Belgravia Villas – Buy Now or Wait?

With the recent round of massive new cooling measures, one of the most common concerns is “Should I buy now or should I wait for price to drop?”

No one is able to tell which direction price will be heading. Everyone you met gives you different opinions. Even industry experts have different points of view. So how should you decide?

Let’s look at some factors that have started to show signs of moving in one direction – northwards. Interest rates have been at all-time low for the longest time. We know that this abnormally low interest rate will not last forever. In fact, interest rate has shown signs of increasing in the near future.

At normal rate, mortgage interest rate has usually hovered around 3 – 4% p.a. versus current low of about 1.2%. It doesn’t really sound like much for a 1 – 1.5% rise but when you actually do a calculation, you will be shocked to see the huge difference!

With reference to the illustration (indicative price for Belgravia Villas) here, you can see two major benefits to lock in your decision now.

1)      Savings in interest – the illustration reflects a 1% increase in interest rate over three years, resulting in additional interest incurred in the first 4 years property holding period. Should the buyer commits to the same property at the same price three years later, he actually pays an additional $85,480 in interest! Even with property price dropping by a 20% (which is highly unlikely), he still pays additional $47,372! This huge amount of additional interest could be saved and be utilized more efficiently.

2)      Potential for a better gain – this example assumes capital appreciation due to inflation of property prices, without considering the cumulative inflation effect and other variable factors. High interest incurred drives up the breakeven price of the property four years later. In turn, eats into the capital gain. With prices dropping by 20%, even with a smaller absolute amount of interest incurred, it still affects the capital gain. And, because price has dropped significantly, it will take a longer period to rise to the same level. To hold out for a longer period means more interest will be incurred!

This illustration very clearly explains why one should seize the currently low-interest opportunity to buy/invest in a property and lock in the low interest rate now. If you are one of those who have been sitting on the fence, take action today and register for Belgravia Villas VVIP Preview now! 

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