Why Aren’t Spacious, Wallet-Friendly Homes Our Reality Yet?
TLDR The article discusses the current housing market in Singapore, focusing on the challenges faced by individuals like Sherlyn Tan...
Read More
TLDR
The blog post discusses various aspects of investing in condos in Singapore, covering topics such as leasehold versus freehold properties, rental yields, property values, and factors affecting investment decisions. It emphasizes the importance of considering specific projects rather than general property types. Additionally, it provides insights on hidden expenses, market trends, and tips for property buyers. The post offers strategic real estate advice, highlights key considerations for first-time Chinese buyers, and explores potential challenges in the property market.
Recently, I stumbled upon a Reddit thread where people were spilling their regrets about buying condos. The topic of debate was whether investing in a condo is still a good move.
As I scrolled through the comments, some points caught my eye. A few made sense, while others seemed like half-baked truths or twisted facts.
One comment that received loads of upvotes (and I agree) said, “Location is key.” But as I dived deeper into the thread, things got a bit murky. The next hot topic was about the actual value of owning leasehold vs. freehold land.
One user pointed out, “For me, it’s either public housing or private freehold. Leasehold private properties don’t make any sense. Their prices are nearly as high as freehold ones (around 80%?), making the lease decay even harder to swallow.”
But hold on! Before you write off leasehold properties, let’s break this down. Interestingly enough, some wise landlords actually avoid buying freehold properties. Why? Because they yield less rental income.
Let’s take two condos located in the same place: one leasehold costing $1.5 million, and the other freehold priced at $1.725 million. They both generate an annual rental income of $48,000. Yes, you read that right. Tenants don’t pay more for living in freehold properties; it doesn’t matter to them.
When you do the math, the gross rental yield for the leasehold property comes out to be 3.2%, while the freehold one is only 2.78%.
So, it all boils down to this: whether it’s leasehold or freehold, the real deal is if it’s the right investment property.
Imagine buying a freehold condo in an already developed area versus a leasehold one in an area that has future potential. Which one do you think will give you a better return?
It’s not always about the type of ownership, but the real value it holds.
Here’s another:
“If you skip out on Freehold (FH), you’re potentially dropping 1% each year. It’ll take a decade or fifteen years to make up for the insurance premium. But let’s admit it, in the property game, that isn’t a long stretch.
A drop of 1% per year sounds a bit shaky. Let’s take a quick look at how leasehold condos hold up against freehold ones over a span of 15 years (leaving out the Executive Condominiums):
Over this time frame, freehold properties don’t seem to be keeping pace with their leasehold counterparts.
Now, there’s no hard and fast rule here. It all depends on the age of the property you’re considering. But if you’re thinking about buying a brand-new freehold versus a leasehold condo, it’s not quite right to assume that you’ll be losing 1% annually.
In case you’re interested, we’ve done some homework on new freehold and leasehold launches since 2014. Feel free to take a peek right here.”
Let’s look at a few other things:
“It all boils down to the type of condo you’re looking at. They’re not all cut from the same cloth.
Take newly launched condos, for instance. They’re often not worth the dough. Paying 2k per square foot for tiny apartments? Get real. You could get a condo in River Valley for what they’re charging for Pasir Ris 8. Plus, most of these are on 99-year leases.
Check out Ki Residence. They’ve got places ranging from 700 to 1300 square feet, going for 2-2.4k per square foot. And these are on 999-year leases.
Then there’s Clementi Park, just across the street. Their units start at about 1100 square feet and go up to over 2000 square feet. Prices range between 1.4k and 2k per square foot. Plus, these are freehold properties.
Fresia Woods is a bit further away, but it’s a similar deal.
With a budget of 2 million, you could snag a 1065 square foot condo at Fresia Woods or a larger 1400 square foot place at Clementi Park. Your only option at Ki Residence would be a smaller 965 square foot unit. If you’re good with just one bedroom, 1.5 million could get you a 1039 square foot apartment at Clementi Park. For 1.6 million, you could get a 750 square foot apartment at Ki Residence.
Clearly, Ki Residence isn’t the best bang for your buck.
Venture a little further to Pandan Valley, and you’ll find 2000+ square foot condos going for 1.5k per square foot or even less!
So, in my book, older condos are where it’s at. The newer ones? Not so much.”
Someone hit the nail on the head with this comment: “You can’t just eyeball the price per square foot and make a blanket judgement.”
I’ve mentioned this before, but the price per square foot isn’t always the best gauge of value. It tends to increase as the units get smaller and cheaper, but decrease as they get bigger and pricier.
Say you were to buy a bungalow. You could be looking at about $1,600 to $1,700 per square foot. But for a huge 7,000 square foot detached home, that’s a whopping $11.9 million.
On the flip side, a one-bedroom place at $3,000 per square foot, measuring just 500 sq. ft., would set you back a cool $1.5 million.
Also, let’s not forget how rules and regulations have been shaking things up over time.
You see, it’s all well and good to weigh the cost per square foot when everything else lines up. But, when you’re dealing with older condos that come with their own quirks like planters and bay windows, judging them purely on square footage pricing just doesn’t cut it.
Instead of focusing on the cost per square foot, it’s a better idea to concentrate on the overall price. Why? Well, it influences a few things:
1. The stamp duty you’ll owe 2. The amount you need to borrow and subsequently the interest you’ll have to pay over the years 3. How your budget might get strained after the buy
The cost per square foot can be handy in certain cases. For instance, when you are comparing two properties with similar layouts and sizes, it can give you a feel for which one offers more bang for your buck.
However, this approach becomes less helpful when you start comparing different types of properties, like HDB flats and private condos, or landed properties.
Consider this: “HDB flats are definitely a better deal, even if the resale price exceeds 1mil! I regret pretty much everything about buying a condo, except for the fact that it’s just across the road from an MRT station. But, when your combined income is around 20k, your options are limited. You’re not eligible for BTO/EC and can’t afford a landed property…”
Still, if you’re earning $20k a month and have your heart set on a resale flat, go for it! There’s no income cap for these properties.
But somewhere along the line, the conversation veered off track, and became more about buying a home than investing in one. When asked if it’s worth investing in a condo, my response would be: which condo?
Properties aren’t all the same. A savvy investor doesn’t just invest in condos or landed properties as a whole. They invest in specific projects, like The M, Midtown Bay, Pandan Valley, etc.
There are certain condos I’d definitely consider investing in even now; but there are others I’d steer clear of, despite any attractive discounts offered by developers.
Should You Buy, Sell or Wait?
If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?
It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.
I can bring you a wealth of on-the-ground experience and a data-driven approach to provide clarity and direction. From beginners to experienced investors, our top-down, objective approach will help you on your real estate journey.
I can help you by:
- Offering Strategic Real Estate Advice – I can help create a comprehensive plan to guide you through your property journey.
- Connecting Your Home with the Perfect Buyers – Through stunning visuals, an effective communication strategy, and an in-depth knowledge of the market, we’ll ensure your home is presented in the best possible way to fulfill your goals.
You May Also Like …
Making Sense of 99-Year Landed Home Investments in Singapore
TLDR Investing in a 99-year leasehold landed property in Singapore can be a lucrative venture due to the country's land...
Read More
Debunked! 6 Popular Property Myths of 2023, Including the 99-1 Loophole – Legal or Not?
TLDR This blog post delves into various aspects of the Singapore property market, including topics such as decoupling, 99-1 property...
Read More
Downpayment For Condo: How Much Do First-Timers Need In Singapore?
TLDR The blog post delves into the complexities of condo downpayments in Singapore in light of the impact of Covid-19...
Read More
How Budget 2024 Impacts Singapore Homeowners: Exciting Property Tax Updates and ABSD Benefits
TLDR The 2024 Budget introduces changes to property tax bands, aiming to ensure fair taxation based on Annual Value (AV)...
Read More
5 Pros of Buying a New Development
Deciding whether to buy a new development or a resale property can be a challenge. In the next few video...
Read More
5 Critical Mistakes to Avoid When Investing in Singapore Property: Insights and Advice from Experts
Investing in Singapore property can be a lucrative venture for investors, but it's important to avoid common mistakes that can...
Read More
Singapore’s Best Kept Real Estate Secrets: 5 Insider Tips for Savvy Investors
Singapore's Best Kept Real Estate Secrets: 5 Insider Tips for Savvy Investors Here are 5 insider tips for those looking...
Read More
Why En Blocs Often Fail to Succeed
TLDR In this blog post, the focus is on the challenges and complexities of en-bloc transactions in Singapore's property market....
Read More
A Executive Summary Guide to the Singapore Real Estate Market 2023 and Beyond …
TLDR The Singapore real estate market is vibrant, driven by a strong economy, stable business climate, and attractive investment opportunities....
Read More
Discover 7 New Condos Close to an MRT Station in 2023
TLDR When it comes to finding the perfect home near MRT stations in Singapore, several exciting new launches stand out...
Read More
Top 5 Rooftop Bars in Singapore with Amazing Views
Top 5 Rooftop Bars in Singapore with Amazing Views Singapore, the Lion City, is known for its stunning skyline and...
Read More
Building A World-Class Nation: Top 5 Facts About Singapore’s Developed Infrastructure
Building A World-Class Nation: Top 5 Facts About Singapore's Developed Infrastructure Singapore is known for its high standard of living,...
Read More
When Should You Consider a Shorter/Longer Home Tenure?
TLDR Understanding the benefits of long-term home loans is crucial for financially conservative individuals in Singapore. Opting for a longer...
Read More
UNCOVERING the Secret to Profitable Small Boutique Condos!
TLDR Boutique condos, with fewer than 100 units, are known for price fluctuations due to infrequent transactions and higher upkeep...
Read More
When Is the Right Time to Sell Your House?
TLDR When deciding to sell your house in Singapore's competitive real estate market, timing is crucial. Selling during a seller's...
Read More
A Step-by-Step Guide To Upgrading From an HDB Flat To Your a Private Property
TLDR Understanding the complexities of upgrading from an HDB flat to a private property in Singapore involves selling your HDB...
Read More
5 Things to Know About the Singapore Property Tax System
5 Things to Know About the Singapore Property Tax System Here are 5 things you need to know about the...
Read More
Unforgettable Vacation: The Ultimate Guide To Singapore’s 5 Best Hotels
Unforgettable Vacation: The Ultimate Guide To Singapore's 5 Best Hotels It's 五新房产, Singapore is a vibrant and exciting destination, known...
Read More
5 Reasons Why Your House Isn’t Selling – and How to Overcome Them!
TLDR When trying to sell your home, ensure it is competitively priced based on its unique features and the current...
Read More
