Updated: Jun 5
Many Singaporean including me made this mistakes:
Purchase a resale flat in over-saturated estate
Purchase a resale condo instead of a brand new launch condo
I bought my resale HDB in 2013 because I thought HDB is a good investment. At the point of purchase, HDB age is 10 year and lease begin in 2002. Now In 2020, the HDB age is 18. The highest peak prices for my HDB was in 2013-2014 – where the transactions crossed $500K. During that period, the flat’s age was about 10 years old. As it began to cross more than 15 years old, the transacted price began to drop. For those who bought in 2013 – now will be after the MOP period – your flat is now eligible for sale. But it is unlikely for you to sell at close to your purchase price of $550K – the transacted prices right now is $470K. There is no gain for me to leverage on for your next property purchase.
If have bought a new launch condo during the same period, in particular The Palette, I could have make a handsome profit. For Example, The Palette 2-bedroom 753sf #05-01 was purchased in 2011 for $663,200 and sold in 2018 for $816,000, making a $152,800 or a return of 115% of the 20% downpayment or 16% annual return.
Compared to my HDB loss of $80K over a period of more than 7 years, private property definitely give me more capital return. However, not all private properties will appreciate this way – it is highly dependent on what the property is.
That’s why your first property is critical – if it is able to give you your first capital gains – it creates a path for your future properties. It is important to make sure the property you purchase does not go against you in the future.
Over the past 10 years, I have encountered cases where clients totally forego the chance to own HDB and go direct to private property as:
they can obtain higher loan amount for private property compared to HDB
progressive payment allow them to stagger monthly instalment
it is perfectly fine to rent while waiting for their property to finish construction.
How Can You Avoid Such Mistakes? Let's have a coffee and I promise to share more insightful secrets with you! WhatsApp Kelvin today to find out more about the 7 Mistakes you should avoid in a Property Purchase.