Your search results

Discover What Else You Can Focus On Beyond PSF – Here’s How!

Posted by Jayson Ang on July 17, 2023

| 0

TLDR

When considering real estate investments, factors like property size, location, and PSF play crucial roles in determining affordability. Smaller units tend to have higher PSF due to fewer square feet to spread costs over, whereas larger properties offer more economical PSF. However, PSF alone may not accurately reflect affordability. Additional factors to consider include quantum value, development age, size, layout, and location. Ultimately, a comprehensive analysis involving these aspects is essential for making informed real estate decisions.

The age-old wisdom holds true: when searching for a new home, buyers often prioritize the cost and affordability of the property.

To figure out which property provides the best value for money, those purchasing private properties often compare prices per square foot rather than total cost.

But here’s the catch: the more compact the space, the greater the cost per square foot. On the flip side, the larger the property, the more economical the price per square foot.

Have you ever pondered why this is the case?

Why does the PSF decrease as the square footage of the property increases?

For example, let’s compare these 2 past transactions at Lentor Modern:

A 2-bedroom + flex unit (732 sq ft) on the 5th floor sold for a price of $2,225 psf ($1.6 million) whereas a 4-bedroom + flex unit (1,528 sq ft) on the same floor was snapped up for $2,005 psf ($3 million).

Though the latter was practically twice the size of the former, its cost was far from being doubled.

How is this possible?

First, let’s break down how the PSF is even calculated. Here’s the general formula for the price per square foot:

Total Price Of The Property ÷ Total Square Footage Of The Property = Price Per Square Foot

To work out the total cost of a new launch condo, you must bear in mind all the luxuries on offer, such as Hansgrohe fittings, Bosch or Miele kitchenware, marble tiles, vinyl floorings and even the balcony and air-conditioning ledge space – all included in the per square foot price.

The smaller the unit, the higher the PSF, because there’s less square footage to spread the cost over.

Let’s get an idea of the bigger picture: if you compare the value of a property (all those expensive items and areas included) to the size of the home, you’ll find a high PSF, even if the overall amount goes down (as shown in our example).

Inversely, when it comes to a bigger home, you can spread the costs over more square footage, so the PSF tends to be lower, but the total value of the property doubles, therefore the higher total price.

The PSF may not be the most reliable measure of affordability due to the fact that it is directly influenced by the size of the property; it’s like comparing apples and oranges – the playing field is not quite level.

Still, it can be useful for comparing properties with the same size and from the same development.

To Make Sure Your Price Comparison Is Accurate, Take Note Of These 5 Factors As Well:

#1: Don’t Just Compare the PSF. Take A Look At The Quantum Value Of The Properties Too

Let’s explore a different scenario – imagine you’re on the hunt for a two-bedroom apartment in District 11, situated within the Newton/Novena region, and you find two choices from two distinct projects with diverse PSF values.

Project X is a 970-square-foot residence, priced at $2.3k per square foot, while Project Y offers a cozier 670-square-foot home for around $2.8k per square foot.

If you’re looking to maximize your bang-for-buck, it’s hard to beat the larger unit with a lower PSF – what a steal!

Enjoy living in a prime location with more space for a fraction of the price.

However, if your budget is a bit tighter, consider the 670 sq ft unit with a higher PSF but a much lower overall quantum of $1.9 million – $300,000 less than the 970 sq ft unit with a $2.3k psf and a total value of $2.2 million.

It’s a great way to stretch your dollar even further!

#2: Find Out How Old/Young The Development Is

If you need to move in soon, the more affordable condo from Project Y may not be your best option. Although it has the appeal of modern and new facilities, it is a new launch, so it’s not yet ready for immediate occupancy – with pros and cons to consider.

If you’re looking for a place to move into right away, the larger, more expensive condo from Project X might be your best bet – it’s a resale, so it could come fully-furnished and ready to live in!

Just keep in mind that if you decide to sell it in the future, you may run into buyers who are apprehensive about lease decay.

Since the PSF is intrinsically linked to the size of the property, it cannot be viewed as a reliable measure of affordability.

#3: Take A Look At The Size Of The Whole Development Too

Developments that span a larger area tend to have a lower Price Per Square Foot (PSF) than their smaller counterparts, as there is more room to spread out. Conversely, limited space can lead to cramming more units into a plot, reducing the size per unit and driving the PSF up.

#4: Don’t Just Look At The Size, Consider The Layout As Well

On the flip side, as the new and shrinking condos getting smaller, they may well remain within the same cost ballpark as the larger and older units. Even though they may be lacking in square footage, their design can be used more economically.

#5: As Always, Location Matters

It is clear that locations have an influence on the cost of property; with higher PSF equating to lower quantum, and lower PSF representing a higher quantum.

Therefore, the price difference between a 3-bedroom in a prime location and a 1-bedroom in a less desirable spot may be even more pronounced – you can bet that the former will cost three to four times more than the latter.

**In summary, you shouldn’t just look at the PSF figure alone when comparing properties and their prices.**

You have to consider these factors as well:

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 …

Mandarin Top 5

5 Top Reasons Why Chinese Love to Invest in Singapore Property Market Today

Jayson Ang – May 23, 2023 –

Here are the top 5 reasons why Chinese love to invest in Singapore's property market today. 1. Political stability: Singapore...

Mandarin Top 5

Top 5 Romantic Date Spots in Singapore

Jayson Ang – March 18, 2024 –

Singapore, known for its stunning skyline and diverse culture, is a melting pot of romantic opportunities just waiting to be...

Mandarin Top 5

Top 5 Places to Watch Fireworks in Singapore

Jayson Ang – August 3, 2024 –

Singapore is known for its stunning skyline and vibrant celebrations, especially during events like National Day and New Year's Eve....

All Buying Tips Opinion

Property Unpacked: Is GLS Impacting Property Values?

Jayson Ang – March 2, 2025 –

TLDR The Government Land Sales (GLS) program in Singapore is critical for developers to obtain development land, with sites released...

All Blog Posts Buying Tips

An Essential Guide to Buying a Home in Singapore 2023

Jayson Ang – January 17, 2023 –

TLDR When navigating the complexities of purchasing a property in Singapore, ensure you meet eligibility criteria, consider affordability factors, and...

Mandarin Opinion Top 5

The Truth About Buying An Old Condo: Homeowners Reveal Their Top 5 Regrets

Jayson Ang – July 16, 2023 –

The Truth About Buying An Old Condo: Homeowners Reveal Their Top 5 Regrets Some homeowners may find themselves regretting certain...

All Blog Posts

Singapore Private Residential Market Outlook 2023

Jayson Ang – January 8, 2023 –

TLDR The Singapore residential property market has shown resilience in 2022, with price growth in both private housing and HDB...

Mandarin Top 5

5 Most Iconic Landmarks In Singapore’s Landscape

Jayson Ang – June 14, 2024 –

Singapore's landscapes is renowned for its innovative and dynamic approach to urban development, boasting some of the most iconic landmarks...

All Blog Posts Buying Tips

Identifying a Good Investment Property: A Guide

Jayson Ang – July 25, 2023 –

TLDR When it comes to navigating the real estate market in Singapore, understanding key factors can make a significant difference...

Mandarin Top 5

Top 5 Historical Landmarks in Singapore

Jayson Ang – April 24, 2024 –

Singapore, a bustling cosmopolitan city-state, is known for its rich history and diverse cultural heritage. This small yet vibrant nation...

All Blog Posts Buying Tips

The Advantages and Disadvantages of Purchasing an Auction Property in Singapore

Jayson Ang – January 13, 2023 –

TLDR When considering purchasing a property through auction in Singapore, remember that you can potentially get a great deal below...

All Blog Posts Opinion

Unveiling the Truth: Why Freehold is Not Always the Optimal Choice for Property Investment

Jayson Ang – January 4, 2023 –

TLDR When it comes to investing in real estate in Singapore, traditional beliefs may not always hold true in today's...

All Buying Tips Reports

2024 Residential Property Market Outlook

Jayson Ang – December 22, 2023 –

TLDR The market outlook for 2024 suggests continued uncertainties affecting housing demand and risk appetite due to geopolitical tensions, macroeconomic...

All Blog Posts Buying Tips

6 Must-Know Factors to Consider When Purchasing a Resale HDB in 2023

Jayson Ang – February 5, 2023 –

TLDR When buying a resale flat in Singapore, make sure to walk around the neighborhood to assess actual distances, check...

Mandarin Top 5

Singapore Sights & Sounds: 5 Must-Know Facts From the Little Red Dot

Jayson Ang – March 7, 2025 –

Singapore, affectionately known as the Little Red Dot, is a vibrant city-state in Southeast Asia that boasts a unique blend...

All Buying Tips

What is Your Next Step in the Property Market?

Jayson Ang – December 7, 2022 –

When you flip open the papers or turn on the news nowadays, the common buzzwords are "INFLATION", " INTEREST RATE...

Mandarin Top 5

Top 5 : Advantages of Owning a Luxury Condominium in Singapore for Long-Term Investment

Jayson Ang – February 23, 2025 –

Singapore, a thriving global city-state, has become an attractive destination for real estate investors. Among the various property types available,...