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  • Writer's pictureDaniel Lee

2 Reasons Why Property Investing Is Not What It Used To Be In Singapore

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Let's talk about why property investing in Singapore is no longer what it used to be and why you should not rely on it in the long term for your retirement.


The reason why I am not a fan of residential property investing, in particular, getting a second property for your wealth accumulation or passive income, is due to the long-term demographic headwinds that will result in an oversupply of HDB resale properties thereby causing both properties and rental prices to remain depressed.


This can be explained in two points.


Firstly, in terms of supply, Singapore will eventually face a situation of oversupply of HDB resale properties as the baby boomer generation passes on while leaving behind their HDB flats with a remaining lease of around 40 to 60 years



As the HDB rule dictates, existing homeowners will be unable to inherit the properties that are left behind which will result in an influx of supply in the market thereby pushing prices down.



Even if the law were to be changed to allow ownership of 2 HDBs, the natural cause of action is for people to stay in 1 HDB and rent out the other thereby causing the rental market to be depressed.


Secondly, in terms of demand, given that Singapore’s fertility rate is falling, it is only natural that the local demand for residential property would be on a natural decline.



The solution to the demand problem can be easily resolved by bringing in additional foreigners but that by itself does seem unlikely as it is not politically favourable.


As such, even if the supply situation is to remain as it is today, with demand falling naturally, inevitably, prices will slowly come back down.


That said, if we were to combine both the demand and supply situation of Singapore’s residential market in the next 25 to 30 years, I find it unlikely that investors can continue to enjoy the returns that they had enjoyed in investing in property in the last 3 decades.


This is why I do not think that investors should rely on Singapore’s residential market as a wealth-accumulating or income-generating instrument, a better instrument would be REITs if you so choose to consider adding property exposure to your portfolio.

All of these can also be found in my eBook: “The Price Of Financial Freedom” which will provide you with a comprehensive guide to help you achieve financial freedom and live life on your terms in the shortest amount of time.


You can download a copy of it for free on my website:


If you do not know how to get started with your financial planning or if you do not have the time to manage your finances, you can consider engaging an Independent Financial Advisor who can help you make sense of the market, accelerate your progress and achieve financial freedom by 5 to 10 years earlier!


To find out more information about how you can benefit from my financial and investment planning services, you can check out what I do on my website here:


Daniel is a Licensed Independent Financial Consultant with MAS and a Certified Financial Planner (CFP®).


Connect with me on social media platforms to receive updates on future content! You can also slide into my DMs if you have any questions :)





 

Disclaimer:

This article is meant to be the opinion of the author

This article is for information purposes only

This article should not be seen as financial advice

This advertisement has not been reviewed by the Monetary Authority of Singapore


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