One of the most frequently asked questions (apart from whether a freehold or leasehold property is better) among homebuyers is deciding between buying a new and resale condo in Singapore.
Whether you’re buying to upgrade from your HDB flat or to rent it out, below are the top considerations to help you narrow down your buying choices.
Pros of buying a new condo
Pros of buying a resale condo
In a move-in/rent-out condition
Cheaper (with early bird discounts)
More predictable rental income
More flexible payment schemes
Can inspect the unit before buying
More unit options to choose from
More room for price negotiation
Lower maintenance cost
Typically larger than newer condos
Pros of buying a new condo:
1. Everything is brand new
Perhaps the most alluring aspect of buying a new condo is of course, that everything about the property — from the fixtures, appliances, plumbing, facilities — is spanking new. So, unlike buying a resale property, you don’t have to worry about repairing something that’s broken by the previous owner.
Apart from the usual swimming pools, barbeque pits and gyms, most newer condos also come with swankier facilities such as on-demand concierge services and smart home features.
Some tenants also prefer to rent a new condo because the unit and the facilities are newer, so this is something to take note of if you’re buying as a landlord.
2. Cheaper (with early bird discounts)
Not considering projects that have reached its Temporary Occupation Permit (TOP), new condos are generally cheaper than resale condos because developers will typically give early bird discounts to entice potential buyers. This could be in the form of price discounts, vouchers or even the absorption of stamp duties.
Besides that, you might also find fire sale properties, where developers will give out attractive discounts for projects that are nearing the 5-year Additional Buyer’s Stamp Duty (ABSD) deadline.
For the uninitiated, the ABSD rule imposes that developers will need to complete and sell all projects within five years after acquiring the land, or risk paying 25% of the land price as ABSD plus interest.
As such, developers will rather sell the remaining units, then risk paying the ABSD.
Read also: 9 Condos To Watch For Fire Sales As They Approach ABSD Deadline in 2020/2021
Whilst you could also find great bargains for resale condos, remember that some sellers will price their property higher since they expect buyers to negotiate the price down.
3. More flexible payment schemes
When buying a condo, you can borrow up to 75% home loan. The remaining 25% downpayment (option and booking fee, stamp duties) must be paid from the buyer’s own pocket.
The difference between a new and resale condo is that for resale condos, you need to pay the 25% downpayment and service the monthly instalments immediately. That’s a lot of money to fork out at one go.
For new launches, it’s more flexible.
There are payment schemes that allow you to spread out across the few years in the lead up to completion, which is helpful especially if you don’t have the immediate funds.
The two types of payment schemes available are:
- Progressive Payment Scheme (PPS)
- Deferred Payment Scheme (DPS)
Progressive Payment Scheme (PPS)
When buying a building under construction (BUC) (a private property that has not been completed), you can opt for PPS.
Basically, you (or rather the bank) will disburse the payment based on the property’s construction progress, rather than paying in one go.
Here’s how the PPS works:
- Pay the 5% OTP fee in cash
- Sign the Sale & Purchase Agreement and pay off the remaining 15% downpayment (CPF funds can be used)
- Settle any stamp duties (also possibly with CPF funds)
Then, you settle the remainder based on the construction progress:
Completion of stage
Repayments (as a percentage or purchase price)
Reinforced concrete work
Partitions and walls
Internal plumbing and plastering, door and window frames, and electrical wiring
Roads, drains, and car parks
Receipt of Temporary Occupation Permit (residents can move in)
Completion (receipt of Certificate of Statutory Completion)
As you can see from above, the initial monthly instalments is lower, so you get to enjoy the property without forking out the full sum.
Read more about PPS here.
Deferred Payment Scheme
On the other hand, the DPS works differently; you pay 20% of the downpayment first and don’t have to pay anything for the next two to three years. Once the period is over, then you’ll resume paying monthly instalments.
However, the caveat is that the price of the property will go up, usually by five to 10% more. Also note that DPS is only available for completed condo projects that have received the Certificate of Statutory Completion (CSC) and TOP.
Read more about DPS here.
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4. You have more unit options to choose from
When you buy a new launch condo, you get to pick a unit that you prefer, be it one that’s better facing, closer to the facilities, carpark, on a higher floor, and so on.
This option is also very helpful if you’re buying in hopes of renting it out, and know the profile of your buyer.
On the other hand, you can only choose what’s available on the market when you buy a resale condo. Additionally, you’ll also likely to face stiffer competition from other buyers eyeing the same unit.
5. Lower maintenance cost
Obviously, a new launch condo comes included with cabinetry, fixtures and appliances that are in tip-top condition. In the event that they break down or malfunction, developers are obliged to fix or repair them for free during the 12-month defects-free period.
A resale condo on the other hand, has a higher risk of things breaking down, be it major plumbing issues, water seepage, cracks, etc. — leaving you with costly repairs.
If you’re buying as an investor, the lower maintenance cost is a huge draw because it means you spend less time and money on major renovations trying to replace or restore things.
Also, remember that the older the condo, the higher the maintenance cost. That’s because the cost to maintain and repair facilities will increase as they age.
Pros of buying a resale condo
While a new launch condo comes with its benefits, that’s not to say it’s better than a resale condo. In fact, below are some of the reasons why buying a resale condo is better:
1. You can move in or rent out immediately
The biggest advantage of buying a resale condo is that you don’t have to wait three to six years for it to be completed. If you are in urgent need to move into a new place, then a resale condo should be your first choice.
A resale condo is also the better option if you’re buying to rent the unit or spare bedrooms, since you can rent it out immediately as well. Furthermore, potential tenants can visit the house and get a sense of what the place looks like, which helps them to decide better.
2. Resale condos have more predictable rental income
Compared to a new condo, it’s much easier to predict the rental income of a resale condo. By looking at current and past rental data on sites like URA and Square Foot, you get a good gauge of rental trends and can decide whether the condo is worth your investment.
3. You get a better sense of what you’re buying
For new launch condos, you basically have to rely on the materials that developers provide you with, such as brochures and maps.
While you could pop by the showflat to get a better sense of the property, remember, showflats come with bells and whistles that are designed to sway you away — the actual unit could turn out to be vastly different.
Related article: 11 things to look out for when viewing a showflat
With a resale condo, it’s easier to decide whether the place you’re buying is right for you. You can inspect the physical condition of the property, know what the surrounding views are like, who your neighbours are, as well as other intricate details such as traffic, noise levels, the overall condition of the facilities, and how well-run the management committee is.
Overcrowded facilities, lifts that always break down and dirty common areas are all signs of a badly-run management. These are the things that a showflat or brochure cannot provide.
4. Might find a seller who’s willing to let the property go at a steal
Developers take specific aspects such as location, land price, construction cost and market condition into account when developing their pricing strategy. Therefore, the price is usually fixed with little room for bargaining.
On the other hand, resale condos are sold by independent sellers who all have different reasons to sell, which leaves more room for negotiation.
For instance, it could be that the seller is in a tight financial situation and is looking to dispose of the property at a huge discount. Or, the seller might be looking to leave the country and wants to sell the property quickly.
In such circumstances, you could be getting your hands on an undervalued property, or a fire sale property.
Also read: What’s a Fire Sale Property and Where to Look for a Good Deal
5. Larger than newer condos
Last but not least, resale condos are generally bigger than new launch condos.
For example, a 2-bedroom unit at Heritage View (which was launched in 2010) is 969 sq ft whereas a 2-bedder at 2020’s Penrose is 649 sq ft.
This trend is likely to continue as property prices become more expensive while homes become smaller. If you have a larger family or need more spacious units, then a resale condo is more suited for you.
Final verdict: Resale condo or new launch condo?
Ultimately, deciding between a resale condo and new launch condo will depend on what matters to you more; if you prefer buying a new home with new facilities, and want more flexibility in your downpayment and monthly mortgage, then a new launch condo is for you.
On the other hand, if you want to move in/rent out immediately, then a resale condo is a no-brainer choice. Despite being older, you can look for good bargains in the market and could get your hands on an undervalued property if you know where to look.
Good luck in finding your new home!
Other related FAQs:
Is buying a condo in Singapore a good investment?
Buying a condo can be a good investment, but always work out your finances accordingly, and consider other factors such as the amount of bank loan you can borrow, the location, and upcoming government transformation plans.
Should you buy a new or resale condo?
Generally speaking, a new launch condo is better if faster capital appreciation is your goal; while a resale condo is better if you’re looking for rental yields.
Should you buy a resale HDB or condo?
While you can collect higher rental yields from condos, remember that the cost of buying a condo is also higher. As resale HDBs are more affordable, you can get good rental yields and likely break even faster.
Do condo values go up?
While condos generally appreciate in value, however, do remember that this is largely dependent on factors such as location, nearby amenities, remaining lease, etc.
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