Updated: Sep 14, 2020
The right property is going to cost you but the wrong property will keep costing you. One of the critical mistakes that all homeowners should avoid is believing Location is the most important criteria. Remember the phrase "Location, Location, Location". Traditionally, most buyers including myself were taught that is the most important factor. Like any industry, the real estate market has transformed over time. What our parents' generation experienced in property purchase, might not entirely relevant in today market.
In the past, it was much easier to make money from nearly any property you invest in. There are a lot of speculation. Today it's almost impossible to speculate due to property cooling measures.
Why is it that some people make a lot of money from property and some people lose money in it? Some say it is luck, some say it is timing. I say the former made money because that buyers have done proper research and analysis. We can't control luck and there is no perfect timing, but we can definitely do proper analysis and research.
Real life example:
COMPASS HEIGHTS (Resale) VS HIGH PARK RESIDENCES (New Launch)
Which is a better location?
Most buyers in 2015 will choose to purchase Compass Heights as it is situated above the MRT and on a low PSF of about $850psf compared to High Park Residence at launch price of about $1000psf. Despite the obvious better, Compass Height underperformed compared to High Park Residence. Why?
Average Price in 2015:$848psf
Average Price in 2019:$825psf
Difference: $23 psf loss
High Park Residence
Average Price in 2015:$1000psf
Average Price in 2019:$1269psf
Difference: $269 psf profit
One of the key factor contributing to the discrepancy in performance is Entry Price.
Compass Height was launched at $500psf in 2001. This mean that at any price below the average price $848psf, owner will still make significant profit. Therefore, anyone who bought Compass Height resale unit will always face pricing pressure from owners who have much lower cost base.
Unless the owner are willing to hold on for the longer term, they might have a slim chance for the proeprty to appreciate. However, they will also miss better opportunities in the market.
Nowadays, property investment are more complex than ever before. it is no longer just about psf or location. Certainly there are also other factors affect how the property price will perform in the future. I spent time analysing the property market to develop a framework to make well-informed and profitable decision.
How Can You Avoid Making Mistakes in property market? Let's have a coffee and I promise to share more insightful secrets with you! WhatsApp Kelvin today to find out more about the framework to make well-informed an profitable desicion.