We are a couple from the Singaporean heartland living in Australia. This blog chronicles our emigration journey, and we hope the information here is helpful to other prospective emigrants.
It is also about anything else which catches our varied interests, hence the title :)
Exit plan: Selling or renting out your property in SG?
We've just received an Anonymous comment in this post. The commenter said:
"I am also in the process of migrating to Vic, Australia. Wondering which neighbourhood is safer. Will you be able to share?"
Unfortunately, if you were to ask us this very question about Singapore itself, or turn that question around and ask yourself this, could you give a very good answer? Apart from "avoiding certain Lorongs in Geylang". Maybe I'm slow, but I can't answer this question for Singapore. And by extension, I can't give a good answer for Victoria or Melbourne, as I haven't lived there before. I do have a friend with a lot of opinions and anecdotes on this, and would invite him to do a guest post if he's keen, but I don't feel that whatever I have gleaned from our conversations on this is definitive enough. All I can say is, take your time to recce for your 'permanent' home while you are renting - if your long-term plans are to buy. Remember that if a place is unusually cheap, there are often reasons. And whether for short-term or long-term residence, stay away from Housing Commission areas. Hope that helps.
The pleasures of Geylang... Image from Sixthseal.com
Now that comment is not the reason for this post. I'm posting because one of the questions we've frequently received as prospective emigres is: "So are you guys selling your place, or renting it out?" Usually, the asker wants to hear a certain answer, which almost invariably is the opposite of what we did.
Selling one's flat prior to emigrating is akin to burning the bridges and just a step below renouncing one's citizenship. It is a blatant vote of no-confidence in Singapore/PAP/Singapore Government/economy/one's personal decision to buy property in the past few months/not emigrate from Singapore... Etc. Anything which one wants to project onto our decision, they will. We can't stop them, and we don't care.
The view from our kitchen window...
Yes, we sold our HDB flat. We've mentioned it earlier in some posts which I don't deem relevant enough to dig up. But this is why:
1. Several months of attempting to rent out our property via online advertisements, with limited response.
2. Having to worry about and/or administer our rental arrangements back in Singapore remotely. Yes we could use an agent, but that eats into the revenue and can't completely eliminate the worry. Call us paranoid if you will.
3. Intel from reliable (to us, at least) sources that the world economy is going to shit, and by extension, Singapore's. Never mind who we elected as President, or that we have the world's highest paid Leeders. They will be among the first to tell us that the Singapore economy is very dependent on external factors, and they'd be exactly right this time. It makes no sense holding a Colonel Sanders lookalike to his election campaign mantra that he is fit to steer us through troubled waters, or that with the current team at the helm, Singapore will have smooth sailing throughout.
In short, you are pretty much on your own, you have to fight for your own lunch, nobody owes you a living, dig the spurs into your own bloody hide, meritocracy, yadda yadda... Hey, they did warn us!
And in case it isn't clear enough, this can - independently of any cooling measures our brilliant Gahmen can think of - lead to point 4.
4a. Intel from various reliable sources that the Gahmen is throttling back sharply on the influx of foreigners, who have been the primary driver of housing prices. Then again, maybe this can't be considered 'intel', it's more like news.
4b. Intel from reliable sources that the housing market was at a peak, and was looking at the next year or two's downturn. It seems to be happening already... This would make matters worse whether you decide to hold and sell, or rent out your property for the next few years, especially if you plan to emigrate AND own a HDB (which you have to sell if you intend to take up Aussie citizenship or buy property in Oz. By right lah. Not sure how many overseas property owners who also own HDB flats are found out...)
If you own additional or private property, you don't have this situation. You can have your 'escape plan' back in Singapore. But we don't, which brings me neatly to my next point...
5. Generating capital and liquidity. We are inclined to buy a place in Australia, if that makes financial sense. Even if we don't, there are safe options for parking our money in Australia and earning half-decent interest along the way. Much better than doing CPF top ups or any pathetic banking options we can get in SG. We are bracing ourselves for potential unemployment in Oz, and the S$1400-$1800 a month that we could optimistically earn from renting out our 3R flat isn't going to do a whole lot for us in Oz. At best it will help us maintain a subsistence-level existence. At worst we may lose this income if we lose our tenant, and then have to fly back to SG to sell our flat at whatever pathetic price we can get due to point #4.
If you have tons of money, this wouldn't concern you. But then, you probably wouldn't be reading this blog. After all, Singapore is an excellent playground for the rich!
6. A symbolic gesture of burning the bridge. This is a minor issue, subordinate to all the other reasons listed, and in itself insufficient cause to sell our flat. But it is a bonus that we have this means to demonstrate our resolve. I have no doubt that some people we know (I wouldn't describe them as friends) were not so much concerned for our welfare as emigrants, than for their own need to feel good with their own decisions - or indecision wrt migration. We do know people who are genuinely happy to stay in Singapore. Ironically, it is these people who do not seem to feel that our decision to sell prior to migration erodes their belief in this country, or in their decision to stay. Then, there are those who openly confess to being interested in migration, but have their own reasons for staying - I respect this group as well, and we have lots of healthy discussions. The worst are those who condemn our decision or get extremely defensive about their own choices, you guys should really wake up and smell a good cuppa of Australian coffee!
7. Rental income (if any) from SG is taxable in Australia. It's not so much that we refuse to pay the Aussie taxman, but it adds needless complexity to our financial affairs. All for what? S$1.4k a month? (bearing in mind that having this income means we do not get the lump sum from selling our flat)
Now that we've discussed our reasons for selling, who do I think should rent out their property instead of selling, and why?
a. If you have tons of cash and don't need to generate liquidity.
b. If your property is private, thus no ownership restrictions and you can freely buy Aussie property.
c. If your property in Singapore generates a good rental yield (whatever you define it as). You would of course need - and already have - a good tax accountant to sort out all your affairs in this regard because you are rich and have better things to do with your time...
d. You have an emotional attachment to Singapore, and see yourself potentially coming back in future. This could work especially if the property in question is not HDB. Then you truly know that you love SG and come back because of that, rather than being squeezed by the balls/tits/ovaries due to HDB regulations and unable to buy the Aussie dream house.
I still can't believe...
The problem with this post is that if you've only just read it, you've probably missed the boat. But if you are really keen on migration, now is the time to get yourself qualified. Take a course, brush up on your English. Do something useful to that end. Catch the next 'upturn' in the housing prices, because even a pessimist like me knows that's going to happen. In fact, I'm so sure that prices will eventually rise in the long term that I wouldn't want kids even if the baby bonus were $100k!
I know there could be some who disagree with us, but it's ok. The intel that we've got about the world economy might be false, that's ok too. Even if the property market skyrockets unexpectedly, good for those of you with property! I'd sure be kind of sore that I was wrong and cashed out at a wrong time, but at least there's some money to start a new life with, and really, that's all that matters for us.