For those who are looking to buy residential property, you are likely be thinking whether to buy a resale or new launch property. Below is a recent statistics on non-landed private residential excluding EC for consideration.
From the comparison of home prices in term of $PSF, it does seem that a resale is a better buy than new launch. However the picture is not complete without looking at the upside potential after purchase the property for next few years.
If you follow the private property price index and rental price comparison below, you will also realise the upside potential of rental yield is better for new non landed property. However every property in Singapore vary due to location, tenure and size so it is important for you to understand the difference before making the decision to choose the property that suits you best.
In addition, one must also take into the account of your financial status and need (family, waiting time etc) before deciding what is best for you. A newer resale with good location, future MRT and amenity may also have good potential for both capital appreciation and rental yield in the years to come. In summary, do consider the following before making the big ticket item purchase for New or Resale, whether it is a residential or commercial (industrial) property.
- Price comparison with nearby property
- Potential amenity, transport (coming MRT) and transformation around the area
- Waiting/ready time for new compare to resale property
- One time payment against progressive payment for the next few years.
- Immediate rental potential against many years and possible construction delay due to Covid-19 for new uncompleted property
- Demand & Supply pipeline in the vicinity affecting the rental and price of property next few years
- Enbloc potential for over 25 years old property.
The residential market has been gaining more than 5% over the last 2 quarters and look very unlikely to fall unless there is a economic downturn happening soon. With current economic, Developer are unlikely to reduce price simply:
- Unsold supply in the market is dropping. Developer land banks are low so no urgency to sell low
- Lower GLS create a Demand, FOMO by Developer
- Land cost is high, construction cost is increasing due to COVID-19 so profit is already low for Developer
- Developer ABSD nearing to TOP/CSC is not a concern as supply is low
- Interest rate stay low or flat for now and not likely to surge for the next one year
Some market observers are now wondering whether the commercial (industrial) property should be worth looking at as the price has been quite suppressed over the last one year which has the potential to turn around by end this year. In addition, there is no ABSD to worry about though no CPF can be used for such investment. We will discuss the con and pro of commercial (industrial) property separately as there are multiple factors involved (eg office, retail and industrial for different market segments) which are different from residential property. Do connect with me if you are considering any purchase or rental of your property in the near future.