40 year old with $200,000 salary a year – Buy stocks, real estate or REITs? Singapore private property a good buy?

So I received a very interesting question on whether Singapore private property is a good buy:

Hi FH,

Happy new year to you. I have a couple of questions regarding investments (equities vs properties). Before that, some background about myself:

• Turning 40 in 2026 (i.e. not many years left for housing loans)  [Sidenote: Loan can only stretch until 65 so this means a 25 year loan thereabouts max]
• Annual income around $200,000; will grow steadily about 4% PA but will not skyrocket. Stable job with low risk of retrenchment.
• Current investments: Around $200,000 in US stocks (individual stock picks), $200,000 in reits. Have safe funds for a rainy day parked in SSB of about $150,000. 
• CPF: SA and MA maxed, $140,000 in OA. No debt; housing covered by spouse.

I read with interest your latest articles on value in markets in 2025. I hold a similar view and have turned cautious in how I invest, and hence was planning to DCA into US/Global ETFs in the new year, using both cash as well as my OA. I had considered investing in a private property, but back-of-envelope calculations I did up showed that (less all expenses including agent fees, BSD etc, as well as opportunity cost of cash/CPF locked into the purchase (assuming 5% return PA)), indicated that breakeven point at 5 years required a 12.5% appreciation – hence I was not so much in favour of this option. 

However, you did a recent article on someone who had a high-income in which you suggested that the person could consider diversifying into a private property, the key being the ability to leverage, and hence I am reconsidering this option. 

Hence my questions are:

• How do you think private properties as an investment could fare vs other asset classes in the mid term ~ 5 years?
• Given my background, would you recommend diversifying into a private property? In order not to eat into my safe funds, I would have to pause/stop/reduce plans to DCA into US/Global ETFs.
• What are some of the factors that myself/someone in a similar position would need to look out for?

Appreciate your views. I would be open to you giving your reply as an article.

Sorry, to add an additional question. Runaway home prices in the public housing sector is obviously a big concern for the Government. Do you see an increased chance of policy changes that may affect the returns from properties as an investment?

A lot of interest in Singapore property recently? Is this good or bad?

There seems to be a lot of interest around Singapore property of late, because here’s another question that I got recently:

Hi FH, thanks for sharing your thoughts! Curious to know how you think about Singapore residential property as part of a target asset allocation, given the macro trends?

Depending on how you see it, this can actually be a contrarian signal.

Because when everybody gets very bullish on something, it usually means that the marginal buyer no longer there, and could suggest we are close to the top.

But no doubt this is anecdotal at best, so let’s take a closer look at the data.

Recent property price trend in Singapore is very strong

Recent property prices continue to be very strong.

Here’s the latest flash estimate from URA (emphasis mine):

The flash estimate of the private residential property price index increased by 2.3% on a quarter-on-quarter basis in 4th Quarter 2024, bringing the price gain for the whole of 2024 to 3.9% … This represents a moderation from the increase of 6.8% in 2023 and 8.6% in 2022. Sales transaction volume increased by about 25% on a quarter-on-quarter basis in 4th Quarter 2024, in tandem with an increase in the number of units launched for sale by developers. Nevertheless, for the whole of 2024, sale transaction volume fell by about 14% compared to the annual average volume in 2021-2023.

That’s very strong price action – a 2.3% increase quarter on quarter in the fourth quarter, in a year where the price gain was only 3.9%.

Effectively meaning that the bulk of the increase came in the fourth quarter.

Here’s the price index in chart form.

You can see how the sharp increase in the fourth quarter wiped out the decline in the third quarter (okay you do need to zoom in a bit my apologies).

How do you think private properties as an investment could fare vs other asset classes in the mid term ~ 5 years?

But that’s backward looking price data.

What about the outlook for property prices going forward?

Morgan Stanley seems less optimistic on real estate prices in 2025

There’s an interesting piece from Bloomberg recently:

Here’s the full article, emphasis mine:

Singapore Faces Risk of New Property Curbs, Morgan Stanley Says

• Government cooling measures could contribute to 5% price drop
• Spike in housing prices partly triggered by speculative buying

A spike in housing prices, partly brought on by speculative buying, could prompt the government to issue more cooling measures, according to a Morgan Stanley research report.

Singapore’s housing rally will spill into early 2025, underpinned by investors looking to buy and cash out before the apartments are completed, analysts led by Wilson Ng wrote in a 6 Jan report.

That’s increasing the chances of the government rolling out more curbs to cool the market. Combined with an influx of supply, it could lead to a 5 per cent drop in prices this year, the analysts said in a separate report.

The investment bank joins a growing chorus of analysts expecting more government action. The city-state’s ruling party is gearing up for an election year, at a time when housing affordability has been a major concern for voters.

Singapore’s private residential prices jumped 2.3 per cent, the most in a year on a quarterly basis, according to preliminary estimates released last week. Citigroup Inc and Barclays Plc are among banks that have warned of potential curbs.

If rolled out, the new policies “will more likely involve raising seller stamp duties” instead of focusing on buyers, analysts led by Ng wrote, adding that such moves would be more effective at nipping speculative buying.

Morgan Stanley said buyers who flip units were getting an average 21 per cent in profit in 2023 to 2024, higher than historical levels in preceding years, which likely added to demand.

Pretty interesting views from Morgan Stanley if you ask me.

My personal views? Where are Singapore property prices headed?

Let’s put together what we know.

We know that price has rebounded strongly in Q4 2024.

We also know that generally speaking, the inventory of private residential units currently available is not overwhelming:

There is supply coming online in the next 1 – 2 years, but generally speaking I would not say it is a huge flood of supply:

Meanwhile, ABSD rates means that it has become prohibitive for foreigners, and any Singapore Citizens / PRs to buy more than one property each.

Knowing all of the above, what would be my views on Singapore residential property?

For what it’s worth, this ventures well into speculative / forecast territory, so do take this with a healthy pinch of salt, and as always I do not have issues changing my views on a dime if the facts change.

Gun to my head, I would say that because demand and supply look generally balanced, base case I would assume a slow and steady increase in prices over a 5 year period.

BUT – the big caveat being that if there is government intervention like Morgan Stanley talks about (whether via more cooling measures or by increasing supply), then all bets are off.

I know the reader also asked how likely is government intervention, but boy I think that’s a really hard question.

I would say if prices get out of control we’ll probably see intervention like Morgan Stanley suggests, but if prices stay flatt(ish) then that’s a much harder call.

Follow Financial Horse to avoid missing any post!

• Telegram Channel (or Telegram Group)
• Facebook
• Threads
• Instagram
• X (formerly Twitter)

Invest in stocks vs invest in private property?

There was a paragraph in the reader’s question that caught my eye:

I read with interest your latest articles on value in markets in 2025. I hold a similar view and have turned cautious in how I invest, and hence was planning to DCA into US/Global ETFs in the new year, using both cash as well as my OA. I had considered investing in a private property, but back-of-envelope calculations I did up showed that (less all expenses including agent fees, BSD etc, as well as opportunity cost of cash/CPF locked into the purchase (assuming 5% return PA)), indicated that breakeven point at 5 years required a 12.5% appreciation – hence I was not so much in favour of this option. 

Okay I didn’t check the numbers so I’m just going to take it at face value.

But assuming a 12.5% appreciation in property price over 5 years to break even.

That works out to a 2.5% appreciation in the nominal real estate price each year.

And that’s just to break even vs parking the funds in a CPF-OA account earning 2.5%.

Is it worth all the effort and risk?

Of course, if you get it right and property prices go up, you could be sitting on even bigger gains.

But on the flipside, if you get it wrong and property prices decline, you could be sitting on paper losses.

What are some of the factors that myself/someone in a similar position would need to look out for?

How long are you looking to “invest” in the property for?

I think if you want to buy property today, and target to sell it for a profit in 5 years time.

The results you get may just come down to a coin toss.

Maybe you get it right by picking the right launch / property, and you make a profit.

Maybe there are indeed cooling measures like Morgan Stanley suggests, or maybe you pick poorly, and you lose money.

The way I see it, if you want to buy property today, it’s much better to take a longer term 10 – 20 year view.

Over such a period of time, it’s pretty much going to come down to the macro factors of how Singapore’s economy evolves, and less so the day to day supply demand dynamics.

How familiar are you with stocks?

Level of sophistication matters too in my view.

Stocks (especially if you are investing a great deal in US stocks) carry a significantly higher amount of risk.

Risk management is key when it comes to stocks.

If you are sophisticated and know how to manage risk well, I think you could see pretty decent on stocks, and it may make sense to allocate more there.

But if you tend to be more of a passive style investor, and you already have a decent amount invested in the obligatory DBS / OCBC / CICT / Ascendas REIT (if you know what I mean), and still have a decent amount of cash left over, then property could be a consideration.

If you get what I mean.

For those who are keen, my full personal portfolio, including the stocks / REITs I am keen to pick up, are shared on FH Premium.

What would I do in such a scenario? Buy stocks, REITs or Property?

I think if it were me in this situation, I probably wouldn’t buy the property.

I thought the key difference with the other reader that wrote in a few weeks back was that the other reader was already sitting on $1 million in investments and $1 million in cash, and had very healthy $500,000 a year cash flow.

With that kind of fact pattern, I thought some additional exposure to property (and leverage) may makes sense.

But with the fact pattern above, I don’t know it just strikes me that there’s a less urgent need to deploy funds in a big way.

I would love to hear what you think though! What’s your outlook on Singapore residential property, and do you think it is a decent time to buy?

This post is written on 10 Jan 2025 and will not be updated going forward. My latest views on markets, my Stock watchlist and full Personal Portfolio, are shared on FH Premium.