A few days ago, just before the 8th cooling measures was implemented, I made a bid for a property which I think has about 50% upside at least in the next 5 years. In fact I thought it would double in price over 5 years. The seller told the agent he was sincere. The agent in turn told me that if I matched the seller's asking price, I would 100% get it.
Now I never, as a matter of principle, start bidding at what the seller's asking price is. Nobody does that. I always bid around 5 to 10% lower than asking and slowly move up. The agent however, assured me that the unit is definitely mine if I bid 0.5% below the seller's asking price! I was highly suspicious that the seller was merely playing with me, wanting to test how much his house is worth. If I meet the asking price I could probably end up paying higher than that! However, I decided to give it a try to bid 0.5% below the asking. After all, even at the asking price, I knew my returns would still be around 100% over 5 years.
True enough, the seller sat on the cheque until the new measures kicked in! Then he gave the excuse that the measures meant he could not buy another house! What rubbish.
If Singapore's residential properties fall 5 - 10% in the next 3 years, I will be the last one laughing. The seller could have cash out on me, keep his cash and buy back in 2014!
I now have decided to give up looking for residential properties for the time being. I will focus on overseas properties, or even commercial units. I don't like offices in Singapore due to oversupply. Industrial doesn't have supply issues but the prices have risen so much that rental yields are now at record lows.
The other option is to go for overseas properties like the UK, US or Australia! I can get 6% gross yield in London easily, and 4% net. In Australia, probably 7 or 8% gross yields. My borrowing cost for Australian properties are in SGD or USD at much lower interest rates!
