An evergreen question among property buyers is whether going for a new launch with a 4-5 years waiting period or or a resale home with immediate occupation availability is a better choice.
Would it make a difference to your investment returns and what are the specific pros and cons of each route?
Let's examine both.
New Launch Condominiums Pros and Cons
Pros | Cons |
New and modern facilities and design | A longer waiting period. |
Entry price is similar with other buyers. | Will require a place to stay or rent meanwhile and rental costs to be incurred. |
Lower risk of price dipping below purchase price. | Lack of rental returns for investors until TOP. |
Availability of choice units. | New and modern facilities and design |
Progressive payment doesn’t require immediate full downpayment and mortgage instalments. | |
Deferment of high interest rates impact. | |
Higher capital growth potential. | |
Resale Condominiums Pros and Cons
Pros | Cons |
Immediate move in is possible. | Dated design and facilities. |
Savings on rent can be significant. | Might not have premium facing units available |
Possible to have back to back moves for those selling their current homes and moving into new one. | Less margin of safety as buying at a higher price than original buyers. |
Immediate rental cashflow. | If leasehold and older, could face stagnation or decline stage and limited growth potential. (*More on this below) |
Usually larger units. | Costs for renovation may be incurred. |
Wider choice of locations. | Immediate impact of high interest rates. |
Viewing of actual unit for sale prevents surprises. | Usually higher quantum. |
Another category of homes fall in between brand new and resale. And they are the subsale market where original buyers sell their units near to its TOP date.
Let's take a look at them too.
Subsale Condominiums Pros and Cons
Pros | Cons |
Shorter/immediate waiting time to move in. | Usually higher in price as sub sale sellers would price in a profit. |
A seamless move may be possible for owners who are selling their present home and moving into the new one. | If they are remaining developer's units (Not subsale), prices would be marked up by TOP due to higher holding costs and profit loading towards the tail end of launch. |
Savings on rent can be significant. | |
Suitable for retiree investors who are looking for rental cashflow sooner. | |
One important distinction between both new and resale homes is its growth rate.
Over the last decade, we have seen performance in new launches outdoing resale homes by a mile.
New Launch vs Resale Price Growth
Performance over last 10 years
New launches: +72.3% Resale Homes: +24.6%
It's a fact that new launch buyers have seen larger capital appreciation and profit over the recent decade compared to resale buyers.
Buyers generally prefer new homes due to the rising trend of smaller households and regulations such as TDSR that put newer homes within easier reach.
*Growth Rates For 99 Years Condos At Various Age Groups (2014-2023)
*It is important to note that the steep growth in prices for 2021 and 2022, due to COVID construction delays are not representative of normal market conditions. Normal market conditions should have brought lower growth across all age groups.
Over the last decade ending 9 Feb 2023, 99-years leasehold condominium best returns years were for the 36-40 years old and 31-35 years old segment (Likely due to enbloc speculation and affordability amidst COVID delays) followed by new launches.
The years in between saw the highest growth for the 11-15 years old segment.
As a rule of thumb, investors should measure their property returns against the benchmark risk-free rate of 2.5% - The returns you will get from your CPF Ordinary Account annually be it a good or bad market.
Property investments carry risks and as such should reward investors with higher returns than 2.5%.
Ideally, we would recommend home buyers to go for properties less than 15 years old if possible as there's a higher chance of exiting with a profit.
In Summary
While the case for investment returns generally favour new launches, individual situations and priorities dictate whether a new or resale home suits them more.
A purely investment focused person should take a closer look at new launches unless a wonderfully priced undervalued deal presents itself in the resale market.
A family prioritizing less disruptions and the inconvenience of moving might find it more palatable to go with a resale choice.
There is no absolute best segment between the two.
For those who wish to fulfil both needs to varying degrees, a chat with your property wealth planner on your options and priorities could help you open up new areas to look at.
Need an opinion on your property investment plans, the best buys available or help marketing your properties?
Get a 1-time free 30-Min Property Wealth Planning consultation with Stuart and his team of Property Wealth Planners. Schedule one right now.
A PWP consultation includes:
- An in-depth financial affordability assessment and timeline planning
- Highly relevant investment insights
- A clear and customised investment road map
- A curated list of best buys in today's market with good growth potential & minimal risks
- Selecting units with the highest potential in a new launch project
- Has your property stagnated in price? What options do you have?
- Marketing plan and getting an optimum offer for your property
Stuart Chng, Executive Group District Director of Huttons Asia, is a renowned leader and personality in the real estate industry. He adores music and can play a few instruments decently without upsetting his neighbours. When not doing so, he enjoys pillow fighting with his son and coming up with silly puns which barely amuses his wife. Professionally, he is a licensed real estate agent, an avid stocks, options and real estate investor, multiple businesses owner, team leader, speaker and columnist for several property newsletters and blogs and is often quoted in media interviews on 938FM, Channel 8, PropertyReport, PropertyGuru and other publications. Throughout his career, he has helped many clients grow their wealth through selecting great property investments and managing their portfolios actively. Read his clients' reviews here. Stuart has also coached many top million dollar producing agents from top real estate agencies in Singapore. Read his agents' reviews here. Relevant Articles
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