Why Is the Price Gap Between New and Resale Condos Growing So Much?
The price gap between new and resale non-landed properties in Singapore is becoming larger and the market is not supporting this. However, if you have the funds to buy a new property, then you can probably get better value for your money in Singapore.
Recent research by CBRE showed that a median price gap between new and resale properties in Singapore condos resale has widened to 5% on average in the last three months. This report was published by an international real estate and commercial property brokerage. This is the second survey report in a year that shows that new and resale condos are priced differently in different parts of the city.
Hence, the increasing prices of condos in Asia’s financial capital, Singapore. What could explain the price gap between new and resale condos?
The most likely reason is that some property agents are deliberately inflating the value of condos and while some property investors are taking advantage of the hype to purchase condos for resale. The reality is that if you have the money to buy a new property in Singapore, then you can get a better value for your money because there is less competition in the market and you have more bargaining power.
Reasons for inflating values
Some good reasons for not buying a new property are below. However, the most important reason is that if you do not have the funds, then you will end up losing more money than you may be able to save with an investment property.
Singapore is no exception to the price gap between new and resale condos. The true story is that the negative aspects of investing in a condo property in Singapore are almost identical to buying a property in any other developed country. These include poor customer service, high maintenance costs, few amenities, outdated and substandard architecture, and many more.
Furthermore, the low selling prices of condos in Singapore is also a result of the fact that all sellers are looking to take advantage of the lack of competition in the market. So the best way to get a good deal on a condo property is to find a seller who will buy back from you the condo that they sold to you. In this way, the seller gets money and the buyer enjoys a lower price.
Another reason why the price gap between new and resale non-landed properties is growing is that land is being converted from undeveloped land to developed and put up for sale. This is the first stage of development. It will still take years to complete the entire development process and the condos that you will be able to purchase will still be expensive.
How to get a good deal
However, you can still get a good deal on a new property in Singapore. So, before you invest in a new property, you should be sure to have an accurate idea of the future development of the area. Also, you should know if the property is going to be upgraded to a condominium or if it will continue to remain undeveloped.
One of the biggest reasons why the price gap between new and resale condos is growing is that it is very difficult to sell a condo in Singapore. The demand for condos is so high and the supply is so low that it makes it almost impossible for a typical individual to come up with the capital to purchase a condo for resale.
Hence, another reason for the increase in prices of condos in Singapore is that the majority of the new properties are being purchased by international buyers who are purchasing these properties to resell to local buyers at a much higher price. This is another common scenario in the US as well.
So, it can be said that the price gap between new and resale condos in Singapore is almost at its maximum level and is becoming more exaggerated every month. The question is; why?