The MAS is warning all Singapore property buyers to remain prudent on their purchases. It’s important to keep diverse investments to avoid financial hardship.
Rental Income on the Decline
The MAS notes that rental income is on the decline and suggests that investors look out for signs because they struggle with their mortgages and loans on their investment properties. Fewer people are interested in renting and there are far more vacancies than ever before. Interest rates are also down, which isn’t helping matters.
Rising Political Risks
The problems with the growth in the rental investment industry are partially due to new policymaking. There are more political risks than before, making it harder to implement effective policies to tackle the issue. The idea of being financially stable through investment properties is at a high risk.
Avoid Stretching the Finances
There was a time that stretching the finances for property investments was common. There was a good chance of getting the rental income until loans were paid off. This is becoming less likely now. With more vacancies, investors are struggling to pay off their loans and the MAS is suggesting that those looking to invest in other properties consider cheaper housing and smaller loans. Avoid stretching the budget and make sure loans can be paid back even if nobody is renting the property.
Banks have buffers at the moment, but they are already taking steps to manage the decline in rentals. The MAS suggests that property investors should do the same and diversify their income streams.