My Glendale Property Update

I have been busy looking after my new born, hence didn't have time to blog. He is almost 8 months old now haha.

To do a recap, I and my wife bought a unit at Glendale in 2019(full article here). Its a freehold two plus one study with three toilets and an enclosed kitchen. We bought it then at S$1,147 psf. We are still renting out this unit. We paid majority of it in cash and took a 400k loan.

As of June 2022 Glendale transacted psf is around $1,485-$1,546. This means a capital appreciation of around 35%(S$412k capital gain). This capital appreciation is likely due to a few factors:

1) Neighboring new 99 years development had a large price gap and is evening out

2) Inflation, causing commodities used for construction like steel and cement to rise creating a high base sell price for developers

3) A 20-25% rental rate increase due to rising mortgage rates and property tax

Rental index showing a very obvious uptrend for the whole island with RCR and OCR leading the rise. For me, there were no vacancy days, rental demand is strong and rental rates has been increasing for every renewal. The latest ura rental data for my unit size is around 3.5k to 3.8k(which is close to 4% gross rental yield) now and tenants are locking in two years for fear of further rental hike.

I was lucky to have repriced my mortgage rate with DBS last year to a 5 years fixed 1.5%

With US inflation data quickened to 9.1%, home loan rates here will likely stay high. Property assets in theory often acts as a good inflation hedge since there will always be a demand for homes, regardless of the economic climate, and because as inflation rises, so do property values, and therefore the amount a landlord can charge for rent. Because real estate is a tangible asset, the negative aspect of it is that its illiquid. 

This rise in home loan rates will likely decrease demand for homebuyers, but this is counteracted by the sharp increase in rental rates. Hard to predict the future but property asset is not an asset to time for the short term. With tdsr, ltv, absd and seller stamp duty in place coupled with more than 10 cooling measures, the government is in a good position to counteract any shock in the property market. Own view.