Resale VS New Launch Condos Singapore: Which is Better?
This question is one of the most common questions buyers will ask when it comes to purchasing a condo in Singapore. As always, different products are suitable for different audiences and there isn’t one that is better than the other in every situation. Apart from growth in price or rental yield, there are other important qualitative considerations such as living near parents, amenities, schools, preferences and such! Be it buying to upgrade from your HDB or buying for investment purposes, below are some points of consideration before you make a decision!
Advantages of Buying a New Launch
It’s Brand New!
One of advantages of choosing a brand-new development include brand new amenities, more relevant and modern features, a fresh design, creating a feel-good factor for buyers. New condominiums offer brand new facilities such as swimming pools, gyms, and barbecue pits, along with potential modern upgrade like smart-home integration features which will be more advanced than older resale properties. Because these properties are new, you spend nothing on renovating the unit and can move in immediately after key collection or rent out after the project has reached Temporary Occupation Permit (TOP).
A Chance at a Better Entry Price (Early Bird Discounts)
Developers frequently offer initial discounts and incentives, such as price reductions or additional perks, to stimulate early sales in new projects. This means that buyers could potentially enter into the project at a good entry price! There are also times that developers do a “Fire Sale” when the deadline of their 5-year ABSD (Additional Buyer’s Stamp Duty) limit is reaching. This deadline dictates that if developers do not finish selling all the units within 5 years of land acquisition, they will need to pay 30% of the land price as ABSD with interest. This would really motivate them to sell the remaining units giving the price advantage to buyers lucky enough to purchase them.
Capital Appreciation Potential
New condominiums usually experience a significant increase in value once they are fully constructed and habitable based on historical data. This increase often outpaces the growth of nearby resale properties. Even though the purchase price of a new condo will more often be more expensive than a resale, this significant capital appreciation as seen in the past few decades of Singapore Real Estate entices many buyers to purchase at launch rather than after TOP.
Flexibility in Payment
New condominiums offer various payment plans, including the Progressive Payment Scheme (PPS) and the Deferred Payment Scheme (DPS), allowing buyers to manage their finances more effectively.
The Progressive Payment Scheme (PPS) applies exclusively to the purchase of private properties that are currently under construction. This payment method allows for the disbursement of funds in stages, correlating with different phases of the property's construction, rather than requiring a single, lump-sum payment.
Under the Deferred Payment Scheme (DPS), an initial payment of 20% of the down payment is required. The balance of 80% is then deferred for a period of 2 to 3 years. Monthly mortgage payments only commence after the deferment phase. During this period, property's value might increase as well, typically ranging between 5 to 10%. The DPS is only applicable to projects that are fully completed and have been awarded the Certificate of Statutory Completion (CSC) and the Temporary Occupation Permit (TOP).
Modern and Efficient Design
Due to developers’ improving design as well as feedback by home owners over the years, newer condos tend to have a more efficient layout. However, amid escalating property prices, new-launch condominiums tend to be smaller than older resale condos. But because of the smaller size, developers are forced to be more creative to ensure the space is crafted efficiently with a smarter design. If you are okay with not having a big space, new launch condos boasts modern facilities and contemporary design could be on your shortlist!
No Need for Renovation and Lower Maintenance costs
Purchasing a new condominium could potentially be more economical, saving you more cash. Undertaking extensive renovations such as replacing flooring, cabinets, fixtures, air conditioning units, or other appliances in an older property can lead to significant expenses! Resale condominiums often require much more maintenance and can incur costly repairs for issues like blocked or leaking pipes, cracks in walls, or malfunctioning air conditioners, potentially exceeding your budget for renovations. Conversely, new condominiums typically include high-quality, often times branded appliances that are generally covered by a one-year defect liability period offered by the developer. This coverage can lead to considerable savings on major renovations. Especially for investors, minimizing maintenance costs is crucial, making newly launched developments a more financially prudent option compared to a resale property, even though the Price per square foot (PSF) might look higher.
Advantages of Purchasing a Resale Condominium
Immediate Occupancy and Rental Opportunities
One of the primary benefits of a resale condo is that you get to move in or rent it out immediately. This is particularly advantageous for those in urgent need of a home. Resale condos also offer immediate rental opportunities, allowing potential tenants to visit and view the property first-hand, helping them make a more informed decision.
More Accurate Rental Income Predictions
Estimating the rental income from a resale condo is generally more straightforward. By working together with your realtor to obtain exclusive data, you are able to analyse existing and historical rental data to get a clearer picture of rental trends and assess the investment potential of the property.
A Better Understanding of Your Purchase
With new launch condos, there are some cases where the completed development looks extremely different from what you saw at the showroom. With resale condos, buyers have the advantage of directly inspecting the property, understanding the neighbourhood, and assessing key factors like traffic, noise levels, and other considerations such as the condition of facilities. This essentially offers a more realistic picture than the often embellished representations of show flats, providing a better insight into aspects like facility maintenance and the effectiveness of the management committee.
Potential for Negotiation and Great Deals
The pricing of resale condos, unlike new developments, is not as rigid and allows for more negotiation. For bargain hunters who are willing dedicate time to research and work hand in hand with their trusted real estate agent partner, good deals might be waiting. Certain sellers' personal circumstances, such as financial urgency or relocation plans, can lead to opportunities for purchasing properties at reduced prices. However, searching for these “fire sale” properties take up significant amount of time as they are far and few between. The longer we take to look for a good deal in the resale market, we might be losing out to opportunity cost when we could have purchased a new condo or decently priced resale condo.
Larger Living Spaces compared to New launches
Generally, resale condos offer more space compared to newer units. Larger spaces in resale condos would be particularly appealing to those with larger families or a need for more rooms. Newer condos tend to be smaller, less ideal for larger families or Multi-generational families living together.
So… New Launch? Or Resale?
Choosing between a resale condo and a new launch condo largely depends on your personal situation and priorities. If the appeal of a brand-new home, complete with modern amenities, with more flexible payment options and potentially higher capital appreciation are important to you, then a new launch condo would be an ideal fit.
If immediate occupancy or the ability to rent out the property straight away is your primary concern, then opting for a resale condo is the clear way to go. Navigating the resale market often requires more extensive efforts, they do also present certain good opportunities to match your personal goals.
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