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Thinking of Selling Your Home in 2024? 5 Vital Realities Every Seller Must Face

Posted by Jayson Ang on November 27, 2024

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TLDR

From 2022 to 2024, Singapore’s housing market underwent significant changes, with a shift from scarcity to a boom in condos and flats. Rising prices and ABSD regulations have created challenges for sellers and buyers. New launch condos are notably expensive, pushing many to consider resale options. Sellers face high down payments and additional costs such as loan settlements and CPF refunds. Co-broking issues persist, affecting the transparency of property deals. HDB resale prices are slowing, and an influx of new flats is expected to impact the market. While rental rates may drop in late 2024, making temporary rentals more affordable, high ABSD rates deter property investments. Resale properties are gaining popularity due to their larger spaces and lower costs compared to new launches. Sellers should manage their price expectations and stay informed about market trends.

Although only two years apart, the distance between 2022 and 2024 has witnessed a dramatic transformation. The housing landscape has shifted from a dire scarcity to a sudden boom of modern condos and flats. And amidst this frenzy, the impact of the ABSD regulations is yet to be fully comprehended. So, if you have plans to sell your property in 2024, buckle up and take note of these crucial developments.

Unveiling Exciting Transformations: The Latest Updates!

1. The Challenge of Affording New Properties: Are They Worth the Cost?

Have you noticed an increase in the number of flyers landing on your doorstep lately? Perhaps they are informing you of the current value of your property, as realtors have shifted their focus to sellers due to the declining interest in upgrades. The culprit? The exorbitant costs of a replacement property.

As of March this year, HDB resale flat prices averaged around $583 per square foot. This means that a vanilla 4-room flat of about 960 square feet could fetch a rough estimate of $559,680. However, the picture drastically changes when we look at new launch condo prices, which average at a staggering $2,207 per square foot. As for resale condos, the average price is slightly lower at $1,657 per square foot.

Considering that most families aim for a three-bedroom condo of at least 900 square feet, the price tag for a new launch condo would be around $1.98 million, while a resale unit would cost around $1.49 million.

It’s no surprise that many have expressed concerns about the unsustainable rise in property prices over the past few years, particularly for condos and landed homes. This is evident when we look at the average prices per square foot.

But let’s not forget the harsh reality for potential buyers. Based on the Square Foot averages, the minimum down payment for a new launch condo (25% of the price) would be a whopping $495,000, almost equivalent to the entire sale proceeds of a flat. Even a resale condo would require a minimum down payment of $372,500.

And that’s not all – anyone looking to sell their flat would also have to settle their outstanding loan and refund the cash used from CPF. It’s no wonder that upgrading immediately after the five-year Minimum Occupation Period (MOP) has become a daunting task, especially with higher mortgage rates and a volatile economic climate hanging over our heads.

ABSD Rates: A Strong Deterrent for Sellers with Multiple Properties!

If you had jumped on the property bandwagon during the golden era of lower (or dare we say, non-existent) Additional Buyer’s Stamp Duty (ABSD), the thought of selling now may leave you with a sour taste in your mouth. With a hefty 20 per cent (and a whopping 30 per cent for our beloved PRs) ABSD tax waiting for anyone who dares to replace their second home, it’s no wonder that those who rely on rental income are turning a blind eye to the selling game. As for our foreign friends, they will most likely put up a fierce fight against any attempts to pry their beloved properties away from their grasp, especially with a brutal 60 per cent ABSD on the line. The idea of their local property going en-bloc would surely leave them with no choice but to turn to the rental market. So for those hoping for a successful collective sale, be prepared to face a potential resistance from this determined group.

2. Unresolved Co-broking Challenges: Are Things Getting Worse?

Some agents in the real estate market have been known to operate in a less-than-honest manner when it comes to co-broking, avoiding communication with buyers’ agents and ultimately limiting the range of offers presented to their clients. It seems that on the private property front, these seller’s agents would rather work with uninformed buyers, as it allows them to keep the entire commission for themselves.

Despite the Council for Estate Agencies (CEA) explicitly prohibiting this behavior, it remains a prevalent practice in the industry. This has raised concerns among realtors, who have observed an increase in such underhanded tactics in recent years. In fact, it is speculated that this may have prompted the “big three” property agencies (Propnex, ERA, and Huttons) to enter into a new agreement in November 2023.

Despite efforts to prevent it, this unethical behavior is difficult to eradicate, and sellers may not even be aware that their agents are engaging in it. However, simply acknowledging the existence of this issue and cautioning your agent against it may help deter them from succumbing to the temptation. It’s important to stay vigilant and ensure that you are presented with all potential offers for your property.

3. Manage Your Expectations Regarding The Prices During Sales

Witness the slowing down of HDB resale prices, evident in the dip of 10.4% in certain towns by Q4 2023. Despite this, real estate agents lament that some homeowners are oblivious to the changing tides. A prime example of this is the audacious $2 million price tag on a DBSS flat; a clear display of unrealistic expectations. Perhaps the soaring prices post-Covid and the persuasive tactics of agents have led sellers to hold on to their inflated perceptions of their flat’s value. This could also be attributed to those seeking a switch to private condominiums, justifying their high asking price.

In essence, the era of skyrocketing HDB resale prices is coming to a halt. The year 2024 alone will bring over 19,600 new flats, while the previous year saw 24,447. This influx of supply will undoubtedly impact the resale market, leaving those who choose to wait in a state of disillusionment (or perhaps already feeling the consequences, given the even faster increase in private home prices).

4. Unveiling the Bright Side of Temporary Rentals

For sellers, here’s a glimmer of hope amidst the current market conditions: experts predict that rental rates may hit their lowest point in the second half of 2024, including those for HDBs. And with the looming economic challenges, it’s likely that these rates will remain low as companies adopt a more cautious approach and cut housing allowances or expat staff during tough times.

But there’s a silver lining for upgraders – lower rental rates mean more affordable interim housing options while waiting for their dream home or renovation to be completed.

On the other hand, the declining rental rates may dampen interest in residential property investments. However, real estate agents assure that this temporary setback will not last, as buyers are currently deterred by the hefty Additional Buyer’s Stamp Duty (ABSD) rates.

5. Shifting Focus: High New Launch Prices Spark Resale Trend!

The disparity between new and resale units in the same vicinity, such as the coveted areas of Tanah Merah or Paya Lebar, is strikingly apparent – with the older units boasting larger, more spacious interiors and a lower maintenance cost, as well as being strategically spread out across the block. This has caught the eye of many upgraders who are able to recognize the value in these resale properties, although no specific names were mentioned, it is believed that the Sceneca Residences and The Continuum are at the forefront of this trend in the East.

However, for those who prioritize living space, the current market trend favors resale properties as the higher quantum of new launches can be a deterrent. A realtor with expertise in central region properties also noted that buyers may take advantage of the narrowing price gap between the RCR and CCR, leading to a surge in interest for older resale condos in prime districts like 9 or 10.

While this may provide some solace for sellers of CCR condos, the recent hike in Additional Buyer’s Stamp Duty (ABSD) for foreigners has significantly reduced their presence in the market. As a result, local buyers may now make up the majority of potential buyers for CCR properties.

However, this may not be enough to offset the downward pressure on CCR condos. In these tumultuous times, it can be daunting to navigate the selling process, especially with numerous agents vying for your attention. For a neutral perspective and comprehensive reviews of replacement homes, do not hesitate to contact me. I am here to provide a helping hand in this challenging market.

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.

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