Is now a good time to upgrade? Things to consider when moving up the property ladder

Much to consider when planning to move up the property ladder
By NG PAU LING
YOU’RE not the only one planning to move up the property ladder. In the first half of 2018, upgrader buyers make up the second largest group in the primary market at 32%, compared with first-time buyers who account for 43%, according to Rehda Property Industry Survey 1H2018 and Market Outlook 2H2018/1H2019.
So, is now the right time for you to step up to a better property in terms of size, location and price?

Should I buy or sell first?
Once you are mentally prepared to upgrade to a new property, the question you should ask yourself is buy-then-sell or vice-versa?
Besides pertinent factors such as financial status and holding power, you need to consider the market sentiment.
In a seller’s market, buy-then-sell is a better option. In a hot market occupied by buyers looking for property, it’s easy to find a new owner for your home. Also, as demand is higher than supply, buying before selling could prevent you from missing out on your dream home.
However, in a buyer’s market where supply is plentiful and prices are down, sell-then-buy could help to create a buffer period for the owner because it may take longer than expected to sell the current home at the desired price.
If the owner is financially able to hold on to the property, he could consider converting it for investment and wait for the market to recover.

Sell-then-buy
Pros:
✓ Clearly understand your budget for the new home.
✓ Cost-saving solution as you do not require to pay off two loans at the same time and increase the financial burden.
✓ The robust income from selling your current property could be the supporting element in securing the new home loan.
✓ Prevent yourself from accepting lower price offers on the existing property due to the selling pressure.
Cons:
✗ You may lose the potential capital gain if you sell the former home while still hunting for the new one.
✗ You may be forced to rent while you are searching for a suitable new home.

Buy-then-sell
Pros:
✓ Keep the old home as an investment property for rental income and capital gain.
✓ Avoid the transition period of renting while looking for the new home; it especially affects the elderly, family with children and owners with furniture requiring storage.
Cons:
✗ The risk of over-committing on the new home and overestimating the worth of the current property.
✗ In a slow or buyer’s market where the supply is plentiful, it may take longer to sell the current home.

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