Factors Affecting the Value of Your Property

Whether you are buying or selling a property as a home owner or as a property investor, understanding the factors that affect the value of your property will help you make prudent decisions regarding your property.

As a buyer, knowing the positive factors enables you to make a prudent purchase decision. While identifying the negative factors empowers you to put them on the table as bargaining

ECONOMY

The following economic indicators may influence the property market:

Gross Domestic Product (GDP) - the higher the GDP the more buoyant the economy.

Employment Rate

Inflation Rate - Inflation reflects an erosion in the purchasing power of money.

Consumer Sentiment - an important indicator that gauges consumers’ buying intentions and level of optimisation or pessimism going forward.

DEMAND AND SUPPLY

Since the property market supply is inelastic to demand, property prices can be volatile. When demand is rising, developers are not able to build quickly enough due to lengthy planning and approval processes. Hence prices will go up. On the other hand, when demand has cooled while many properties are ready in 2 to 3 years time, then there will be an over supply situation and prices will go down.

However since the implementation of cooling measures such as Additional Buyer Stamp Duty (ABSD) and Total Debt Servicing Ration (TDSR), buyers are forced to be prudent in their property purchases. Property prices have been moderated with gradual increases and decreases instead of huge fluctuations.

LOCATION AND ACCESSIBILITY

This may be one of the most important consideration when buying a property.

Singapore is divided into the Core Central Region (CCR), Rest of Central Region (RCR), and Outside Central Region (OCR).

Properties in CCR have the highest value as they sit on prime land. eg in district 9,10 and 11. RCR properties are generally less expensive than their CCR counterparts, while OCR properties are the most affordable.

Properties within a 10 minute walk to an MRT station are ideal and command a premium as they make commuting more convenient. For people who prefer not to own cars this is the best solution. If there is no MRT station nearby, then having a bus stop with

FACILITIES AND AMENITIES

Properties in the vicinity of good schools are popular with young families with school going children, while properties near international schools are sought after by expatriates.

Mixed developments with residential and commercial spaces are often priced higher than purely residential developments as it provides an element of convenience. Likewise, having a large shopping mall, supermarkets, or eateries nearby is also a plus factor.

ENVIRONMENT

Residential properties with serene, clean and green environments or nature parks improve the quality of life to its residents and hence have added value

99 LEASEHOLD OR FREEHOLD

Freehold properties typically command a premium over leasehold properties as they are owned ‘forever’. New leasehold properties will go through a growth phase and after that will start to decline in value. Beyond a certain age, the value of leasehold properties will start to decay.

SIZE OF THE PROPERTY

Generally the larger the size, the higher the value when comparing similar properties. However, in terms of value, the per square foot (PSF) is the most accurate indicator or the value of the property. PSF has been soaring the past year with new Outside Central Region (OCR) properties hitting above $2000psf which is kinda crazy!

GROWTH HOTSPOT

Under the URA Masterplan, certain areas are earmarked as Urban Transformation Projects that will encourage economic growth and bring jobs and amenities closer to the resident.. For example the Greater Southern Waterfront, Punggol Digital District, Woodlands Regional Centre etc. Money will be pumped into infrastructure, land will be released for residential developments, investments will pour in jobs created and the whole area will be rejuvenated. Hence the value of properties in the surrounding areas tend to increase albeit over a long period of time. Investing in a growth hotspot is a smart move as the investment is low and the future returns are high.

Another way to look for growth hotspots is to look for potential plots of land around the development that have not been released yet,. Although we cannot predict when the land will be released under Government Land Sale, the potential for growth is almost certain as each subsequent plot of land released will be at a higher price than plot sold before it.