Buying a private property is an aspiration of many Singaporeans. If you are a new buyer looking to enter the property market, a crossroad you might find yourself in is whether you should buy a new launch or a resale condo in Singapore. Which one of the two is a better investment option?
With properties in Singapore being one of the most expensive in the world, you must take time to understand your financial needs and priorities. Also, be clear about your priorities and intentions to build a solid base of reference when choosing between a new launch or a resale condo.
For example, consider whether you anticipate your family to grow in the coming years with a new child or parents moving in, or you prefer to live in a quieter neighbourhood or one with fast and easy access to amenities like healthcare facilities and schools.
Let’s start the discussion with a look at the advantages of purchasing a new launch condo.
Brand-new projects usually win over older developments on the latest facilities, features and design. If the apartment you buy is brand new, it comes with a feel-good factor because everything – fixtures, cabinets, appliances and plumbing – is new and nice.
In addition to well-designed and well-maintained swimming pools, gyms and barbeque pits, most newer condos come with the latest facilities, such as on-demand concierge services, karaoke rooms and smart-home features.
Moreover, new condos have high rentability. If you want to rent out your new condo, keep in mind that most tenants prefer to rent a new one compared to older apartments. However, note that you can only rent your condo once the project has reached the Temporary Occupation Permit (TOP).
To create hype around new launch projects, developers typically offer their lowest prices to entice property buyers and spur sales. The perks could come in different forms, such as price discounts, vouchers or stamp duty reimbursements, thus easing your burden of finances. Please note that new condos that have reached their TOP are not included in this case.
Sometimes, developers give out steep discounts for fire-sale properties close to their 5-year ABSD (Additional Buyer’s Stamp Duty) time limit. An ABSD deadline requires developers to complete and sell all development units within 5 years of acquiring the land or pay 30% of the land price as ABSD plus interest.
A unique characteristic of a new launch condo is: one-time capital appreciation upon TOP.
Even if the new launch private condo is more expensive than surrounding resale condos, the majority of new launch condos will still benefit from this one-time capital appreciation upon TOP, making it an attractive investment option for Singaporeans.
When purchasing a resale condo, you must pay the 25% downpayment (in cash or CPF) upfront, followed by monthly instalments. You will also have to pay the option fee, booking fee, stamp duties, etc., which make a significant upfront investment for you.
On the other hand, new-launch condos enjoy flexible payment options. For new-launch projects, you can choose either the Progressive Payment Scheme (PPS) or Deferred Payment Scheme (DPS) to spread the cash outlay.
PPS is only applicable when purchasing a private building under construction (BUC). Under this scheme, the payment is disbursed based on the stage of the property’s construction rather than in one go.
Here’s a summary of the repayment scheme for PPS:
DPS requires you to pay 20% of the downpayment upfront. The remaining 80% is deferred for two or three years. Once the deferred period is over, you will start servicing monthly mortgage repayments. Note that the property price may go up, usually by 5 to 10%, during this period.
DPS is applicable only for completed condo projects that have received the Certificate of Statutory Completion (CSC) and TOP.
Given the rising property prices, even though the size is relatively smaller, new-launch condos are usually more efficiently designed.
If space is not a constraint for you, a new launch condo with the latest facilities and design can make a smart choice!
When you buy a new condo, you save on your cash reserves. If you need to overhaul the whole apartment with new flooring, cabinetry, fixtures, air conditioners or other appliances, you might burn a big hole in your pocket.
Older resale condos may also be prone to costly maintenance and repairs, including choked/leaking pipes, wall cracks, faulty air-conditioners, etc., which could blow up your renovation budget.
New condos often come with premium branded appliances usually covered under the one-year defect liability period by the developer, which means you can save substantial money on major renovations.
If you are buying as an investor, you will want to keep maintenance costs low; hence, picking a new launch could be a better choice than a resale condo.
Price is one of the key factors to consider when buying a condo. In Singapore, new-launch condos can be priced as high as 40% more than existing resale condos in the area on a per-square-foot basis.
But why is a new launch sold at a premium compared to resale condos?
There are three main reasons behind this.
That said, there is scope to grab price discounts in new launch condos as well, offered by developers for select units (those with blocked views or unpopular layouts). If you get lucky with the ballot system, you might get a chance to grab a bargained deal.
It is also not uncommon to see developers offering decent units at a discount in a slow-selling project.
Let’s discuss some of the reasons why buying a resale condo could turn out to be a better choice when compared to a new launch.
It is possibly one of the most apparent benefits of a resale condo. Unlike new launch condos, you don’t have to wait 3 to 5 years to complete the project when buying a resale condo. Resale condos are ready to be sold off the shelf, making them the preferred choice of homebuyers in urgent need to move into a new home.
Similarly, if you are planning to rent out your condo or have spare bedrooms in your condo, a resale condo allows you to do so. And if you are purchasing a unit that already has tenants, you can get rental income from the very first day.
If you want to move in or rent out soon, you may consider buying new launch condos that have just received their TOP.
By taking the current and past rental data from surrounding resale condos into account, you can easily compare and predict the rental income of the resale condo you are planning to purchase.
You can find such related data on websites like Square Foot and URA and get a good idea of the rental trends going in the market. It allows homebuyers to judge if a new condo will make a worthy investment choice.
With resale condos, you get what you see!
When buying new launch condos, you generally have to depend on developer-provided materials such as maps and brochures as the actual property is generally still under construction. If you are in luck, you might also get to see a show flat before finalising your purchase. But can you rely on the show flats? It is common to see that the actual unit turns out to be quite different from the show flat.
This is not a problem in the case of resale condominiums. You can get a better feel of the physical condition of the house you are planning to buy, know about to-be-neighbours, and look around into the surroundings to see the noise level, traffic, and so on before finalising your purchase decision.
It is also easier to inspect those intricate defects, which are never talked about by the developer or the brochure.
New launch condos offered directly by developers often have little scope for bargaining once the price has been finalised. On the other hand, there are more chances of getting a steal deal and negotiating the final price when buying a resale property from an independent seller.
For this, check out the prices of other sold units within the condo project to get an idea about the unit’s potential selling price you are interested to purchase.
For instance, you may get your hands on an undervalued or a fire-sale property. It is possible that the seller may have a tight financial situation or is looking to dispose of the property urgently before moving overseas. This leaves you with more room for negotiation and finding a seller willing to let the property go at a steal.
As property prices continue to rise, new condos have become smaller (and smarter). Due to the increasing construction cost (land space, manpower and resources), developers have devised layouts that maximise available space and make the best out of it. Older units, although more spacious, had lower costs as construction costs were also less in the past.
For example, a 2-bedroom condo at Heritage View (launched in 2010) was 969 square ft., whereas a 2-bedder condo at Penrose, which was launched in 2020, is 649 square ft.
So, if you have a big family or need more space in your home, a resale apartment would be a more suitable choice. A larger unit also expands the interested customer base for selling or renting.
A new launch condo uses a balloting system that involves an element of luck in getting the desired unit. This balloting system allows potential buyers to choose a unit they prefer (from whatever units are leftover) depending on factors like floor height, sun facing, car parking, nearness to facilities and amenities, etc.
This means, depending on your ballot number, you may or may not get your desired unit when your turn comes.
Unlike new launch condos, when you buy a resale condo, you can pick any unit available for sale on the market. If one project doesn’t suit your needs, you can always move to the next one. With so many choices available, you will find one that works for you sooner or later.
The only concern is that you will likely face a tough contest from other homebuyers looking to buy the same resale unit.
|New Launches||Resale Condos|
|Chance of early bird discounts||Immediate move in & rental yield|
|Lower cost of maintenance||Clear rental expectation|
|Better designs & up-to-date facilities||Priced at a cheaper psf|
|Flexible payment schemes||Generally bigger in size|
|Easier to rent out||Potential savings on renovation|
|Fresh 99-year lease||Potential under-value purchase|
|A wider selection of units||Fewer surprises, if properly checked|
|1-year defects liability period||Choice of location, floor level, etc.|
In our opinion, newly launched condos are more suitable for investment and bring higher returns, while resale condos are more for your own use.
To have a “good start” to their new project, developers tend to offer early bird discounts to buyers on balloting day. Also, new condos booked during the under-construction phase have a waiting time of 3-4 years at least. Since buyers are buying these uncompleted units off-plan, they are priced cheaper than resale flats.
Additionally, most tenants prefer a smaller new condo over larger old condos. They are ready to pay more for “new” than “size”.
If you are getting a property for investment, new launches will make more sense in terms of time-value-money as your initial outlay is lesser since your monthly mortgage payments will only fully kick in once the project has reached its TOP.
But the above case may change depending on the investor’s needs and requirements. If you are looking to rent out the place immediately, a resale investment property could make a better choice. A new launch might take 3 to 5 years to be ready for living or renting out.
Resale units are typically less risky for new landlords as they can get a near-accurate idea of rental rates and physically inspect the property before purchase.
Buying a home is one of your life’s biggest and most expensive decisions. You must pursue it with clear intentions right from the beginning.
Your choice between a new launch condo and a pre-loved resale condo should depend on your preferences and current financial situation. Some other factors that may affect the property investment journey include affordability, available home loan packages, unique features and amenities, potential rental yield and future potential of the unit’s location.
At Dollarback Mortgage, we take your circumstances and priorities into account before advising you on what property we believe you should buy. We know the best mortgage rates in the market and sometimes help to crack exclusive deals you cannot get directly from the bank.
If you want to purchase a property or refinance your home loan, please contact us for a no-obligation discussion with one of our mortgage experts.
Find out about the benefits and risks of bridging loans in Singapore
Many financial experts back the idea of renting a house over buying
Find out the 6 common issues faced when getting a home loan