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How To Find Undervalued Property in Singapore – 8 Secrets!

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With property prices in Singapore being the most expensive in the region, it is challenging for investors and homeowners to find undervalued homes at low prices. Finding an undervalued property for sale is more than just luck. Often buyers in a rush to buy a new house or without knowing how and where to search for undervalued homes fail to find these hidden gems.

Even in the current high-priced environment, there are ways to spot an undervalued property in Singapore. Of course, this requires some experience, but be rest assured that if you do your research and follow the tips we have discussed below, you will surely be able to discover the below-valuation properties.

What is an undervalued property?

Put simply, an undervalued property is priced lower than its market value or the amount indicated by its bank valuation.

When homeowners are looking to move out of their homes urgently, or developers want to sell their units within a stipulated time, there is a good chance of finding a steal deal. Clinching an undervalued property will also save you a substantial amount of money. It is like a golden find that offers a low price on a quality property!

According to experts, a property is considered undervalued when it is 5% to 15% lower than its market valuation. For example, a $3 million property would mean a good $150,000 to $450,000 in savings!

How do I find an undervalued property in Singapore?

Start with identifying whether the property you are looking at is actually undervalued or not. You need to compare median prices of similar or comparable properties within your desired area and take a deep look into the latest price transactions and price trends.

Trust your research and look for properties that are not in the city centre but are still in good locations, like near the MRT stations or good schools. With the below-discussed tips in mind, you should be able to help you better understand how and where to look for an undervalued property in Singapore.

While these tips are no hidden secrets, they provide a good place to start looking!

1. Start with examining saturated areas first

When taking your first baby step into the world of hunting for undervalued properties, you can start with locations where there are multiple housing properties of different ages within a radius of 1 km. The reason behind this is that areas with a lot of new launches tend to dip in property prices.

Now let’s look at the 1 km radius around Tanah Merah MRT station. You will find the following developments:

DevelopmentAverage PriceTOP Date
Grandeur Park Residences$1,5622021
Urban Vista$1,3432016
Optima @ Tanah Merah$1,2162012
The Tanamera$9041994
The Glades$1,4532017
East Meadows$9742001

Here are some things to focus on:

Those willing to live in older developments can go for East Meadows, which is only slightly pricier than The Tanamera, even with a 7-year age difference. Also, note that The Tanamera is closer to the MRT station compared to East Meadows.

Now located in the same general area, Grandeur Park Residences is 5 years newer than Urban Vista and comparatively not as costly as The Glades.

Also, Grandeur Park Residences is bigger and thus will be more crowded than Urban Vista.

Such comparisons are tougher in areas with only a few developments. For example, within 1km of Jurong East MRT station, there are only a handful of condo developments (like Ivory Heights and J Gateway). So, it will be hard to compare properties based on price differences, distance from the MRT or the number of units in a development.

Remember that it is just a starting point and certainly not enough to make a final decision on buying an undervalued property.

2. Work out the price gap between a new launch and resale property

Start with finding a resale condo located nearby some new launches. Look at the price gap between a resale condo and a new launch. Considering the area of the resale condo, check if the price gap is decent enough. If it is, then you should take a careful look. If the price gap is 20%, the resale property is worth looking closely at!

By doing so, you have a chance of getting a resale property in the same area but at a better value.

3. Try looking for the “worst house” in the “best location”

It is a common notion among property buyers that they could find an undervalued property if they look for a stigmatised or rundown property in a desirable area. Well, an approach like this might work well for you if you are planning to purchase a property for rental income. A lot of short-term tenants might be willing to live in a prime area, even in an older or rundown home.

But following this approach requires conscious thinking. Buying the “worst” property in a neighbourhood may not always turn into a value buy, especially if that area is prone to crime incidents or the property location is close to a red-light area like Geylang.

Such homes can be hard to sell in the future. Only because a house is older and located in a high-demand neighbourhood does not necessarily mean it will be undervalued.

Also, when buying an older property, you must take the high restoration costs into account. For this, you might have to take a renovation loan, which would be an additional burden on your housing loan.

4. Look out for motivated sellers

Property owners can have a multitude of reasons for wanting to sell their units and move out of their homes quickly. They could be emigrating overseas for a job or may have already purchased a new property and thus be willing to sacrifice the best price in exchange for a speedier transaction when they sell.

During financial distress, some sellers may look to liquidate their properties quickly for cash. It makes the seller more open to negotiation and even accepts lower offers. You’ll be surprised at the kind of value you can find.

Make sure you are a little more vigilant about why the seller is keen to sell the resale property at a discount before making a final decision.

5. Watch out for projects reaching the ABSD deadlines

When you purchase property in Singapore, you have to pay the Additional Buyer’s Stamp Duty (ABSD) fee. It is a government-levied property tax based on your citizenship status and the number of properties you own.

Not just homebuyers, developers also have to pay ABSD when they buy property sites from the government’s land sales. They have to pay a high sum of money that is equivalent to 30% of a development’s price if they develop more than 5 units.

But developers can avoid paying ABSD tax by selling all developed units within 5 years of acquiring the sites. If they successfully sell all the units they had developed, 25% of their ABSD can be remitted.

This is why property developers can be seen in a rush to sell new launch properties at reduced prices (below valuation) when approaching the 5-year ABSD deadline. For example, 38 Jervois offered significant discounts to homebuyers as the developer was looking to meet their ABSD deadline.

Many developers launch a fire sale offering significant discounts. This is why you can expect dips in the price of new launches in the later sales phase. If you want to be one of the “lucky” buyers, be sure to act fast.

6. Keep a check on who recently bought or looking to buy their matrimonial homes

Often young and affluent investors in their 20s can be seen buying smaller, compact homes as an investment.

Now, if they plan to get married after some years and buy their matrimonial home, either they will have to pay a substantial 12% ABSD tax on their new purchase or sell their private property. In such a situation, some homebuyers or owners may sell their investment property at larger discounts to get their matrimonial homes sooner and save their ABSD tax as they enter their phase of life.

If a homeowner has already purchased their new matrimonial house but has not sold their previous property yet, they might sell it soon (within the next 6 months) to qualify for ABSD remission. In such a situation, expect them to be more open to negotiation as they have a deadline to meet.

7. Check out older listings [including rental listings]

Check out listings that have been around for a while. Chances are most sellers are more open to negotiation to sell their property after a certain time frame, say 3 months.

Additionally, homebuyers should check rental listings as well. The agents or landlords of units that have been vacant for several months or a few years are worth asking if they would consider selling. Even if they say refuse the first time, check back after a couple of months.

If the unit is still untenanted, the landlord might change their mind this time and be ready to sell. It is then up to you or your agent’s skills to bargain the property price during the negotiation process.

8. Go to Property Auctions

A lot of sellers choose auctions as a way of selling their property, be it a private condo or a commercial space. Since property auctions promise quicker transactions, there is a good chance to find undervalued or affordable properties here.

Keep track of real estate agencies that regularly conduct property auctions in your area. While it is not a guarantee to find desperate sellers and properties below valuation, there is no harm in attending such actions when they are organised in and around your city.

Auctions also sell properties repossessed by financial institutions as a result of the owner defaulting on his/her loan. Usually, such units can be acquired at lower prices, but there are exceptions too. At times, the financial institution selling a property may set a new auction price, including the principal amount plus interest, penalties and other charges.

In such cases, the auction price of the property may negate the lower property valuation or sometimes take it above the valuation.

Other important things to keep in mind before buying an undervalued property

Remember, the cheapest unit by price is not guaranteed to be a ‘bargain’ property. To be sure if a property is really undervalued, you must figure out the actual reason why a property is being sold at a discount.

Before committing to an undervalued real estate, don’t forget to consider the maintenance fees, rental yield, the ease of selling and renting a property, etc.

Also, take into account the neighbourhood surrounding your desired property. Notice if it faces unbearable traffic noise during the daytime or if it is peaceful outside. Examine the property physically and find out if there are any structural problems like leakage.

Keep a check on the upcoming announcements that will impact the property price. For example, new cooling measures or the approaching ABSD deadline. If possible, look at the government development plans that tell you areas that will see decent development in the next few years. This way, you can decide if the property before the transformation could be considered undervalued at the current price.

People experiencing personal upheavals such as emigration, divorce proceedings or impending jail time are likely to sell their property at a bargain price. Typically, these people are willing to let go of their property quickly to get fast cash.

Figuring out such things will allow you to establish the reason for its low price tag, and then you can decide if it is really a good deal.

Final Thoughts

Undervalued properties are a rare find. Finding an undervalued private property is time-consuming, but homeowners and investors should try these methods when trying to discover a hidden gem.

And more importantly, when you do spot a hidden deal, don’t underestimate the importance of getting a good bank loan. All your effort could go in vain if you end up with an unsatisfactory home loan.

Getting a reasonable interest rate on your home loan can make all the difference in your hunt for undervalued property. A costly home loan package will make you pay all the money you saved in finding an undervalued property over the years. On the other side, if you manage to get a good home loan with the lowest interest rates, it will positively impact your future financial outlook.

Get the best home loan in Singapore across all major banks and compare mortgage rates with the highest rewards. As an added advantage, we offer exclusive rewards and promotions when you refinance or get a new home loan through us.

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