Should I Buy the New Launch Property Now or Wait For Interest Rate to Drop?
Before I begin, I just want to state that this is entirely my personal view based on my assessment of the market condition now. The #1 objection right now to property purchase is high interest rate.
Alot of my leads told me that they want to wait for interest rate to come down before they go into the market. I dont think this is a smart move especially if you are someone who "die die" want to buy a private property.
1. Do you know that if you buy a new launch, it will be progressive payment? So you will not suffer the full blunt of the high interest rate immediately. Say if you buy a new launch that TOP in 3 years time. Assuming it's an average of 3.5% interest rate for the next 3 years, you will be paying 35k interest for a $2m property for $1.5m loan. What this means is, you are paying additional 25k in interest when compared to the 1% low interest rate environment.
2. What if I tell you the average yearly appreciation for private property in Singapore is 4.5% for the last 20 years. That is to say if you delay the purchase by another year (to wait for the interest rate to come down), the same 2m property would most likely have appreciated by another 90k. If you delay for another 2 years, it will be 180k more.
3. Do you think property price is going to collapse or drop from now on? It's not going to happen. It's all demand and supply. Refer to this article from business times. The cooling measures do not cause property price to collapse. What the government is trying to do is to ensure a bubble doesnt form where by people start to force sell or declare bankrupt when economy is not doing well. During the Covid period, all asset class plunged except for property in Singapore. It surged!
4. I cant imagine how many people are on the sideline now waiting to enter the market when interest rate falls. Perhaps that will fuel another surge in property price. It's like crypto FOMO.
Let's not be penny wise, pound foolish. Just because you want to save that 25k in interest, you ended up paying 180k more for a property 2 years later, or worse, you get priced out entirely from the market.