Recently it has been reported that home-buyers in Singapore are showing a clear preference for new condominium homes to those in the resale market. Every weekend, business seems to be brisk at new condo launch show flats. Some experts have suggested this trend is a result of the slew of anti-speculation measures introduced by the authorities to cool the over-heated property market.
Among other things that the government implemented is the Seller’s Stamp Duty (SSD). It is imposed on anyone who sells a Singapore private property within the first four years of purchasing it. The duty to be paid is 16 per cent, 12 per cent, 8 per cent and 4 per cent if the property is sold within the first, second, third and fourth year of purchase, respectively.
Because of this, it seems from an investment point of view that buying a new condo unit at the developer’s property sale has some advantages over buying a resale unit.
A new launch property is usually under construction and it normally takes about three to four years for the condo project to be completed. So a buyer can wait it out and only need to decide whether to sell the property when it is completed or near completion.
By then, the value of that condo unit would have appreciated sufficiently to make a tidy profit and the SSD cost would be minimal or possibly none at all.
In the meantime, the buyer enjoys a progressive payment plan. After paying the 20% down-payment, the rest of the purchase price is paid by installment, depending on the rate at which the condo project is being completed and this is usually spread out over a few years.
If you were to buy a resale condo unit, you have to pay the full property price upfront and so be committed to servicing a hefty bank loan right from the start. You will be immediately concerned over getting a sufficiently good rental yield to cover your cost and still generate positive cash flow for your investment.
Another advantage of buying properties at a new condo launch sales event is the assurance of having a one year defects liability period in which the developer has to make good any building defects that occurred. There is no such arrangement in the resale market. The buyer takes the unit as it is – you have no recourse against the seller if you find any defect once you have taken over the property.
Yet another advantage of booking a unit at a new launch event is that the buyer gets to choose the unit he wants. Of course you should aim to get in at the pre-launch stage where you will be given the priority to book units of your choice. But sometimes when a condo project is very popular and there is more than one buyer vying for the same unit, a ballot may be necessary to determine who gets the choice unit.
The economy in Singapore is not suffering the way it is in other parts of the world, and the real estate market here remains strong. There are many new condo launch events coming onto the market in the months ahead. If you are a property investor who is keen to register your interest in a particular upcoming condo project, please feel free to contact us.
Jessica Liu writes on behalf of newlaunchatsg.com, which is an online portal dedicated to meet every aspect of the consumers needs in the real estate industry. It covers all information of Singapore property on condominiums.
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Advantage of buying new condo at launch sales