In the last few years, the Singaporean economy has been having a hard time because of high prices. Every investor has to come to terms with the fact that the rate of inflation is going up all the time. For this reason, people need protection from this silent killer that depreciate the value of money.
One good thing is that investing in real estate is one of the best ways to keep inflation down. You can also choose from resale condos, HDB, new launch condos, BUC condos, commercial shops, and industrial units when you buy a home. Houses get better with time, but this does not mean that they get better because they don’t. In fact, houses do wear out over time and need to be repaired, but they still beat the rise in prices.
There is a lot of money out there, so the value of the dollar goes down, which causes prices to go up. This is called inflation. Some examples: If the government prints more money, then a $100 bill will be worth as much as a $80 bill before the government did this. People often compare how much something costs now to how much it cost back then.
Everyone has to deal with inflation at some point in their lives. The only way to protect yourself from it is to be smart with your money.
The best way to fight inflation is to invest in real assets.
An investment in real assets that pay out real money will help you beat inflation. Of the real things that people like to invest in, gold is one of the most popular ones. Gold tends to rise in value during inflation, which is different from when the value of money goes down. Other good ways to protect against inflation are to invest in consumer goods stocks and commodities.
However, real estate is the best way to fight against inflation. If you want to make money when prices go up, real estate is always a good bet. You can’t have too much land, and the population keeps growing. This makes real estate a great way to protect against inflation.
Demand for land is always going up, no matter what the inflation rate is. The value of a home can also be affected by future projects in the area. So, an investor who thinks about the future of a place will make more money in the long run. You need to keep an eye on where the new MRT stations are in Singapore if you want to buy property there.
The government is very open when it comes to planning for new roads and bridges. Thomson East Coast Line, which is still being built, will be the most exciting thing about this. Properties like Thomson Impressions, Thomson Three, and Seaside Residences will benefit from this line.
Investment in real estate helps protect against inflation.
Inflation has a negative effect on most parts of the economy, but real estate is the only investment that behaves in a different way. It reacts proportionately to inflation. Rather than going down, the value of a home goes up, and rents also go up. Thus, it is a good idea to own your own home.
It’s one of the best ways to show how inflation affects prices if you look at how much homes cost in 2012 and now. An old house that was worth $100,000 now costs $180,000 or more.
Inflation not only affects the value of your home, but it also affects how much you pay for your rent. When someone rents out their house, it would make $1000 a month. However, rent prices went up by $100 each year because of inflation. If you are a landlord, this means more money in your pocket even if prices go up or down. Because inflation is a landlord’s best friend, it is clear that it is a good thing for them.
It also affects the cost of labor, the cost of materials, and so on when a new condo comes on the market. In the western part of Singapore, we show how Clement Canopy can be used as an example. Because it costs $615 per plot ratio, the price Clement Canopy needs to break even is between $1,100 and 1,150.
If you live in Eastern Singapore, the land bid price for Grandeur Park Residences is $761 per plot ratio. This means that the price to break even for Grandeur Park Residences would have to be somewhere in the range of $1,250 up to $1,300. Break-even price and land bid price will be different because labor costs, material costs, and so on will go up over time. This will make the difference bigger. Inflation means that buildings built today will cost more than those built a long time ago.
It’s important to note that inflation also affects taxes, income, expenses, and many other things that are linked to property, like how much money you make and how much you spend. However, if there is an increase in prices, property investors will benefit more because inflation is good for real estate.
When does it make sense to buy a home to protect against inflation?
If you start a real estate business at any price, it is never a good idea. Even though property is a good hedge against inflation, it’s never a good idea. Only if you buy property when the prices are right will it help you such as 33 Devonshire which sit right at the heart Orchard which expected to debut in 2022.
Even though prices are high, it makes sense to buy now even though the prices will go up in the future. It’s also a good idea to think about the property’s cost, because it can be hard to pay back bank loans. There will be a lot more risk and a lot more money spent if the price of the home is high. To avoid losing your money, you should buy what you can afford. Otherwise, you could lose all your money.
A look at how inflation affects housing loans
Now that you know that real estate is a good way to protect against inflation, it’s important to learn how inflation affects home loans. In Singapore, most people get a loan to buy a house.
Inflation has a positive effect on loans that people take out. During the time that the SGD is being borrowed, it is worth more than it is when the loan is paid back. This is because the loan amount isn’t adjusted for inflation, and the person who gets the money is the one who has to pay it back. There will still be an effect from inflation, but it will be felt through the rise in interest rates. Inflation always causes interest rates to rise at the same rate as they rise. Because of this, it costs more to get loans in the future.
To plan for inflation, how do you think about it?
Having a good plan can help lessen the effects of inflation, but no one can avoid it. Every investor should think about their finances in advance so that they can deal with the effects of rising prices. It is a good idea to think about inflation and plan for it so that you can save money. For example, when budgeting for their housing requirements, it’s a good idea to account for a rise in the cost of everyday goods. You should figure in a 5% increase in the prices of all food items every year.
During times of high inflation, real estate is one of the assets that can help you stay safe. Since Singapore became a country, the real estate market has been very good. It is expected to get even better now that new things like the MRTs are changing the landscape. To avoid inflation, you can make smart decisions about how to invest your money. When inflation rises, you can be sure that your money will be safe if you do a good job of budgeting and invest in real things like real estate.