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 …

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 Buying Tips

7 Essential Tips for Finding Your Perfect Retirement Home

Jayson Ang – October 27, 2024 –

TLDR Searching for a forever home should balance heart and practicality. Avoid homes with stairs, high cabinets, big kitchens, and...

All Buying Tips Opinion

How En-Bloc Sales of Condominiums Turned into a Speculative Exit Strategy in Singapore

Jayson Ang – August 2, 2025 –

TLDR En-bloc sales—where owners collectively sell an entire property for redevelopment—have become a key feature of Singapore’s private property market,...

All Buying Tips Opinion

Bayshore: Reinventing the Experience of Living by the Beach

Jayson Ang – May 4, 2024 –

TLDR When deciding on buying or selling property in Bayshore, consider the recent developments and potential future growth. With a...

Blog Posts Mandarin Top 5

Travel Without Worry: The 5 Best Telco Companies For International Roaming In Singapore

Jayson Ang – July 8, 2023 –

Travel Without Worry: The 5 Best Telco Companies For International Roaming In Singapore When it comes to choosing a mobile...

All Opinion

Why Aren’t Spacious, Wallet-Friendly Homes Our Reality Yet?

Jayson Ang – April 17, 2024 –

TLDR The article discusses the current housing market in Singapore, focusing on the challenges faced by individuals like Sherlyn Tan...

Mandarin Top 5

Top 5 Reasons : Why Ultra-Rich Families Racing To Park Wealth In Singapore

Jayson Ang – October 9, 2024 –

Singapore, a small island nation in Southeast Asia, has become a magnet for the world's ultra-rich families seeking to park...

All Blog Posts Buying Tips

Learn the Essentials of Renting Property in Singapore as a Foreigner

Jayson Ang – May 26, 2023 –

TLDR Renting in Singapore offers various options for foreigners, such as HDBs, Condos, and even unique properties like heritage homes....

All Buying Tips Opinion

7 Frequently Overlooked Questions That New Condo Buyers Should Ask At The Showflat To Avoid Any Regrets In The Future!

Jayson Ang – January 29, 2024 –

TLDR Newly launched condominium buyers face uncertainties about price changes, proximity to schools, construction methods, maintenance costs, elevator availability, commercial...

All Buying Tips Opinion

Freehold vs. Leasehold Condos in 2025: An Updated Performance Analysis

Jayson Ang – September 19, 2026 –

TLDR Freehold vs. leasehold condos in Singapore show nuanced performance differences over the past decade. Leasehold units often deliver stronger...

All Blog Posts Buying Tips

Discover the Benefits of a SORA Home Loan in 2023: Why Consider SORA Interest Rates

Jayson Ang – May 17, 2023 –

TLDR The article discusses the transition from SIBOR and SOR to SORA as the new benchmark rate in Singapore's banking...

All Opinion

Budget 2024: What To Expect For The Singapore Residential Market?

Jayson Ang – February 18, 2024 –

TLDR In 2025, owner-occupiers of residential properties can benefit from property tax relief based on the Annual Value Band. Retirees...

All Buying Tips Opinion

First-Time Homeownership After 40 in Singapore: Navigating Unique Risks

Jayson Ang – June 8, 2026 –

TLDR Older first-time homebuyers face unique challenges including lease decay risks, stricter loan-to-value (LTV) limits, and shorter loan tenures leading...