What you need to consider before buying a condo now
The year of 2019 is shaping up to be an exciting time for the property sector. Over the next few months, homes from some highly anticipated launches will hit the market. That includes the 1,468-unit Parc Clematis which could be launched at about $1,500psf, the 188-unit Haus on Handy estimated at $2,800 psf, and 186-unit View at Kismis with a launch price of about $1,700 psf. Even the executive condominium scene is heating up with the launch of the 820-unit EC Piermont Grand by CDL, at prices of $1,100 psf.
In fact, while the numbers of new private homes (excluding ECs) sold in June – a typically slower month – had fallen by 13.8% from May to 821, it was the best sales performance in the months of June over the past 6 years, according to OrangeTee & Tie Research.
The question on many people’s minds right now is, is it the right time to buy a condo now? Here are some reasons we think the answer might be “yes”.
More launches, more choices
According to data from OrangeTee & Tie Research, an increase in housing supply typically encourages more buying interest. The increased supply of new homes means that there are more choices for homebuyers, whether in terms of prices, unit sizes, locations, and even whether a new home has a freehold or leasehold tenure.
In fact, there has been a recent jump in freehold condominiums being sold in May and June 2019, and this trend could continue with the increasing number of freehold units being launched for sale in the near future. “It is rare to have a good selection of premium, freehold projects being launched at choice locations,” said Christine Sun, Head of Research & Consultancy at OrangeTee & Tie.
“This could be a good opportunity for buyers to snag a freehold property; otherwise they may have to wait for the next collective sales cycle that is likely to take place many years down the road.”
Prices continue to grow
Singapore’s private residential price index rose 1.3% in 2Q2019, based on the latest figures from the URA. This was the first quarterly increase since the latest cooling measures were implemented in July 2018, and represented a net price increase of 0.6% from the start of 2019.
OrangeTee’s Sun has forecast prices to grow by 1% to 3% for the rest of the year, a good sign for homebuyers to act sooner than later.
New launches set new price expectations
When a new condominium project springs up in a neighbourhood, its selling prices often set the benchmark for older homes around its vicinity. Indeed, in 2Q2019, OrangeTee & Tie’s research head Sun noted that “many new projects are selling at new benchmark prices for their locations in recent months”.
That means higher possible selling prices for existing homeowners in many different prime districts, and could be the right impetus for homeowners who plan to upgrade, to take the plunge soon.
Interest rates may take a breather
The US Federal Reserve appears to be taking a step back in pushing for another 25 basis point rate hike in the second half of this year, owing to the increased uncertainty from the US-China trade war. That also means that interest rates on home loans here could still remain low for the time being.
Homebuyers who are able to snag a good deal on a home could also benefit from servicing their home loans at the current lower interest rates.
Cooling measures to remain status quo
The latest remarks from MAS managing director Ravi Menon indicated that last year’s cooling measures had been effective in preventing a property bubble from forming. “Since end-Q2 last year, private residential price increases have eased significantly and average transaction volumes have fallen by 30%. Bids for land tenders, in both the en-bloc sale and Government Land Sale markets, have become sober.”
“We have learnt from experience that preventing a bubble from forming is less painful than deflating one that has fully formed,” explained Menon, and added that the government’s aim is “not to depress property prices but to promote a stable and sustainable market.”
Menon also noted that the government “does not have a target rate of increase for property prices nor can it manage the cycle too tightly” and will “continue to monitor the property market closely and stands ready to help ensure a healthy and sustainable market.”
Homebuyer can take heed that while existing cooling measures are unlikely to be lifted, new cooling measures that could scupper their buying plans are not currently in the works.
Seek the right advice
Purchasing a new home is a big decision so homebuyers need to do their homework right, by understanding their needs and make a purchase that is well within their budget. If you’re unsure, seek help from a trusted property agent.