Should you buy New Launch or Resales Condominiums?

Now that is a golden question, agree?

There is no definite answer and if an agent tells you to just buy a New Launch Condominium, I will suggest you flee quickly.

Why do I say that?

A property is traditionally for own stay, not for making money. If your own stay property happens to achieve capital gains, that will be a bonus because you would have stayed in the property ''for free'' and received a substantial amount of cash when you sell it. You should not assume that every New Launch property is the same.

So how does Capital gain happen?

1. Due to the location and the infrastructural development around it.
2. It is also due to the market forces impacting (demand and supply) that region.

With this in mind, does it mean that all New Launch Condominiums will achieve capital gains?

Generally if you take a macro view of the Singapore Property market, due to land supply scarcity, the Government's continuous rejuvenation of townships, the extensive MRT lines that brings shopping amenities, food courts and convenience to your door step; properties tend to appreciate in value over time.

However, the question is how long must you wait? And when do you sell it?

• If you sell too early, or during a buyer's market, you won't get much.
• If you sell too late, due to the decreasing lease of the property, you won't fetch a good price too. The buyer of your old property needs to invest in renovation or overhaul, therefore s/he will offer you lower prices.

Let's look at some details:

Some New launch Condominiums offer a shorter wait for prices to increase due to the developer's attractive and lowest possible special VIP price at the launch day. This is also why some stacks are released first. Those stacks tend to be either better ones offering a premium view or has certain additional features. Once the project is launched well, it is easier to market the remaining units till the project is entirely sold. And fortunately for Singapore, rarely do we see unsold units for mass to mid market segments.

The other reason is during the 1st three years of the condominium project, some units get

• sold via sub sales, where the sellers make a gain even after paying Seller stamp duty. This scenario is possible but depends on the market forces of the location. For Example, a buyer decided not to apply for public housing (skip the long queue).
• Developers also adjust the prices upwards gradually according to the market conditions. For Example. a colleague shared that she bought a 3 bedroom condominium at Martin Modern during the Preview at a special discounted price. Eight months later, another OTP (option to purchase) was issued for a 4 bedroom unit, situated next to her unit, at a per square foot price increase of almost $1000 higher.

Therefore, New launch buyers at the early entry point can look forward to a substantial profit on exit after just 3 years of holding period.

The other advantages of new launch condominiums are due to financing:

• progressive payment scheme till the CSC period,?
• very affordable monthly installment on progressive payment,
• not affected by the high-interest rate lock-in period due to BUC's no fixed rate

New Launch condominiums buyers also enjoy

• lower renovation costs,?(typically only carpentry work)
• potentially higher rent
• easier to rent out because tenants prefer new units

What about the Resales condominium?

Typically, a Resales condominium unit would have been sold by the first owner for a good profit. Thus, it takes longer to wait for prices to increase further. This means the holding period is longer and the annualised percentage gain (should you successfully sell it later) may not be very high.

If the Resale condominium buyers start off at a higher entry price point compared to New launch condominium buyers, should both of them decide to sell their properties later on, the latter can still sell at the former's asking price and enjoy a good profit.

The other difficulty is the inability to predict good eventual selling prices as there would be too many competitors/ resale sellers within the same condominium.

IN Conclusion:

Real Estate buying depends on your life priorities and goals. If you intend to make a pot of gold, then you need a qualified consultant to help you analyze your choices. It doesn't mean that resales condominiums are not value for money. If you need a larger space, older condominiums provide that advantage. However Older condominiums need more investment for renovation and you can't tell if years down the road, prices can increase. Even if it does, how old will you be by then? Are you willing to wait?

As for a New launch Condominium, you need a more experienced viewpoint. A qualified consultant's advice will help you zoom in to the best potential due to the many available options out there. There exists no bad products, only poor recommendations. If you can check box a list of needs, you will be a happier buyer.

Contact me for a bespoke Real Estate consulting service. I will do my best to meet your needs and requirements.

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