Is This The Right Time To Buy A New Condo
Covid-19! Locked down! Will prices come down? Sounds like it should be, right?
Never before in history that not only Singapore but globally that we are experiencing a lockdown to contain the pandemic! Almost the whole economy has come to a stop! Tourism comes to a stop, airlines are not flying, schools are closed, working adults are to work from home except essential services, some are had pay cut and some have even lost their jobs overnight!
So, where does this lead the property prices to be? Going further to south?
Should I buy now, or wait further?
This article from Straits Times dated 1 April 2020, said there was drop of price of 1.2% and it went on further to stress that they are not expecting a sharp fall in prices going forward.
Ms Sun said she is not expecting dramatic price corrections in the coming months despite the worsening Covid-19 outbreak. “Many property measures have already been put in place over the past years to ensure financial prudence among buyers. The possibility of many homeowners slashing prices or defaulting on housing loans is not high,” she said.
Extract from Ms Christine Sun, head of research and consultancy at OrangeTee & Tie.
Thanks to government’s foresight to make our local owners to be prudent when it comes to buying property. Though we had made so much noise about TDSR, loan to value, ABSD etc, but aren’t we grateful these measures were in place? Owners are now not very worried if there are no tenants on board or if they have a pay cut because of those strict measures.
Taking reference to SARS, data showed property prices didn’t drop very much, instead it rebounded very quickly after the SARS epidemic.
But this is different from SARS! You might argue, SARS did not warrant a lock-down, we are having almost a complete stop in the economy now!
Sure, we shall look at China then! It was the first country to announce the locked down and also the first to lift up the locked down. How did the property fare after the lift up?
Many would expect the market will crash after the locked down is lifted up, right? On the contrary, people are buying like there’s no tomorrow!
Nobody would have expected Hermes, the French luxury goods, to make US$2.7M in one day!
How did the property market fare?
30 major cities across China has its property prices increased three times!
If China had an increase of 3-fold, what will we be expecting Singapore to be like?
Analysts are saying that Singapore will be seen as a leading property market recovery. Singapore property market always recover after economic downturn.
Fearful when others are greedy and greedy when others are fearful.By Warren Buffet
I remembered Citibank shares fell to US$1 way back to Global Financial Crisis in 2008/2009, (it is worth US$43 as of 24 April 2020), and not many people were brave enough to buy then, because it will be down to zero if it didn’t manage to tide over. (But real estate is different, it will never be zero). We would have well rewarded if we hadn’t been fearful then!
Wouldn’t that work the same for the property market also? We buy when others are fearful, and when developers will give discounts. You buy a property when you can afford and reap the profits when the market picks up.
There are so many choices in the market, what should we buy?
I will recommend you to buy new condo, why? Let me walk you through the following points.
- Newer facade and facilities
The main appeal of a new condo is, it is brand new. Who doesn’t like updated design and all brand new appliances, or even smart home features?
- Progressive payment so payment is lower in the initial years
Buildings under construction follow the progressive payment scheme stipulated by URA, you only need to pay 25% and the rest will be taken care by bank loan, and payment is incremental and will only need to be made once each particular segment of the condo has finished construction, which is easy on your pocket!
Did you see the word ‘discounts’? Yes, you did.
Call me, I’ll tell you where are the discounts and star buys/value buys, whatever you want to call it!
Developers are tangling with discounts for you to commit at this Covid-19 period, why not take advantage of it? No need to go out! We can provide a virtual tour or zoom meeting to walk you through!
- Brand new condition/One-year liability period
All new condo units come pre-renovated with flooring, kitchen cabinets, bathroom accessories, appliances, air conditioning and in some cases, smart home features. What more to ask for? You only need minimum renovation and you are ready to move in or lease it out. Plus, they are covered by a one-year defect liability period whereby the developers will cover all defects and faulty appliances!
- Many choices to choose from
At new condo launch, you are the first few to pick your choice unit. Being able to choose allows you to pick the unit that you want. For example, you can pick units with pool view, greenery view, high floor, quiet facing etc. You are able to choose your preferred unit based on your budget and needs!
Many tenants prefer a condo where the pool is new and clean, the walls are still pearly white, the gym has new top-notch equipment, etc. Having a new condo thus meets all these preferences, and it will be easier to rent out.
- Lower quantum vs resale in the same area
Yes, we know that new units are getting smaller and smaller, but if developers are still building bigger sized units like in the past, how many of us can realistically afford such high quantum? Furthermore, do we really need such big units now, considering that family sizes are smaller as well.
- Greater scope of appreciation
There is a greater chance for capital appreciation for a new condo vs old condos.
Take a look at this, Commonwealth Towers (new condo then) vs Queens (old condo)
Located minutes away from each other, see how much room of appreciation it has on a new condo vs old condo.
You reap a profit of 16.3% for Commonwealth Towers over 4 years versus 1.27% for Queens. Not forgetting you did not have to pay for maintenance fee when building is under construction. And progressive payment has contributed to a higher profit to put in your pocket.
Having read so much about it, how much money do you need to make that step forward?
|Booking fee (cash)||5%|
The above calculation is valid if this is your first property. However, if this is your second property, there will be an additional ABSD (12%) imposed.
What is my take?
In my opinion, the benefits of new condos out weight the benefits of old condos, be it brand new, progressive payment, etc. I guessed the main draw is the potential capital I can gain.
I hope this will give you a clearer picture of how much you will need to proceed that purchase!
Still confused? Call us, we will be more than happy to sit down to clear your doubts over a cup of coffee.
Having been in the industry for 15 years, I have helped many clients to rent, buy or sell their properties, be it residential, commercial or industrial. I take each and every case seriously and this has earned referrals clients to me. Many clients are my friends now, my expat tenants jio me for coffee when they are in town!
I want to be your third pair of eyes to point out blind spots which may cost you money to rectify or worse, hard to sell because of that obstacle.
I take pride in what I do, which involves constantly reading up and updating myself with the latest news and regulation changes, so as to give my clients the advice they deserve.