Buy Resale Condo Singapore
5 factors to consider when buying a resale condo
When people try to buy resale condo Singapore, people tend to think of what gains or benefits are there. So they tend to think of how many amenities nearby. They tend to try to research the MRT stations and shopping malls nearby. We probably know all these but there are many more factors to consider when you are buying a resale condo. Let us take a look at these factors:
Future buyers finances
Willing buyers are not always accompanied by willing banks. There are numerous examples of properties with multiple interested buyers, many of whom are unable to purchase due to bank financing restrictions.
This may go unnoticed if you use limited financing (e.g., you can afford a large down payment or have collateral far exceeding the value of the property) – your smaller loan means you may not have encountered any problems, but future buyers may.
Properties in Geylang, close to the vice area, are a good example of this (between Lorong 8 to 24). Property in this area has a low vacancy rate, is about a 10-minute drive from the CBD, and has a mix of amenities (supermarkets, food, retail) that many people would love to have right across the street. And, given that large swaths of Geylang will no longer be zoned for residential use, these remaining properties have a real scarcity value.
However, this alone does not make for an easy investment decision. Future buyers will almost certainly have to use cash, private contracts, or high-risk non-banking institutions for loans, which will drive down prices and make the area risky for new investors.
Financing is influenced by a variety of factors, including but not limited to:
- Lease decay (it is not possible to obtain a loan for properties with 30 or fewer years on the lease, and the maximum financing can decrease even if the lease is reduced to 50 years)
- Property size
- Specific types of floor plans (yes, you can get a lower valuation because of a unit with too many strange corners and angles)
- Property reputation (some older properties, such as Golden Mile or People’s Park Complex, have negative reputations despite being in a good location).
As a result, always consider the implications for your future buyer if you sell the property in 10 to 15 years. This is especially true for older properties like walk-up apartments.
Even if people want to live there, they might not be able to pay what you want.
If you’re unsure about future financing considerations, tell us about the property; we can help you determine whether banks will have a problem with it.
Number of units
There are numerous advantages to large or mega-developments, which are typically defined as 1,000 or more units. They typically have larger facilities, lower maintenance fees, and overall lower costs. Treasure at Tampines, Normanton Park, and Parc Clematis are a few examples.
However, having so many units crammed into a single development can be a challenge. With over 1,000 units, there’s a good chance that someone in a nearby block is also selling at the same time as you. In the worst-case scenario, a large number of owners have all planned to sell at the 10-year mark, resulting in a slew of listings competing with yours.
Also, while we do not recommend relying on an en-bloc sale, you should be aware that larger developments have lower en-bloc prospects (as long as the ABSD rule remains as such too). This is partly due to the difficulty of reaching the required 80% consensus when dealing with multiple owners, but it is also due to developers having a five-year ABSD deadline to complete and sell projects. This is true regardless of the size of the development, so most developers today prefer smaller plots.
To be clear, this does not imply that large or mega-developments are poor investments. They continue to benefit from lower prices and recurring costs. You simply need to temper your gains expectations and consider whether these advantages are worth the future competition.
MCST management performance
The MCST in a condo is frequently invisible until something goes wrong. Sometimes these are dramatic, as with Pine Grove in 2020, and other times they are about money management, as with Neptune Court.
These issues do have an impact on resale prospects, as one of the most basic first steps is to Google the condo name, which will reveal the incident. However, dramatic incidents are rarely the most damaging to resale gains.
Instead, issues such as malfunctioning gym equipment, unusable pools, and facilities that have been closed down for years (for whatever reason, this frequently happens to the sauna) all add up to detract from property value. Remember that your future buyer may not be a home buyer; a landlord may want to buy in order to rent it out, and poorly maintained facilities make it more difficult to find tenants.
As a result, buyers should inspect not only the specific unit, but also the common areas. Talking to residents and looking for upgrades can help you determine the quality of the MCST.
(One sure sign of a good MCST is when a condo has new facilities that were never built with; upgrades indicate surplus funds and good management.)
How versatile the units are
One issue with shoebox units (500 square feet or less) is determining who will buy them when you decide to sell. With a family of four, a HDB upgrader has no use for it, limiting potential buyers to other investors, lifelong singles, or some retirees.
Because this is not currently the primary buyer demographic (HDB upgraders are the dominant force today), it may have an impact on future resale value.
Similarly, units with unusual configurations, such as dual-key units, must be approached with caution. While these are ideal for renting out, future buyers may not want to give up living space for the sake of an extra pantry or fully divided sub-unit. Given that dual key units tend to be more expensive than equivalent sized counterparts, this could have an impact on future gains.
Keep in mind that buyer trends can shift more quickly than you might expect. With the work-from-home and Covid-19 scenarios, having a study room in your unit may be more important than you think – a year ago, this feature was hardly thought to be as in demand as it is today.
Overall, buyers who want an easier exit should look for units that are versatile – ones that have a lot of room for renovation and are large enough to make accommodation to a wider range of purchasers (this is one reason why new investors are sometimes told to pick 2-bedroom units over 1-bedroom units; small families could rightfully fit into a 700 sq.ft. – 2-bedroom units).
Read more about what new launch condo buyers should avoid – https://www.buyproperties.com.sg/new-condo-launch/buy-new-launch-condo/
Transaction volume in the region
The price movement becomes more volatile as the transaction volume decreases. Peace Mansions is a well-known property that drives analysts crazy: this aging property has a great position along Middle Road, but it constantly sparks debate about whether it has resale value or en-bloc potential.
There are a variety of explanations for this, ranging from nearby KTVs to the property’s age and upkeep, but one aspect is that the price data is ambiguous:
Each data point reflects just one or two transactions over the course of many years. It’s been difficult to determine whether you’ll make money buying a unit here until recently; it could be a windfall or a complete dead-end (it is a nice place to rent if you consider location more important than fanciful facilities, though).
So far, you’ve read about what it takes to achieve a gain in property value. However, there are investment concerns to consider. You may consider rental income as alternative goals instead of capital appreciation. Look beyond the headline text of a resale condo being near a particular MRT station. It helps as a nearby amenity but it must not be the main decision making factor.
Do you have anymore feedbacks when you wish to buy resale condo Singapore? Do make contact with us to see how else we can help you.