Private-home sub-sales continue to hit new highs in 2023

Volumes rise to their highest level in a decade with 1,294 transactions as market confidence grows

Mar 25, 2024

SUB-SALE volumes in Singapore’s private housing market rose yet again in 2023 to their highest level since 2013 with 1,294 transactions, a 69.2 per cent jump from the previous year.

This is the second straight year of strong growth in the sub-sales market, which is typically seen as a proxy for speculative buying behaviour. Volumes had hit a decade-long high in 2022 with 765 transactions, up 34.7 per cent from 2021.

Still, current levels are a fraction of the 4,863 sub-sale deals recorded during the housing market’s peak in 2007. And the rise in sub-sales is likely a result of the recent strong run-up in home values.

A sub-sale is recorded when a buyer resells a property bought directly from the developer, within the three to four years before the project’s completion.

Figures from the Urban Redevelopment Authority (URA) showed that sub-sales accounted for 9.5 per cent of all deals in the fourth quarter of 2023, bringing it past 9 per cent for the first time since 2011. This is also the highest level since Q1 2010, when sub-sales made for 9.6 per cent of all transactions.

Over the past decade, sub-sales generally ranged between 0.3 per cent and 3.5 per cent of all transactions.

Data analysed for The Business Times by local property portal showed that almost all sub-sale transactions recorded in the second half of 2023 were profitable. Just one deal in September made a loss of S$38,000 – for a 1,335-square-foot (sq ft) unit at the freehold apartment Rezi 24 in District 14.

In Q4 2023, all deals made profits ranging from S$10,000 to S$864,000. The overall median capital gain for a sub-sale deal was S$243,500, which tended to be around 22.3 per cent of the original transaction price.

The profit figures cited for sub-sale transactions in this article exclude any transaction costs, such as taxes, stamp duties and legal fees.

Sellers also saw a median annualised capital gain of 4.8 per cent, based on a holding period of 4.2 years.

The deal that raked in the biggest profit in Q4 2023 was for a 2,067 sq ft terrace house in the 99-year leasehold condominium development Affinity at Serangoon. The unit changed hands at S$3.18 million in October, earning the seller a cool S$864,000 after holding the property for 4.6 years.

Meanwhile, the deal that made the smallest profit was for a 657 sq ft unit in the freehold condominium Sky Everton in District 2, which was sold for S$1.85 million in October. This brought the seller just S$10,000 in profit after a holding period of 4.3 years.

Breaking it down by region, sub-sales in the Outside Central Region (OCR) chalked up the biggest profits with a median capital gain of S$243,000 – around 23 per cent of the initial purchase price – and an annualised profit of 4.9 per cent.

This was followed by the city fringe, or Rest of Central Region (RCR), which saw a median gain of S$244,000 – 20.4 per cent of the initial price – and an annualised profit of 4.3 per cent.

Lagging was the prime Core Central Region (CCR) with a median gain of S$238,700 – just 9 per cent of the initial transaction price – and an annualised profit of 2.4 per cent.

Nicholas Mak, chief research officer at, pointed out that properties in the suburban OCR typically generated the highest capital gains in percentage terms since the acquisition price of these properties tended to be lower than those in other regions.

For instance, the median acquisition price for private homes in the CCR was S$6.16 million. In contrast, for RCR and OCR properties it was S$1.27 million and S$1.12 million, respectively.

The study also found that there was little difference in profit for sub-sales of freehold or 99-year leasehold properties. But the profit margin and annualised capital gains were higher for 99-year leasehold properties since their acquisition price is generally lower than that of freehold properties, Mak said.

Steady growth

This is the fourth consecutive year of increasing sub-sale numbers after more than a decade of steady declines, noted Mak. It also follows a trough in 2020, when just 198 sub-sale transactions were recorded.

Since then, the market has witnessed a steady increase in volumes, with sub-sales more than doubling in 2021 to 568 deals and rising further in 2022 and 2023.

Mak attributes the upward trend in sub-sales of homes since 2020 to delays and disruptions in the construction industry brought on by the pandemic. This resulted in some residential projects taking a much longer time to complete, he said, and this has lasting impact even now.

“Investors have a longer window of opportunity for sub-sales due to the delayed completion of projects, and the rising prices would make sub-sales more profitable,” said Mak. Between Q1 2020 and Q4 2023, URA’s price index for private residential homes rose by 32.5 per cent.

“The higher potential profit would (therefore) incentivise more investors to sell their properties,” he said.

On top of that, some real estate agents may encourage homeowners to “recycle” their capital by making a sub-sale, said Mak.

For example, after brokering the sale of a newly launched private residential project, some agents may keep the contact details of the buyer and reach out after three years or so to encourage them to sell their first unit and buy another uncompleted unit.

These agents may be spurred to do so since the commission rate paid by property developers is usually more than the typical 1 per cent they receive from a resale deal, said Mak.

Buyers who are waiting for an uncompleted property will also be on a progressive payment schedule, he said. This means that the property’s full price will only have to be paid before the project is completed. Doing so may also give the homeowner a higher return on investment, Mak said.

Besides, there were several large residential projects launched in the OCR in 2018 and 2019. This meant that there were many “affordable” condo units available to short-term investors, which led to more sub-sales in the past two years, he said.

Still, Mak highlighted that current sub-sale levels are nowhere near their peak in 2007, and unlikely to continue growing in 2024.

“The market conditions today are very different from those in 2007,” said Mak.

Cooling measures such as the Additional Buyer’s Stamp Duty, Seller’s Stamp Duty and Total Debt Servicing Ratio were not in place back in 2007, for instance. These measures were only introduced between 2009 and 2013 to curb market speculation, following the global financial crisis of 2008.

Furthermore, economic uncertainties and the current high-interest-rate environment are likely to weigh on the private residential market. As such, sub-sales are very likely to decrease in the coming year, Mak said.