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“We can’t decide on whether to buy a resale or new launch condo in 2024!”
Many aspiring private property buyers can resonate with this:
“The prices of new launch condos are getting higher and higher every year!”
“So expensive and so small!”
Since then, the sentiment of some buyers has shifted to the resale market for more affordable options due to the high exorbitant prices of new condos.
Truthfully speaking, there is no absolute answer to the question.
Both have their pros and cons.
Let’s examine both before making a move.
Pros & Cons of Resale and New Launch Condos
| S/N | Factors | Resale | New Launch |
|---|---|---|---|
| 1 | Entry Price | Average about 30% lower | Hitting peak after peak |
| 2 | Space & Floor Area | Usually larger in size | Relatively smaller and more “compact” |
| 3 | Location | Island-wide; more options | No flexibility on location |
| 4 | Physical Viewing | Seeing is believing; can see physical unit | No actual product; showroom units for display |
| 5 | Move In Time | Almost immediate; in 3 – 4 months | 3 – 4 years construction time |
| 6 | Rental Income | Yes | No |
| 7 | Facility | Older; more worn down | Brand new |
| 8 | Unit Facing & Level | Limited | More choices available |
| 9 | Renovation | May require major makeover | Brand new; minimal renovation cost |
| 10 | Maintenance Fee | Higher | Lower |
| 11 | Property Tax | Yes | No |
| 12 | Payment Scheme | Monthly installment in full | Progressive Payment Scheme (PPS) |
| 13 | Capital Growth | Lower | Higher |
| 14 | First-Mover Advantage | No | Yes |
10-Year Trend of New Launch vs Resale Condo
Price Gap
Statistically, the average price gap between new homes and resale homes is about 33%.
Just like a new car versus a car from the open market, there will be a price difference.
Therefore, the prices of resale condos are indeed more attractive to price-sensitive buyers.
Capital growth
The performance over the past decade has illustrated that most new launch condos buyers have experienced greater capital gains and profits compared to resale condo buyers.
Why Do Buyers Still Buy High Prices New Launch Condos?
New things feel great
People like new things. Don’t you?
On a certain emotional aspect, new things are the best.
The property, interior renovation, facilities and building façade are all brand new.
Potential savings
Lower maintenance cost as everything is brand new.
Renovation costs have gone up too recent years. It will easily cost you around $80,000 to $120,000 for a full makeover.
But since it is a new launch condo, the unit comes fully furnished, lesser damage to your wallet.
Also, you pay zero property tax while your condo is under construction.
Sometimes, you might get early-bird discounts during the launch week and special discounts at year-end, or certain festive seasons, such as this:
Imagine buying a decent unit in the prime region at discounted price, to me that’s a big win!
Theoretically, you are already sitting at paper profits compared to other buyers who purchased before the discount.
More choices to choose from
Some buyers like high-floor, unblocked view units, while some fancy ground floor patio, pool-facing units. To each, his own.
You are free to pick unit with specific level and facing based on your family’s preference in a new launch project.
But you can’t do that when buying a resale condo; the options are rather limited.
First-mover advantage
Past statistics have shown new launch condos yielded a bigger profits over resale condos.
People invest in new launch condos with the intention to flip for profits every 3 to 5 years.
Upon project TOP and cleared the 3 years Seller Stamp Duty (SSD), the buyers will exit to capture profit and immediate onto the next new launch project.
The price you bought at was at 3 years ago, whereas the next buyer paying for your condo will be at the open market rate.
If done right, buyers can repeat this cycle and profit twice or thrice in 10 years time.
Unaffected by soaring interest rates
Another reason why new launch condos are still selling like a hotcake despite its high prices, in an elevated interest rates times is due to its staggered payment scheme.
Progressive Payment Scheme (PPS) allows buyers to pay for their new condo in stages, tied to different construction milestones.
Hypothetically say, you are buying $2million new launch condo using the progressive payment scheme, here’s the breakdown on how much you have to pay:
Upon project TOP, you would have paid $113,538 in 36 months.
On the other hand, say you bought a resale condo at the same price, the monthly installment will kick start in full at $7,161 per month. In 36 months, you would have paid $257,796.
POTENTIAL SAVINGS OF $144,258 OVER THE 3-YEAR PERIOD.
Whether or not this is a steal, you be the judge.
What’s Good About Resale Condo Then?
In comparison to the new launch condos, resale condos may seem at a disadvantage in many aspects, yet this doesn’t imply they lack all competitive strengths.
More often than not, people who are looking at resale condos, chances are, you are either an EC or HDB upgraders, whom have family with a kid or two.
Hence, space and immediate accommodation will be your main deciding factor.
Another thing to note, is that a big portion of your funds are coming from the sales proceeds of the HDB or EC, and a sizeable amount of loan from the bank.
In other words, your budget is limited, your choices will be limited too.
The basic need for size
Most HDB and EC upgraders are usually family with kids, so “upgrading” to a 1 or 2 bedder shoebox condo will not make sense at all.
Especially if their previous property was around 900 to 1000sqft. Therefore, when upgrading to condo, they are more inclined to buy units that are roughly the same size or bigger, to accommodate the entire family.
More affordable in terms of price
Talking about size, what is the price disparity between a new and a resale condo?
A 3-bedder new launch condo unit with minimum 1000sqft cost around $2.5m.
A 3-bedder resale condo unit with minimum 1000sqft cost around $1.47m.
You need to fork out $569,600 as an initial outlay for a $2.5m new launch condo.
Given the current HDB price growth, most HDB upgraders are going to be priced out. A quantum of $2.5m is out of reach for the average upgraders unless they own a high-value flat or EC, or have a good amount of side savings.
In this case, resale condos emerge as the winner for its affordability.
Shorter transition time
With school-going children and some with parents, buying a resale condo gives you immediate accommodation, which is crucial.
It helps eliminate the need of renting a place outside while waiting.
Even though rental rates may have tamed with the TOP of multiple mega projects in 2023, they are still at a high point compared to the past.
Imagine paying $3,500 for the next 36 months, you will incur an additional cost of $126,000, alongside other living expenses, car loans and children’s education until key collection.
Ready rental income
Some resale units come with existing tenants, which is a form of immediate return if you buy over the unit.
Interest rates and monthly installment may be high at the moment, by collecting steady rental income can help offset part of the cost.
Even if your goal of buying a resale condo is primarily for family occupation, rental income is an extra source of income should you rent out bedrooms as and when needed.
Due diligence on-site
Certain things you will only get to see in an actual condo like:
- Friendly or nightmare neighbors
- Maintenance of swimming pools and other facilities
- Waiting time for lifts in mega projects
- Management Committee
- Facing of the unit; any west sun, etc
The good thing about resale condos is that you can visit at hours of the day to check on all the above before signing on the dotted line.
As for a yet-to-be-built condo, all you can do is visualize and pray that everything will play out smoothly in the future.
Final Verdict: Resale or New Launch Condo In 2024?
Both resale and new have their own set of merits and shortcomings.
One of the most important factors will be your affordability and budget.
Limited budget; primary residence with space
As discussed above, the average quantum of a resale 3-bedder condo will cost around $1.5m, and $2.5m for a new launch condo.
Even at $1.5m, it’s not like an ordinary Singaporean family can effortlessly pull out that sum from their pockets, can you? Most of us would need a big loan to make the jump to a private home.
That said, at $1.5m, which is a more palatable price point for the average family to digest, as compared to a brand new condo pricing at $2.5m.
Moreover, if you are an HDB or EC upgrader looking for a family-sized unit, you will need a unit size somewhat on par with a typical 4-room flat to house the whole family, with little moving disruptions.
In this instance, getting a resale condo is the way to go for your family’s needs.
Investment Property
Assuming you are an affluent investor with decent savings waiting at bay, perhaps this year presents a rare opportunity for you to consider getting a new launch condo in the core central regions.
The ABSD hike from 30% to a whopping 60% has notably deterred foreign interest.
Owning a property in the prestige and luxury area of Singapore has always been a dream for many Singaporeans.
In the past, the group of buyers was always the high net-worth individuals and foreigners for them to sink their financial roots into CCR properties. They value Singapore as a safe haven to invest their money in.
With the recent announcement of ABSD adjustment for foreigners, transaction volume for CCR homes has dipped sharply since. Prices begin to stabilize.
Some new launch condos in CCR are priced attractively, such as Orchard Sophia.
Why? Because the developer has to ensure they clear their inventory before the ABSD deadline to avoid paying penalties.
Additionally, by paying progressively, buying a property in high interest rates times will greatly ease your financial stress and cash flows.
In a nutshell, if investment or owning a property in the CCR have been your pursuit, consider giving new launch condo a go!
Still unsure of your next move? Contact me for personalized advice and let me be part of your property journey!
