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The real estate market in Singapore has shown significant signs of recovery so far this year from a slump over the past years. Prices are on the rise, and market sentiments are extremely bullish currently, with many investors even deeming Singapore to offer better opportunities than Hong Kong. Nevertheless, what are the factors that affect property prices? We’ve uncovered some important factors affecting the housing market, both on a macro and micro basis, that will almost certainly impact the price of your home.

Property Location

When it comes to real estate, we’ve all heard the phrase “location, location, location” but what does this exactly mean in practical terms when it comes to property prices?

Real estate is about location; the amenities and accessibility of a specific property affects the prices due to the impact it has on one’s lifestyle. Some example of key considerations include:

  • Quality of local schools (especially important for parents)
  • Proximity to local employment opportunities or workplace (which is why properties in the Central Business District command a premium in prices)
  • Proximity to social, shopping and recreational centres (extremely important for families)

Nevertheless, it is important to note that these factors are not independent of one another. For instance, many parents want to drop the kids off and pick them up at school as part of a their routine in their commute to and from work. These three preferences – proximity to school, work and nearby amenities— are a combination that make for immensely valuable property.

Generally, getting a home which has one of the three attributes would be fairly affordable. If you’re getting two out of three, you should expect stiff competition and slightly higher prices. To get all three, you might have to prepare a higher amount of financial leverage to compete for these spaces.

Design: Additions and Alterations

While some buyers actively seek out new properties, most home buyers prefer a house that is move-in ready –  and they are willing to pay a reasonable premium for that comfort. This why certain resale properties are more expensive than new properties. Furthermore, an interior or exterior design built with expensive materials and likeable features and looks will tend to increase the valuation of a said property.

Prices of Comparables

Comparable properties, sold in your area also impact your own home’s market value. Valuers and real estate agents look at recent sales of homes with similar features as a benchmark against your home’s potential price. However, it is also imperative to note that foreclosures and short sales often complicate situations because they tend to be sold at lower prices, thus decreasing the neighbourhood’s overall average sales price.

Nevertheless, it is important to remember that the prices of comparables are a key driver for the valuation process: valuers will generally rely heavily on recent nearby transactions on homes of a similar size to yours.

Economic Indicators

Without a doubt, the economic climate and the strength of the overall economy also significantly impacts the real estate market as consumers’ ability to support housing prices largely depends on key economic and demographic factors like GDP, unemployment, and income growth.

The Global Financial Crisis in 2008 greatly depicted the link between real estate and the economy. Local economies in the United States faced an immense level of property price depreciation. On the flip side, Hong Kong’s booming economy over the past few years has depicted in extremely optimistic and soaring prices for its properties as well.

Interest rates

Interest rates are a key factor in how mortgage rates are established because it sets the cost for banks to borrow money. Lower interest rates typically lead to lower mortgage rate offers from banks; in turn, this decreases the amount of monthly mortgage payments a homebuyer must pay for a given mortgage amount.

The smaller the monthly payment, the more seemingly affordable a loan is to prospective homebuyers; this fact can increase the size of the mortgage for which homebuyers are eligible to get which, in turn, might drive up property prices due to higher demand.

Investor sentiments – Creating a cycle

It is also important to remember that property prices operate in a cycle. The upturns and downturns will always be there in the real estate market.

For instance, the 2008 Global Financial Crisis created an appealing environment for investors with an appetite for residential real estate. The increased cases of foreclosures provided both domestic and foreign investors with the counter-cyclical opportunity to acquire properties at relatively low prices and followed up by either renting out or renovating it and resell at a profit.

This pattern continues due to increasing demand, until the volume of sales and available supply start to dwindle. As this happens, property prices start increasing due to the rapid increase in demand, and this increase and decrease in prices will continue to happen in the future depending on economic circumstances.

Other factors to consider

Of course, there are various other factors which hold considerable influence to property prices as well. The following summarizes some of the major ones amongst many others:

Property cooling measures: the government has always been on the lookout to ensure that property prices are generally affordable for the masses (especially HDB flats) while also preventing overheating of the market should demand be robust.

For instance, the revision on 5th July 2018 of loan to value and increased additional buyer stamp duty has sparked an overnight rush in sales numbers. The residual effect of the cooling measure should however keep the market in check.

Developer activities: Developer activities are also very important. They cater to zoning restrictions allowed by the government, and also are responsible for the pipeline of supply to the market. As such, the concept of demand and supply, which is the key fundamental of property prices, all hinges on the delivery of supply into the market.

Concluding Thoughts

All-in-all, real estate prices depend on the fundamentals of demand and supply of the market and also operates on a cyclical manner. As such, it is important to analyse all of the aforesaid factors as well as the broader market and economic conditions with respect to your specific property to determine how the home’s value may fare over the course of time, and use this information to your advantage.

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The post What exactly affects real estate prices? appeared first on Redbrick Mortgage Advisory.

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Thinking of selling your property?  Trying to maximise the value of your home with minimal effort? We have the solutions for you; here are 9 quick tips that will bring in as much cash as possible:

Tip 1: Consult an interior designer

Call and invite an interior designer over to have a look at your home. You will probably have to pay a consultation fee to a designer, so check with several designers in your area; a standard hourly fee ranges between $50 to $200, and they can provide you with several ideas for needed improvements.

You should also listen to minor suggested improvements, such as paint colours or furniture placement, which can go a long way toward improving the looks, vibes and thus value of your home.

Tip 2: Prevention is better than cure

Not every home improvement method has to be about enhancing the looks. It is also important to maintain your property at all times. Deteriorating and breaking ceilings, termite infestations or outdated electrical systems — these are some issues which tend to be neglected all too often.

As such, there is a need to always discover hidden problems that could negatively impact your home’s value. Small problems such as a hidden water leak, clogged up sinks or loose wires can become big, expensive problems quickly; and henceforth the longer you put off repairs, the more expensive those repairs will be.

Tip 3: Paint… Because first impressions matter

Perhaps the simplest, and very cost-effective improvement strategy – is to paint. As they say, first impressions matter. Hence freshly painted rooms and hallways that look clean and new – that spells value. Nevertheless, when selecting paint colours, keep in mind that neutrals appeal to the greatest number of people, therefore making your home more desirable.

Tip 4: Find Inspiration

Of course, there are free ways to get design tips as well – just keep seeking inspirations. An alternative to hiring a designer is to search for images in interior design or architecture magazines, books, TV shows and websites. Pinterest is one place you can take inspiration from. Take note of the samples and ideas that you want to try and start your to-do list. You can try to emulate it but keep it simple; do it according to your budget.

Tip 5: Improve the air quality

Air quality is more than just the condition of the atmosphere outdoors. Of course, air fresheners always work, but if you have older carpets and furniture in your home, they might be hiding contaminants and allergens. As such, the first step is to determine if these need replacing is to hire a professional company to test your indoor air quality. If indeed the results indicate that your carpets should be replaced, choose environmentally friendly products and floor boards like tile or laminate floors. This is simply due to the fact that such floors are much easier to keep clean, don’t hold odours, gives a fresher look and thus generally more appealing to potential buyers.

Tip 6: Look up your ceiling

This one is mainly for those who have old houses. Remember to always check out your ceiling. One of the most overlooked yet prominent structural element that makes a house look old, is a ‘popcorn ceiling’ or ceilings full of stains. Henceforth, it is important to dedicate a weekend to removing this dated look and start adding dollar signs to the value of your home. Doing this is relatively simple.

Just visit your local hardware store for a solution to soften the texture, then simply scrape the ‘popcorn’ away.  Cleaning this may not seem like a big change but one of the keys for adding value to your home is to repair, replace or remove anything that could turn buyers away.

Tip 7: Cleanliness counts

‘First impressions matter’ and this legendary advice is absolutely true. As such, it is extremely important to make the interior of your home shine from the moment someone walks through the door; especially so for a potential client. If you do not have a domestic helper, you might want to put in your utmost effort, or perhaps hire a cleaning service for a thorough top-to-bottom scrubbing. Even if you clean your home regularly, there are nooks and crannies that you may miss or overlook, thus make sure that every part of the house is covered.

Tip 8: Visually increase the size of your house

The size of your home dramatically affects the value; and of course, any increase in GFA (Gross Floor Area) would increase its value. However, square footage isn’t the only space that counts. Visual space is equally important – how do you make your house seem bigger than it actually is?

The key to doing this is to make each room in your house feel larger. Replace heavy closed window blinds with vertical blinds or shutters to let light in — more light into the room makes it feel larger and more open. Also, try adding a single large mirror to a room to visually double the space.

Finally, make it more minimalistic. What being minimalistic means is that the more furniture and stuff you have in a room, the more cramped it will feel. On the other hand, adding an attractive shelving unit to an underused space is another good way to store any unnecessary things out of sight.

Tip 9: Add new energy-efficient fixtures

Finally, the last tip is pretty simple. For instance, all you need to do is add a functional, decorative ceiling fan and voila – your ceiling would look beautiful, unique, modern and it even saves costs (due to energy conservation). Simultaneously, it provides necessary light and, in warm months, creates a soft breeze reducing the need for expensive air conditioning.

Furthermore, there is a refreshing feeling induced with the latest technological advancements, both on an extrinsic and intrinsic basis. This is definitely preferred over an outdated, wobbly, loud or broken ceiling fan which may be an eyesore. The main idea here is this: replace old fixtures with new ones to make your home more enjoyable for you now and to increase the value of your property should you decide to sell.

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The post 9 easy ways to increase the value of your house appeared first on Redbrick Mortgage Advisory.

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In a joint press release by the Ministry of Finance (MOF), Ministry of National Development (MND) and the Monetary Authority of Singapore (MAS), it has been announced today (5th July 2018) that the Additional Buyers Stamp Duty (ABSD) rates will be raised, and that Loan-to-Value (LTV) limits will be tightened. This is part of an effort to “cool the property market and keep prices in line with economic fundamentals”.

Additional Buyers Stamp Duty (ABSD)

ABSD rates will be raised by 5% for Singapore citizens and permanent residents buying second and subsequent homes, and 10% for entities. The changes are illustrated in the table below:

Category Properties Rates on or before 5 July 2018 Rates on or after 5 July 2018 (Revised)
Singapore Citizen 1st residential property 0% 0% (no change)
2nd residential property 7% 12%
3rd and subsequent residential property 10% 15%
Singapore Permanent Resident 1st residential property 5% 5% (no change)
2nd and subsequent residential property 10% 15%
Foreigners Any residential property 15% 20%
Entities Any residential property 15% 25% (Additional 5% for developers)

Developers will be subjected to an additional 5% ABSD, on top of the 25% ABSD that all entities have to pay. Unlike the 25% ABSD, the 5% ABSD cannot be remitted, and the developer must pay this upfront upon the purchase of residential property.

Homebuyers currently in the process of a property transaction need not worry unduly. The current ABSD rates will apply instead of the revised ABSD rates as long as the seller has granted the homebuyer an Option to Purchase (OTP) on or before 5th July 2018, and no amendments have been made to the OTP on or after 6 July 2018. However, the homebuyer must exercise the OTP on or before 26th July 2018 or the OTP validity period, whichever is earlier.

 Loan-to-Value

All housing loans granted by financial institutions will henceforth have a 5% lower LTV limit. HDB loans are not affected by this revision. The adjustments are presented in the table below:

Individual Borrowers
LTV Limit (Existing Rules) LTV Limit (Revised Rules)
1st Housing Loan 80%, or 60% if loan tenure is more than 30 years (25 years for HDB) or extends past age 65 75%, or 55% if loan tenure is more than 30 years (25 years for HDB) or extends past age 65
2nd Housing Loan 50%, or 30% if loan tenure is more than 30 years (25 years for HDB) or extends past age 65 45%, or 25% if loan tenure is more than 30 years (25 years for HDB) or extends past age 65
From 3rd Housing Loan 40%, or 20% if loan tenure is more than 30 years (25 years for HDB) or extends past age 65 35%, or 15% if loan tenure is more than 30 years (25 years for HDB) or extends past age 65
                                                     Non-Individual Borrowers
LTV Limit (Existing Rules) LTV Limit (Revised Rules)
All Housing Loans 20% 15%

The revised LTV limits will apply to loans for residential property purchases where the OTP is granted on or after 6th July 2018.

Mortgage equity Withdrawal Loans (MWLs) will also face a similar tightening of LTV limit:

LTV Limit (Existing Rules) LTV Limit (Revised Rules)
Borrower with no outstanding housing loan 80% 75%
Borrower with an outstanding housing loan 60% 45%

The revised LTV limits will similarly apply to MWL applications made on or after 6th July 2018. For the refinancing of MWLs applied before 6th July 2018, the current LTV limits will still apply.

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The post New property cooling measures announced: ABSD is raised, LTV tightened appeared first on Redbrick Mortgage Advisory.

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There have been several cases of property agents going rogue over the years; perhaps you might know a victim of these scams. Even with the establishment of the Council for Estate Agencies (CEA), property swindles are unavoidable due to how lucrative the industry is. Hence, the onus is on you, as home buyer/owner, to properly vet estate agents before engaging them.  

Fret not, we have compiled 7 essential qualities that make a good property agent.

1.     Ambitious

No deal is considered too insignificant. Property agents who are inclined to take up any deal even if the commission is low, are the ones you want to engage. They are persistent in pursuing any deal, calling potential buyers/sellers even without being prompted. Even if they face rejection, they would not concede defeat. Instead, they will explore other ways to overcome difficulties they face. These are the property agents who deliver the best deals to their clients and are likely to develop a long-term relationship with them.  

2.     Client-centric

 Most property agents would rather close a deal as soon as possible than haggle for a couple of thousands more as their commissions do not increase considerably. This should serve as an indicator that the agent does not have your best interests in mind.

As a home owner (i.e. seller), an easy giveaway is how an agent deals with your property before a viewing. Reliable property agents are likely to do more than just give your place a quick makeover. They will ensure that the entire house looks presentable and tidy – cracks on the wall are sealed, no leaks in the pipework and toilets are unclogged. Whereas lazier agents are likely to just perform a once-over, tucking things away instead of tidying it up.  

Additionally, good agents know their clients’ selling motivation. A client who is selling an investment property versus a client who is selling their family home will have very different needs. An outstanding agent would know how to cater to his/her clients’ respective needs.

As a buyer, an exceptional property agent will only show you properties that best match your requirements. If you made it known that you have a toddler and yet the agent shows you a property that has no child-safety features, you know he/she is not paying attention to your needs. Agents like these are likely to recommend properties with the best commissions rather than what is most appropriate.

3.     Engaging/Communicative

It can be stressful dealing with an agent who is a poor communicator. You may feel as though you are doing more work than the agent with the numbers of calls you are making to them. It is crucial for agents to constantly keep in contact with their clients and customers. Seemingly insignificant information to an experienced agent may be highly important to clients who are new to the real estate scene. Hence, good agents will constantly keep you updated, rather than have you call them all the time.

4.     Honest 

Proper agents are serious about disclosure. An agent is required to reveal any potential conflicts of interest and every source of referral fee/commission. Additionally, reliable agents inform you about commissions even before you ask.

However, some estate agents try to secure your deal by promising a low commission rate or high valuation for your property. Too high a valuation is impractical, it can cost you an opportunity to sell at a decent price while you wait out. In promising a low commission rate, your property agent is likely to list your property at an inexpensive price in order to obtain a fast deal. Good agents need to provide genuine valuations instead of deceiving their clients.

5.     Knowledgeable

To test if an agent is a good one, ask questions you already know the answers to. An excellent agent will usually know the answer; if they do not, they will be sure to return with a right one. Additionally, good agents are kept up to date with the latest market trends and movements. They are also aware of upcoming developments in the area your property is situated in.

As good agents are knowledgeable, they rarely make sweeping statements when addressing your concerns; explanations are usually backed up with statistics.  

6.     Proactive

As the saying goes, “If you want something done, ask a busy person to do it”. Good agents are constantly on the ball. They are proactively calling prospective buyers, communicating with existing customers and regularly chasing new leads. As the real estate market is time sensitive, a laid-back property agent may miss the opportunity to make the most out of a deal.

However, no matter how much they have on their plate, they will be sure to return a miss call.

7.     Strategic

Lastly, competent agents usually have effective marketing strategies. If an agent is employing similar marketing strategies as the rest of the other property agents (like distributing flyers in letter boxes), chances are feasible results will not be produced.

You should also sneak a peek at an agent’s sales materials. Did she carefully plan her listings or is it merely a plain description of your property?

While a property agent is employed to help you in your sale/purchase, you should also familiarise yourself with the industry terminology. Moreover, apart from these qualities to look for in an agent, you should first check if the property agent is registered with the CEA and have a brief understanding of what an agent is supposed to do for you.

The buying and selling of a property should be an exciting journey, and should not feel like a chore as long as you have a reliable real estate agent you can depend on. Be sure to bear in mind these 7 points while you’re in the process of finding someone you can work with!

Want to find the best mortgage rate in town? Check out our free comparison service to learn more!

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The post 7 qualities that make a good property agent in Singapore appeared first on Redbrick Mortgage Advisory.

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There are many definitions to decoupling. In plain English, the Cambridge dictionary defines it as “a situation in which two or more activities are separated, or do not develop in the same way”. Thus, investors use this term to describe a situation whereby returns on asset classes diverge from the expected or normal pattern of correlation.

However, when looking at Singapore properties, it means to divide the shared ownership of a property – especially that of a couple, hence the term decouple. Legally, it is called severance of joint ownership of the property. This is done through the signing of an instrument in required forms prepared by lawyers that is then submitted to the Singapore Land Authority. It should be noted that there is a difference between decoupling for HDB flats and also decoupling for private properties. For this article, we will be focusing on decoupling of private properties.

Why do people decouple?

The reason why owners will undergo the decoupling process is because in light of the government’s cooling measures placed on the housing market, couples who wish to purchase a second property in Singapore, in hopes of avoiding having to pay additional stamp duties through the Additional Buyer’s Stamp Duty (ABSD).

Thus, taxes and repayments for the decoupling process will be broken down below.

ABSD was first implemented in 2011 when investor demand was strong from both local and foreign markets. However, rates depend on the residency of buyers and also the purchase price or valuation of the property, whichever is higher. These taxes (ABSD and BSD) are rounded off to the nearest dollar.

BSD:

Value Rates
First $180,000 1%
Next $180,000 2%
Next $640,000 3%
Remaining Value 4%

ABSD:

Profile 1st Property 2nd Property 3rd and Subsequent Properties
Rates for 8 December 2011 to 11 January 2013
Singaporean N/A N/A 3%
Singapore Permanent Resident N/A 3% 3%
Foreign Buyers 10% 10% 10%
Rates from 12 January 2013 onwards
Singaporean N/A 7% 10%
Singapore Permanent Resident 5% 10% 10%
Foreign Buyers 15% 15% 15%

When looking at private properties, the government does not restrict (much) on the decoupling process. The only restriction is that none of the owners can be a bankrupt or going to be a bankrupt.

It should also be noted that CPF be used for the purchase of the property, upon the sale of the property in the decoupling process, there is a need for funds withdrawn to be returned to the CPF of the seller plus accrued interest, if any.

Moreover, if there is any outstanding mortgage, there is a need for the buyer to take on the wholesale onus of mortgage repayments.

Additionally, it should be noted that BSD will be enforced on the buyer. However, should the property be sold within the first 4 years of owning the property, the seller will also be taxed under the Seller’s Stamp Duty (SSD) – on the higher value between the transacted price or fair market value.

Date of Purchase Holding Period Rate
20 February 2010 to 13 January 2011 (all inclusive) Up to 1 year 1% on first $180,000

2% on next $180,000

3% on remainder

More than 1 year No SSD payable
Between 30 Aug 2010 and 13 Jan 2011 (all inclusive)  Up to 1 year 1% on first $180,000

2% on next $180,000

3% on remainder

More than 1 year up to 2 years 0.67% on first $180,000

1.33% on next $180,000

2% on remainder

More than 2 years up to 3 years 0.33% on first $180,000

0.67% on next $180,000

1% on remainder

More than 3 years No SSD payable
Between 14 Jan 2011 and 10 Mar 2017 (all inclusive) Up to 1 year 16%
More than 1 year up to 2 years 12%
More than 2 years up to 3 years 8%
More than 3 years up to 4 years 4%
More than 4 years No SSD payable
On and after 11 March 2017 Up to 1 year 12%
More than 1 year up to 2 years 8%
More than 2 years up to 3 years 4%
More than 3 years No SSD payable

Process of decoupling

This process can be done through various ways:

  1. Gifting

Gifting of properties should be done through the deed of gift and is subjected to the property being fully paid. Thus, there is a need to check for charges on the property – bank charge for mortgages and CPF charge for funds withdrawn from CPF for payment of property. There is also a need to ensure that the owner intends to give it as a gift and not be held in trust.

However, stamp duties still have to be paid as such there is a need for valuation of the property to be done so as to ensure the correct payment of taxes. On top of that, this will also act as a proof of the value of the property being gifted at market value rather than being undervalued.

Thus, these will eliminate the problems in selling the property in the future or obtaining a bank loan. It should be noted that this will follow that of gifting during the donor’s lifetime (inter vivos gifts).

  1. Part-Purchase
  • Fully Paid

The ownership of these properties would usually be transferred through sales and purchase agreements, with the other owner buying over the shares of the other. This should be done at an arm’s length transaction and an independent valuation should be sought.

It should also be noted that stamp duties are payable for buyers and sellers. In this case, for the buyer, only BSD will be imposed. On the other hand, if the seller sells it before 4 years holding period is up, SSD will be imposed.

Thus, under this situation, the property should be purchased without any charges on the property – bank loans and CPF charges.

  • With outstanding loan balance

Similar to having fully paid for the property, the transfer should be done through a sales and purchase (S&P) agreement at an arm’s length transaction with independent valuation being sought. Thus, stamp duties are also applicable based on the above situations: buyers having BSD imposed and sellers having SSD imposed if it is sold within 4 years of owning the property.

How this differs from the previous is that there is a bank charge on the property. This is due to the mortgage loan that was used to finance the property. As such, the buyer will then have to bear all mortgage payments, that were originally split between the couple, alone.

In addition, should CPF be used to pay for the property, there is a need for the seller to use the sale proceeds to repay the amount withdrawn from CPF during the purchase of the property.

Banks often do not like to do the part purchases – especially those who want to continue financing from the same bank. This is largely due to the lack of funds dispersed and the large amount of paper work associated with the process. As such, buyers usually consider restructuring and refinancing the loans to other banks.

Hence, decoupling is a process of severing a joint ownership through the signing of an instrument with the required documents, which is usually done when a couple intends to own a second property and do not wish to pay for ABSD on the second property. As such, couples can transfer ownership of property through gifting or part-purchase – fully paid or with a loan balance.

Decoupling for HDB flats

For HDB flats, decoupling is referred to as the resale of part share by way of part purchase between family members at a mutually agreed price; there has to be monetary consideration involved for such changes.

However, these rules were revised to ban resale between married couples. Divorced couples can choose to buy over the others’ share in the flat through a partial purchase by way of resale after finalising the divorce and meeting the Minimum Occupancy Period (MOP).

Thus, there are eligibility criteria for both buyers and sellers under the resale of shares.

  1. For Sellers – they must have met the prerequisite MOP and deemed eligible to sell on the open market.
  2. For Buyers – they must meet one of the prevailing housing schemes to buy over the owner’s share.
  3. For divorces, there is an additional requirement:
    • Divorce to be finalised after the requisite MOP.
    • Divorce documents must indicate resale of part-share to the other party.

In addition, there are also conditions to be fulfilled after the resale of part-share, which is to fulfil a fresh MOP before sale of flat in the open market, renting out the flat and/or investing in property when at least 1 owner is a Singaporean citizen.

Hence, the main differences between decoupling for HDB flats and private properties are that HDB flats cannot be decoupled for married couples while for private properties, it can be done.

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Thinking about investing in real estate? Well, we must say that real estate indeed is an amazing asset to invest in due to its many qualities. Rather than investing in paper or digital notes which you cannot feel, real estate’s physical qualities make it an amazing asset to own. Without further ado, here are 8 reasons to do so!

It’s a safe haven (It’s a core investment!)

Properties are generally very defensive in nature as an investment. Unlike stocks, bonds, or any other investment alternatives, real estate has been proven to be extremely resilient amidst any economic turmoil and less risky compared to the aforesaid assets.

According to research by AMP, values of Australian property have increased at a rate comparable to that of the share market since 1926 – an average of 11.4% per annum – despite a succession of wars, disasters, recessions and crises. It’s done so without the volatility of the equity market, thus making it a very safe investment choice.

It’s easier to research than equities

Playing the stock market requires a lot of education. You have to understand how the system works, understand the complex world of trading (which also involves dealing with the various consultants, brokers, banks and fund managers). On top of dealing with various parties, it is imperative that you fully understand the companies on the market – which involves researching and analysing the financial press, annual reports, financial sheets, company releases amongst many others.

Investing in property, meanwhile, is much simpler: at its most basic, you can simply jump online and start looking at properties. Of course, there is more to merely choosing a property. However, comprehensive market research materials are easily obtainable online with a wide array of opinions by experts as well. Simultaneously, its physical nature will allow you to simply visit the property and make a decision for yourself.

It suits your investment strategies

Real estate is an amazing asset which suits the investment appetite of any investor whether you are extremely conservative or bullish. Here are some common strategies:

  • Long-term capital growth

Looking to build a retirement asset? Long-term increase in value is the most effective way to do this. Property has historically proven its ability to deliver capital gain provided you select the right area with correct supply / demand ratio and demographic. Choosing properties in the downtown core region of any countries have always been a sure-fire method.

  • Positive steady cash flow

Need a constant stream of extra money without much effort? Choose properties where there are available tenants, and just enjoy the steady stream of extra income monthly (make sure the rents outweigh holding costs though).

  • Buy low, sell high

Noticed a rundown place with development potential? You can simply purchase, renovate, subdivide or redevelop and create value out of thin air even through a simple paint job– unlike other asset classes. Buy cheap, sell high!

100% control

Upon acquisition, you directly own the asset and you have complete control over it (assuming, of course, you can keep up the mortgage repayments, otherwise the various parties involved would take over control your property then). Playing by the means that you can influence both asset worth (by adding value) and cash flow (e.g. by raising the rent) directly – something that’s nigh impossible to do with shares in a company.

You have the freedom to design!

Due to the physical nature of real estate as an asset, you are able to design your own property to your liking! From the external to the interior design, there is a high degree of freedom (within the legal permits) to create your own image of your property.

However, do keep in mind that your design also affects the value of your property. For instance, as mentioned earlier, buying an old property and upgrading the interior and exterior by manners such as repainting, putting in new carpets, or renovating the rooms or toilets is bound to increase the value of a property.

Price is flexible

The thing is, if you buy a share, you buy it at the market price at that time: there’s no scope to negotiate. You buy it as it is. There are no room for negotiations whatsoever.

However, in the property market, it’s exactly the opposite: buying and selling is all about negotiation. If you are a smooth talker, this is the asset game for you, Anyone can use their negotiation skills to either buy or sell; equally, a motivated buyer could pay over the odds for the right property. There are also multiple sources to find undervalued properties, particularly deceased estates or mortgagee sales, or sales due to divorce. Such properties can usually be found at fire sales or property auctions as well.

As opposed to shares where all shares in the same company are sold at the same price and, in general, all the players in the market have similar knowledge for properties, one can utilise a wide array of skills, knowledge and contacts to improve one’s negotiation expertise and thus buy a property considerably below market price.

It improves your financial knowhow

Without a doubt, investing in real estate will improve your financial knowledge! In a different manner from investing in equities, real estate investing builds financial literacy in a more personal level. The initial simple act of saving for a deposit teaches financial discipline; planning for an acquisition will teach you how you can work the numbers to ensure the affordability for purchase, and once an investment has been acquired, ensuring that a healthy rental income and tax benefits not only requires some monetary dexterity, but also makes you more capable of managing your money.

Leveraging: Other people pay for your investment

Finally, when done correctly, you stand to ensure that your real estate investments will be automatically subsidised. How? It is all due to rental payments. Imagine investing into a property where there already is a tenant in the premise of the property. Of course, the tenant has to pay rental and this becomes a source of income for you. Now imagine, what happens if the rental income is the same as – or even better – is more than the operating costs of that property? Amazing isn’t it, you stand to break even quickly and earn nice profits on a very passive basis!

All-in-all, these are the 8 compelling reasons for why you should invest in real estate. However, to seal the deal for an extremely productive investment, never forget about financing – this is an important factor that can make or break your investment.

As such, it is important to contact an established local mortgage advisory company like Redbrick to ensure optimal results for your real estate ventures.

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For those living in apartments and condominiums, do you know what are your duties and responsibilities living in strata-titled properties? Have you heard of some of the by-laws on the use and enjoyment of common property as stipulated in the Building Maintenance and Strata Management Act (BMSMA)?

Last year, you might have come across news on the golden stairway on the 20th storey of a HDB flat in Balestier that sparked debate over whether it is art or vandalism. Ms. Priyageetha Dia, a fine arts student at Lasalle College of the Arts, spent five hours covering the steps next to the lift landing with gold foil, in which permission from relevant authorities was not sought and Town council says the student’s effort to cover HDB staircase in gold foil is ‘not permissible‘.

As a small city-state with scarce land and dense population, Singapore, like many cities worldwide, is faced with the twin challenges of accommodating population growth and rapid urbanisation. It is therefore, not surprising that there have been many vertical developments, especially with the Housing & Development Board (HDB) providing subsidised homes for over 80% of Singapore’s population. Such residents own, enjoy and are responsible for the upkeep of common facilities like lifts, car parks and corridors.

For private residential developments, common areas also include sport and recreational facilities such as swimming pools, tennis courts, gyms and function rooms. Since a large proportion of the population lives in strata-titled properties like apartments and private condominiums, it is essential to better understand the regulations relating to the maintenance of property and the management of strata-titled property:

Understanding the Basic Terms

Subsidiary proprietor (SP): This refers to a purchaser to whom the developer has transferred ownership of a unit, as shown on the strata certificate of title.

Management corporation (MC): The BMSMA empowers the MC of each development to control and manage the common property. The council of the MC is a representative body of members elected from among SPs or their nominees, which will administer the day-to-day running of the strata development and is elected at each annual general meeting (AGM).

Managing agent (MA): A MC may employ the services of a MA to help the MC in the day-to-day running of the strata development.

Share value: The share value of a property is a figure that represents the proportionate share entitlement assigned to each strata unit in the same development. It determines:

(1) the amount of contributions for maintenance that an owner has to pay to the management corporation of the estate for maintaining the common areas in the development;

(2) the voting right of a unit owner; and

(3) the share that an owner has in the common property, which is jointly owned by all the owners in a development.

Resolution: Resolutions are decisions made by the MC. Owners can decide for themselves how their estate should be managed through the passing of resolutions e.g. Resolution by Consensus, Comprehensive Resolution, Unanimous Resolution, 90% Resolution, Special Resolution and Ordinary Resolution.

  1. Maintain your own unit and its exterior features

First of all, what are exterior features? Such examples include permanent fixtures that are part of the exterior façade of buildings, like the openable windows and pipes in your unit. It is your duty to maintain your lot and exterior features exclusively used by you. Failure to do so will potentially cause others to have injuries, or damages to property. As the Act covers potential as well as actual damage, you may face severe penalties — including a fine and jail (see Section 9 of BMSMA).

  1. Seek approval when you make any improvements and additions to your unit

This applies to improvements and additions that may result in an increase in the total Gross Floor Area (GFA) of the entire development. In such cases, you are required to apply to and obtain a 90% resolution from the MC (see Section 37).

Examples of such works include roofing a private enclosed space and putting a slab over a void in a unit. Depending on the type of work done, you may also be required to obtain the consent of other approving authorities like the Urban Redevelopment Authority (URA).

  1. Be aware of the compulsory by-laws and other by-laws made by your MC

The BMSMA contains a set of by-laws whereby every MC is required to adopt. Essentially, by-laws are rules that you have to abide by when living in a strata-titled development.

In addition to the compulsory by-laws, MCs are allowed to make additional by-laws, pursuant to a Special Resolution. However, such additional by-laws must be consistent with the existing by-laws indicated in the BMSMA (see Section 32). Under the current regulations, the following are some of the compulsory by-laws that have been provided for:

Noise Do not create any noise that may disturb other residents.
Parking of vehicles Do not leave or park your vehicles in any common property without the approval of the MC.
Obstruction of common property Do not stop or interfere with the lawful use of the common property by other residents.
Damage to lawn, trees, shrubs and other plants Do not damage any lawn, garden, trees, shrubs, plants or flowers on the common property; do not use any part of the common property for exclusive use without the approval of the MC.
Alteration or damage to common property Do not mark, paint, drive nails or screws to any structure that is part of the common property without the permission of the MC. However, you may install locks or other safety devices to prevent intruders or animals from entering your property or harming people in your unit, provided that such devices look the same as the rest of the building and you have to be responsible for its maintenance.
Depositing rubbish and unwanted items on the common property Without the permission of the MC, do not deposit rubbish or unwanted items (such as discarded sofas) on the common property.
Drying of laundry Without the permission of the MC, do not hang your laundry anywhere other than designated areas, as to be seen from outside the building; do not hang your laundry for more than a reasonable time.
Storage of flammable liquids Do not store flammable chemicals, liquids, gases and other hazardous materials in your property or the common property without the permission of the MC other than those needed for domestic use.
Keeping of animals Do ensure your pets (if any) do not annoy other residents in your estate.
Proper use of lot Do not use your property for any purpose (illegal or otherwise) that may adversely affect the reputation of the estate.
Change of use of lot Do inform the MC if there is any change of the use of your unit, and seek approval from the relevant authority.
Prevention of fire and other hazards Do not behave in such a way that affects fire safety or creates a hazard or danger to others; do not display or place any object on or by any window, balcony or outside your unit in a manner that is likely to cause damage to property or injury to life.

Lastly, as an owner of your unit and for a fee, you have the right to request for information (e.g. the name of your estate’s MA and the names and addresses of the office bearers of the MC) from your MC. If you are keen on knowing more about your MC’s operations, you are also allowed to look at the records of the MC such as the minutes of general meetings of the MC and the council, books of account, other records or documents under the custody of the MC.

How many of these regulations were you already aware of? We hope that this article will provide you with a better idea of the BMSMA and some things you can take note of. After all, when living in a strata-titled development, it costs nothing to ensure a friendly and safe neighbourhood, as well as to live in harmony with others.

“A good neighbour is a fellow who smiles at you over the back fence, but doesn’t climb over it.” — Arthur Baer

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International investments of residential properties are undoubtedly becoming more popular. More often to collect extra rental income or capital appreciation rather than occupying the property, there is an increasing number of Singaporeans who seek to purchase overseas properties. If you are one of them, here are some key considerations to ponder:

Trusted Property Management Partners

An important yet constantly overlooked key consideration is the partnership with a property management company. It is essential to seek expert advice and assistance with regards to overseas properties. As such, there is a need to engage an established company to assist with issues such as leasing, facilities management as well as provide tax advice amongst others, in order to ensure minimal complications, maximise cost effectiveness as well as rake in a clean amount of net operating income.

Currency Risk

The fluctuations of a specific foreign country’s currency value against the Singapore dollar is one that must always be considered. The real estate market or economic climates of a country, of course, are the other key factors that may affect the projected value of an overseas property investment. However, any appreciation or depreciation of the foreign currency will also affect the overall returns from the investment due to its fluctuations. Hence, it is important to always keep track of the movement of a country’s currency value.

Taxes and Fees

Various countries differ in their forms of taxes and fees, as well as the amount payable for each of them. Prior investigation of these factors is absolutely important before making a decision to purchase, as the differences may be huge. For instance, property stamp fees in Singapore may be capped at $500, however, stamping fees in Malaysia has no cap and merely based on contract value (just to give you an example, there is a common possibility of paying about S$20,000 for a million dollar property)! As such, it is highly recommended to do preliminary research on the possible costs incurred while determining the required returns from the property.

Loan

Another factor that should not be taken for granted is the mortgage. The process of financing an overseas investment may not be as easy as it seems. Singaporean investors are much less likely to obtain financing from the foreign country that they seek to invest in.

Henceforth, the purchase of an overseas property is usually financed by a local Singapore-based bank, or fully purchased by cash. Nevertheless, this may still prove to be a much viable option due to the fact that loans in Singapore typically charge lower interest rates as compared to loans from foreign banks.

Location is also important in obtaining an attractive loan package. Investments in properties within developed countries (such as London, Australia, etc.) have been proven to be easier in obtaining financing as compared to developing countries (such as Cambodia, Myanmar, Malaysia, etc.) due to the level of stability of the respective countries’ economies.

However, even within a country itself, banks will further scrutinise the specific location of the asset. For instance, residential properties within Zone 3 of London are less preferred by banks as compared to properties in Zones 1 and 2, that are regarded more of a ‘safe haven’ due to their close proximity to the city center and ever-present high demand.

Exit Plan

A proper exit plan is very crucial in ensuring the success of an overseas property investment. Always have a specific target group of buyers within a specified period of time. One tip is to buy what the locals would, and can afford to buy – to ensure that the property can be disposed easily.

At the same time, beware of the presence of capital gain taxes – there is a possibility that the shorter the holding period, the higher the tax payable should you decide to sell it off.

Strategy

Finally, when it comes to buying an investment property, what’s your strategy? How do you know if the asset you are going to put your money in is worth investing? What are your investment objectives?

It’s more than strolling into a hotel ballroom on a Sunday afternoon and making your purchase on a whim while enjoying the free refreshments provided. Many a time we let our “gut feeling” get the better of us, no thanks to the promises of emerging markets and fancy amenities.

Most investors fail to realise that what they really need is just good old fashion experience – with no hidden agenda nor conflict of interest. And that’s where Complete RPI comes in.

What can you actually afford? What is the net return after all costs allowing for void periods, service charges, disproportionately large agency fees and shifts in interest rates? Fear not, because we give our clients a realistic overview of the huge commitment they are about to take on, answering questions that actually matter.

We understand the desire to acquire a shiny new apartment, but at the end of the day, these investments do not come with guaranteed returns. Instead, we’ll propose to you a mix of investment opportunities for both capital growth as well as yield, to diversify your portfolio and spread your risks.

With access to the entire UK market, Complete RPI does not simply tell clients what they want to hear. Instead, we acquire properties with tenants in situ (i.e. the property is currently tenanted), guaranteeing rental income. Some of these properties have ongoing corporate rental agreements for 3, 5 or 10 years; on top of that, some of these properties may require refurbishment, where the value can be further enhanced.

If that does not convince you, then surely this will: exclusive access to your property portfolio via your personal property portal that we will asset manage. While current features include the ability to review financial performance, inspection reports, management statements, invoices and expenditure, we are constantly updating and improving the system to serve our clients better. Trust me, you’ve got to try it for yourself.

Ask yourself:

  • Have you received totally impartial advice when it comes to UK Property Investment?
  • Are you happy with your UK property agent?
  • Has your UK investment property increased its rental income significantly over the past few years?
  • Does your UK investment property have a 98% occupancy rate?
  • Did you realise that you can release equity from your UK investment property?

If you answered NO to any of the above, please contact us – Complete RPI makes YES a common factor!

Click here to find out more about asset management for your UK property portfolio today.

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If you were to flip through any newspaper, or to scroll through any newsfeed on your devices, there is a high chance of you coming across some kind of news about en-bloc sales in Singapore.

With all the en-bloc craze and your friends going on and on about their hopes for their homes to go on en-bloc, what exactly is en-bloc?

What kind of developments are sold in en-bloc sales?

  • Sale of the entire strata development
  • Sale of entire property (non-strata development)
  • Sale of adjoining properties together
  • Combination: Sale of strata and property together with adjoining properties.

Thus, in collective sales, the main essence is to combine units or parcels of land to make it more attractive for developers to purchase. It is because ultimately, the developer can build on a larger plot of land, which has more possibilities for development.

How does the en-bloc process start?

There are a few major ways to kickstart the en-bloc process.

  • Owners of a development come together to sell their units collectively through the en-bloc process, instead of selling their units individually in the resale market
  • An asset management fund gives the owners of the development an offer to en-bloc the property
  • Developers give owners of the developer an offer to en-bloc the property

Support and Objections for En-bloc sales

Amidst all the talk on en-bloc, you probably would have heard of disputes between disagreeing neighbours who go absolutely bonkers over whether their development should go for en-bloc or not.

Why do some neighbours pray for en-bloc every night, while others seem to only agree over their dead bodies?

Why do some neighbours support the en-blocs of their properties?
  • Physical State of the property

For one, the property may be old, and has been standing for more than 30 years. This means that the maintenance cost needed for the upkeep of the building will be much higher for the residents.
For instance, the wires may be corroding internally, or the development may be facing water seepage problems. Common property like lifts may also be mal-functioning, which will probably irritate many owners and potentially cause safety concerns.

Residents may end up having to fork out $50k to $60k to change the lifts, or even up to $100k in larger developments.

Thus, some owners have the view that, no matter how much money you pay, serious problems in aging properties cannot be fixed. So they would rather sell it than to continue holding onto the property for investment.

  • Remaining Lease on the Property

Another factor is the property’s remaining lease. Some of the properties may have been bought on a 99 year lease. Say the property has been standing for almost 60 years. Simple math will tell you that the owner would only have about 39 years left on the lease.

Because of this, some owners may have difficulty getting bank loans or withdrawing their CPF because of the remaining lease on the property.

Some of the owners will thus want to upgrade to another property with a fresh 99 year lease. What better opportunity than an en-bloc sale?

  • Potential for Profits

A collective sale may also mean potential for profits, especially if the plot of land your development is sitting on is especially attractive to developers.

For example, you live in an old condominium with blocks that are only five storeys high. You probably stand a good chance to get earmarked for en-bloc as developers can profit from it! Developers can demolish the five-storey blocks and replace then with twenty-five storey blocks to make some big bucks.

In a strata development that has common property like swimming pools and gyms, you are not only selling off your individual unit, but the common property to developers as well!

Some property owners who may have bought their properties at higher price will see this as a chance to recoup back some of their losses or to finally break even.

Why do people object to en-blocs of their properties then?

At the other end of the spectrum, there are also reasons for home owners who are adamant on the idea of en bloc.

  • Sentimental Reasons

Some people refuse to let go of their property due to sentimental reasons. It may have been the house where they grew up in, or the place where they have formed many happy memories with their loved ones.

There was even a case of a widow, who refused to agree to the en-bloc as she claimed that the spirit of her late husband would not be able to find her if she was forced to move out because of the en-bloc.  However, the development, Eng Lok Mansion, managed to get a sale’s order at last.

  • Difficulties finding a suitable replacement home

After your property has been sold at the en-bloc, you will have to go through the process of sourcing for and setting up another new home for yourself.

In areas like Katong where there are a few en-blocs going around the area, you will probably face difficulties getting a replacement property in the same vicinity.

They may be some features of the property and location that owners do not want to give up.

Mr Soh Ee Shaun of Dairy Farm Estate in Bukit Timah, was one person who was against the collective sale of his estate. Although the price giving was highly tempting, the proximity to nature and wildlife around their estate was not something they wanted to give up.

  • Costs associated with finding a new house

While developers may have given you an attractive price, it will be wise to first benchmark it against what you have to pay for similar units in the market.

Some extra costs associated with buying a new property include stamp duties, legal costs, and renovations. After adding up all the costs, some people may find that the trouble may not be worth it after all.

Do you think your house may be shortlisted for en-bloc? If your home has been selected for en-bloc, will you be part of the team that agrees or disagrees?

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This is the continuation of a two-part series. If you have not read the Part I of this series, which we talked about Singapore’s public and hybrid housing types such as HDB flats, ECs, DBSS flats and HUDC flats, you can find out more about them here. In this segment, we will be focusing on the types of private residential properties in Singapore, which include both landed and non-landed.

PRIVATE HOUSING

Generally, private residential properties can be divided into two main categories: non-landed and landed property. Private housing can be freehold, 99-year leasehold or 999-year leasehold. As opposed to HDB dwellers, residents of non-landed properties get to enjoy community living with shared facilities such as a swimming pool, and such properties can be owned by foreigners — instead of being restricted to just citizens. Landed properties, however, have some restrictions on foreign ownership whereby foreigners are not allowed to own or purchase, except those in Sentosa Cove.

Non-Landed

(i) Condominiums

Condominiums are private housing developments guarded by security and equipped with a range of shared facilities, which may include but not limited to tennis court, squash court, gym, function rooms, BBQ pits, swimming pool, etc. The minimum plot size for such developments is 4,000 sqm; they can come in the form of studio units, penthouse units, individual houses or multiple-room units. As with all high-rise buildings, the higher floor a unit is at, the higher price it will command. This is because higher units offer better view, and practically, it will also have less noise, more wind, better air, etc.

(ii) Apartments

Apartments are similar to condominiums but they may or may not come with shared facilities and lifts. In addition, the minimum plot size for apartments is 600 – 800 sqm, much smaller than that of condominiums. Private apartments are more expensive than HDB flats, but they are more affordable as compared to private condominiums because private apartments usually have less generous recreational facilities.

(iii) Walk-ups

Walk-ups refer to a condominium or apartment that does not have a lift or elevator. Being low-built, it is very convenient to reach one’s unit as residents do not have to climb the stairs extensively. In this case, the lower the floor, the higher the value of the unit due to the greater accessibility it offers.

Landed

Landed properties are very costly and require high maintenance. Their prices vary depending on many factors such as the plot size, location, land title, etc. Despite their hefty prices, they are often everyone’s dream house as landed properties are generally unrivalled in terms of privacy, spacious living quarters, personalised abode, massive gardens, unrestricted developments in your own land, and even pools.

Property Type Plot Width (min) Plot Size (min)
Good class bungalow 18.5m 1400sqm
Other bungalow 10m 400sqm
Semi-detached house 8m 200sqm
Back-to-back semi-detached house 10m 200sqm
Terrace house I (intermediate units) 6m 150sqm
Terrace house II (intermediate units) 6m 80sqm
Terrace house II (corner units) 8m 80sqm

An overview of landed properties and their plot size

(iv) Terrace Houses

Source: Luxushills

Terrace houses, also called linked house or row house, are usually built together with at least 3 units joined by a common wall. While joined, each terrace house is a property in its own and has its own walls and roof.

The minimum width required is 6m, or 8m for corner terraces — which are the first and last units in a row of terrace houses joined by only 1 common wall. Corner terraces usually cost more since they are more spacious in comparison with intermediate units.

(v) Semi-detached Houses

Source: Toh Avenue

For a property to be referred to as semi-detached (aka Semi-Ds or Duplex), it has to be sharing a common wall with its adjacent unit, and with a minimum plot size of 200 sqm. They are pairs of properties separated by a wall partition, each with identical measurement and layout. Some examples are semi-detached bungalow houses and semi-detached terrace houses (also known as a corner terrace).

(vi) Detached Houses (Bungalows)

Detached houses or bungalows do not share common wall with another property; they are one of the larger estates amongst landed properties. Due to the fact that no other estate is in some way connected to a bungalow, such a freestanding detached house will offer utmost privacy and exclusivity for homeowners.

With a minimum plot size of 400sqm, bungalows can be built as single storey, double storey or even higher. Note that the maximum site coverage for bungalows is 40%, while 2-storey mixed landed and 2-storey semi-detached housing can be up to 45%.

(vii) Good Class Bungalows (GCBs)

A GCB is a freestanding house within a plot of land, and is definitely not sharing a common wall with any other landed house. Its minimum plot size is 1,400 sqm, which means that if a standalone property is built on a land parcel larger than 1400 sqm, it is considered as a GCB. Furthermore, GCBs are located in prime locations and must be in one of the 39 GCB Areas (GCBA) designated by the Urban Redevelopment Authority (URA).

GCBs can have up to 2-storeys, excluding the basement. However, the maximum site coverage for GCBs is 35% i.e. a GCB must not take up more than 35% of the plot size.

In land-scarce Singapore, there are only about 1,000 known GCBs. Coupled with the large parcels of land and amenities such as car parks, gardens, swimming pools, etc, this type of housing is very desirable and highly sought after by the affluent individuals in Singapore.

(viii) Cluster Houses

Designed to incorporate the convenience of condominium facilities such as swimming pools, gyms, etc into the privacy and spaciousness of landed properties, cluster houses are rare but definitely on the rise in Singapore. What’s more, they can be a mixture of terrace, bungalows, or semi-detached.

(ix) Shophouses

Shophouses are rows of low rise buildings with narrow frontages but deep rears. It is a special type of terrace house, which is typically two or three stories high. In the past, shophouses were a hybrid of a commercial shop at the ground level and residential living on the second level. Today, most shophouses have been refurbished and transformed into homes and offices.

With distinctive layout and historical significance, shophouses are popular among those who have a keen artistic eye.

(xi) Conservation Houses

This type of property is rare in the open market and usually cannot be found on the ads. Protected by the Singapore law, conservation houses often have a unique mix of exquisite architecture, history and culture, which are conserved to its fullest state with its traditional facade maintained.

Source: URA

SUMMING UP…

From basic public housing meant for senior citizens, quality yet affordable HDB flats for families, to the most desired semi-Ds, up to the luxurious GCBs — have you decided which one to purchase for your first home, to invest or upgrade your current property?

Want to find the best mortgage rate in town? Check out our free comparison service to learn more!

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The post 20 housing types in Singapore — Do you know them all? (Part II) appeared first on Redbrick Mortgage Advisory.

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