevalent today is the rise of co living spaces. Properties undergo renovation where communal areas are created to house a few tenants, and as a result, churn higher rental yield. This method is quite innovative but you need to find suitable housemates that are considerate and open to sharing with strangers. Would you want to be responsible for any issues arising from conflicts? Remember the HDB stabbing case that happened recently?

How people lose money in property?

1) Poor financial management - Does not have any clue how to manage family expenses wisely. In this case, the limited perspective is mortgage = liability. Thus, to have lesser liability, it is better not to loan.

2) Selling too fast - marketing the property within 3 years and incurring Sellers's stamp duties. Thus, they are unable to break even.

3) Selling too cheap - paying low commissions and getting agents who only want to sell fast since they aren't getting fair market rates. Let's face it, if you pay peanuts, you get?

4) Buying the wrong property - this is worst than eating the wrong food. Usually such properties aren't tenanted, and it is very difficult to rent out or rents at a low price. You end up trying to pass the ''problem'' to the next buyer. But seriously, who is going to be that sucker?

5) Getting too many advices - with all due respect, not all advice is good. And even if it is, it may not apply to your case. There is no cookie cutter solutions when it comes to buying a property. Not all units will perform the same, even if it is the same project. (If simply buying into a project or developer means its a sure win, then everyone should transact at the same price for that project.)

The truth is in every project, some units will sell better at a higher premium than other units. The question is which one? and why? and did you secure it?

6) Unable to hold - perhaps the most painful of all scenarios, the inability to hold forces someone to quickly liquidate their assets. In this case, at a heavy loss. Back in the Covid period, a lot of units were released back into the market under bank auctions.

On the reverse side, properties that were held for more than 20 years in the Core Central Region yielded more than $1.5m in gains.

7) Trying to outsmart the market - a.k.a. Time the market. Buyers who think they ''sure win'' is like a gambler trying his luck. If you work with a professional agent, you should trust his/ her recommendations to you rather than doubt and question everything. It is stupid for the agent to sell you a rubbish product that cannot be sold easily later on. That basically destroyed his / her pipeline and business continuity. Why would you refer people to an agent who sold you shxt?

8) ''family'' agents - I have seen far too many cases of buying the wrong product from ''relative'' agents. It is indeed a hard ball to swallow. Please do not make that mistake! Past data does not guarantee future success! What matters is your game plan and how you chart your personal growth. It is YOUR game plan, and you need not be pressured into buying.

Should Singaporeans still buy new condos?

If you are able to get a loan, my advise is to go for it! Take advantage of your Singaporean birth right and buy your first property now while there is no ABSD taxes. Buy your BTO and upgrade after 5 years since you have the chance to do it. While we do not know what may happen in the next 5 years, I can assure you that if you choose the property wisely, you are unlikely going to lose money.

Even if you aren't going to pay up the property early due to the high quantum, you will still be better off years later because of capital preservation and the hedge against inflation. Whatever you have paid up, will still be your money.

During inflationary cycles, property prices also rise in tandem.

What about black swan events?

No one can predict the future. Property crashes was expected during Covid19 period but it didn't happen. What happened were the rich buying up more properties and selling it 8 months later for a neat profit.

In the event that a really bad**s event should happen for property prices, then wouldn't it be a worldwide event? The question is : Are you going to suffer the brunt of it, or will you start charting your path to become the rich?

In closing, I hope you will be wise with your property planning. I hope you like this article. We are still in CNY but I took time to write this for you! Share it to your friends! Contact me today for more unfiltered hard truths that gives you the keys to success.

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