reporter2
06-04-22, 12:08
Newer units have better facilities, older ones have more living space
Christine Sun
Apr 3, 2022
Q: My wife and I have sold our condo unit as we received a good offer and we are looking to buy another one. The prices of leasehold condos from the 1980s seem quite attractive. In addition to less chance of significant capital gains in the future, what other downsides should we be aware of? We are in our 50s and have two children in secondary school.
The private resale market ended on a strong note last year. There was a significant rebound in buyers' interest, and sales volume surged to a 14-year high.
The resale market was well supported by HDB upgraders who have sold their flats at attractive prices over the past year. There were other buyers who have downgraded from landed properties and larger condominiums as well. Many buyers turned to the secondary market as there was a shortage of new homes in the suburban areas.
Moreover, the price gap between new and resale leasehold condominium units has widened over the years, from 11.1 per cent in 2011 to 46.7 per cent in 2021. Therefore, many buyers find resale condominium units more affordable and better value for money.
The market share of leasehold resale condominiums has risen over the past decade.
Based on caveat data from the Urban Redevelopment Authority, 9,584 leasehold resale condominium units were sold in 2021, above the 10-year average of 4,069 units.
As a proportion of condominium resale transactions, leasehold condominiums made up 58.5 per cent of the market share last year, up from 47.7 per cent in 2011. Comparatively, 6,802 freehold resale condo units were sold in 2021, constituting 41.5 per cent of the total resale volume.
Newer leasehold resale properties have been growing in popularity in recent years. Newer leasehold resale condominiums below 10 years old constitute 31.3 per cent of the total leasehold resale transactions last year, up from 16.8 per cent in 2011.
The best-selling newer leasehold resale condominiums in 2020 to 2021 were Marina One Residences (220 units), High Park Residences (170 units), Sims Urban Oasis (123 units), Bartley Ridge (114 units) and Parc Rosewood (109 units).
Older leasehold resale condominiums above 40 years old rose slightly in demand from 1.4 per cent in 2011 to 2.1 per cent in 2021. The most popular condominiums in 2020 to 2021 were Neptune Court (46 units), Braddell View (41 units), Lagoon View (29 units), The Arcadia (26 units), Hillcrest Arcadia (25 units) and People's Park Complex (21 units).
Buyers prefer newer leasehold resale condominiums as many are built by reputed developers and offer facilities like gyms, pavilions, spa equipment and leisure pools. Some of these projects could be mixed developments encompassing retail and commercial services.
Demand may have also increased with more supply of such condominiums in the market. Over the past decade, many land parcels were sold through the Government Land Sales Programme.
Considerations in purchasing older condominiums
The take-up of older leasehold condo units did not rise as fast as their newer counterparts. Many home owners may not have put up their units for sale as they could be waiting for a collective sale deal to gain a windfall. Other buyers may have considered other factors, such as the higher cost of upgrading or repairing the unit's air-conditioning system, kitchen cabinets, bathrooms, or electrical wiring.
Moreover, should the home owner wish to sell the unit later, he may face some difficulty finding suitable buyers. The subsequent purchaser may not be able to secure a mortgage if the balance lease is too low.
https://i.imgur.com/yBNbi6N.png
In addition, the property's resale value may drop if the condition of the unit deteriorates with wear and tear.
In purchasing older leasehold properties, buyers may also need to assess their long-term investment strategy. If the property is not sold through a collective sale, there is the risk of its tenure running out in the future.
Currently, voluntary lease tops-up by the Government are uncommon. No one knows if there will be a policy change even if the population of leasehold condominiums grows.
Having said this, there are still advantages to buying an older leasehold property. For one thing, the living space is usually larger than in newer properties.
https://i.imgur.com/qlJjJSL.png
For those who plan to live out the balance lease and are not concerned about reselling the property, the low entry price may help owners reserve more savings for retirement since the cash outlay is lower than for buying a new property.
Perhaps buyers can study the masterplan surrounding the development before deciding. They may be able to gauge future land use from the broad, long-term strategies for the land parcel and its precinct. Buyers can then assess if it has collective sale potential and is worth investing in for the long run.
• The writer is senior vice-president of OrangeTee & Tie Research & Analytics.
https://i.imgur.com/ymbjZKH.png
https://i.imgur.com/pKns5Sj.jpg
https://www.straitstimes.com/business/invest/newer-units-have-better-facilities-older-ones-have-more-living-space
Christine Sun
Apr 3, 2022
Q: My wife and I have sold our condo unit as we received a good offer and we are looking to buy another one. The prices of leasehold condos from the 1980s seem quite attractive. In addition to less chance of significant capital gains in the future, what other downsides should we be aware of? We are in our 50s and have two children in secondary school.
The private resale market ended on a strong note last year. There was a significant rebound in buyers' interest, and sales volume surged to a 14-year high.
The resale market was well supported by HDB upgraders who have sold their flats at attractive prices over the past year. There were other buyers who have downgraded from landed properties and larger condominiums as well. Many buyers turned to the secondary market as there was a shortage of new homes in the suburban areas.
Moreover, the price gap between new and resale leasehold condominium units has widened over the years, from 11.1 per cent in 2011 to 46.7 per cent in 2021. Therefore, many buyers find resale condominium units more affordable and better value for money.
The market share of leasehold resale condominiums has risen over the past decade.
Based on caveat data from the Urban Redevelopment Authority, 9,584 leasehold resale condominium units were sold in 2021, above the 10-year average of 4,069 units.
As a proportion of condominium resale transactions, leasehold condominiums made up 58.5 per cent of the market share last year, up from 47.7 per cent in 2011. Comparatively, 6,802 freehold resale condo units were sold in 2021, constituting 41.5 per cent of the total resale volume.
Newer leasehold resale properties have been growing in popularity in recent years. Newer leasehold resale condominiums below 10 years old constitute 31.3 per cent of the total leasehold resale transactions last year, up from 16.8 per cent in 2011.
The best-selling newer leasehold resale condominiums in 2020 to 2021 were Marina One Residences (220 units), High Park Residences (170 units), Sims Urban Oasis (123 units), Bartley Ridge (114 units) and Parc Rosewood (109 units).
Older leasehold resale condominiums above 40 years old rose slightly in demand from 1.4 per cent in 2011 to 2.1 per cent in 2021. The most popular condominiums in 2020 to 2021 were Neptune Court (46 units), Braddell View (41 units), Lagoon View (29 units), The Arcadia (26 units), Hillcrest Arcadia (25 units) and People's Park Complex (21 units).
Buyers prefer newer leasehold resale condominiums as many are built by reputed developers and offer facilities like gyms, pavilions, spa equipment and leisure pools. Some of these projects could be mixed developments encompassing retail and commercial services.
Demand may have also increased with more supply of such condominiums in the market. Over the past decade, many land parcels were sold through the Government Land Sales Programme.
Considerations in purchasing older condominiums
The take-up of older leasehold condo units did not rise as fast as their newer counterparts. Many home owners may not have put up their units for sale as they could be waiting for a collective sale deal to gain a windfall. Other buyers may have considered other factors, such as the higher cost of upgrading or repairing the unit's air-conditioning system, kitchen cabinets, bathrooms, or electrical wiring.
Moreover, should the home owner wish to sell the unit later, he may face some difficulty finding suitable buyers. The subsequent purchaser may not be able to secure a mortgage if the balance lease is too low.
https://i.imgur.com/yBNbi6N.png
In addition, the property's resale value may drop if the condition of the unit deteriorates with wear and tear.
In purchasing older leasehold properties, buyers may also need to assess their long-term investment strategy. If the property is not sold through a collective sale, there is the risk of its tenure running out in the future.
Currently, voluntary lease tops-up by the Government are uncommon. No one knows if there will be a policy change even if the population of leasehold condominiums grows.
Having said this, there are still advantages to buying an older leasehold property. For one thing, the living space is usually larger than in newer properties.
https://i.imgur.com/qlJjJSL.png
For those who plan to live out the balance lease and are not concerned about reselling the property, the low entry price may help owners reserve more savings for retirement since the cash outlay is lower than for buying a new property.
Perhaps buyers can study the masterplan surrounding the development before deciding. They may be able to gauge future land use from the broad, long-term strategies for the land parcel and its precinct. Buyers can then assess if it has collective sale potential and is worth investing in for the long run.
• The writer is senior vice-president of OrangeTee & Tie Research & Analytics.
https://i.imgur.com/ymbjZKH.png
https://i.imgur.com/pKns5Sj.jpg
https://www.straitstimes.com/business/invest/newer-units-have-better-facilities-older-ones-have-more-living-space