Why Resale & Why New Launch?
Updated: May 18, 2021
Before we start, tomorrow is the 2nd of June 2020, alot of us will be heading back to workplace. Even though our numbers have lowered over the past few weeks but please continue to stay alert, and do our part to keep yourself and our community safe.
"KEEP CALM & SANITIZE" ;)
Now lets get back to the article!
So... after my sharing on “Things You Might Not Know About Property Investment”, some of my friends messaged me asking for further insights on property investment.
Resale Property or New Launch unit from the Developer??
Will the price gets cheaper??
Today, let’s take a look at these matters at hand and I will try to answer all of the questions in this article. LETS GO!
It is no doubt that most agents will advise their clients to go for a newly launched project from a developer because of having the “lowest price” and the statistical upward trends of the new launch market. With that said, my position today is to weigh out these options and let you be your own judge on which makes more sense for your family and you.
Frankly speaking, this decision is really based on every individual’s requirement. In short, it's your choice. That is because the option of purchasing a New Launch or Resale private property is wholly on you, and it comes down to a couple of important factors.
What is your budget
How long are you comfortable to wait
Will you be okay with an older unit
Once you have gone through the questions above, and managed to further understand your personal/family preferences, your choice will be relatively clear. In hope to provide you with a better decision, let’s take a deeper look and weigh out the advantages and disadvantages of both.
Resale Private Property
For buying of a resale unit, you must know that you are dealing directly with a private seller, and from time to time with certain unrealistic expectations for the selling of their property.
At the same time, for those asking about “fire” sale.. Honestly it is super rare to find a “fire” sale unit and it only comes once in a blue moon, It's like finding a needle through a haystack. Especially with all the stimulus packages created, to strengthen homeowners capacity in retaining their unit, like deferring of loan payments, extension of ABSD remission and etc… In my opinion, these measures are introduced not only to help homeowners to tide over such period, it is also a way to help curbing any surge of “fire” sale.
Do you know as a homeowner you can now apply for deferment repayment for your residential property loans until 31st Dec?
Commonly comes in bigger sizes which provides more “live-able” space
Commonly are of more affordable price point as compared to New Launch
Better visualisation of your ideal renovation for the unit as you get to see it
Commonly able to find more amenities within your vicinity
Moving in can happen likely within 3 months from signing of documents, which also mean you can start leasing your property after the 3 months
Able to appreciate the actual condition of the property
Chances to negotiate for a better price with the seller
Buyers who have agent representing them, usually do not need to pay for commission
No First Mover Advantage(*I will explain this at the later part of the article)
Only a standard purchase scheme, no other type of payment schemes
Normally requires a thorough renovation of unit
Worn out goods like appliances and air-conditions that will have to be changed
Dated design and layout
You will likely be buying it at an increased price from previous owner
Requires thorough check for any hidden defects like leakings and electrical faults
Lesser remaining lease (Leasehold properties)
For buying a new launch unit at the showflat, you are directly taking the deal from the developers. With the Covid-19 situation, which resulted in increment of cost in construction, material, labour and deliverance by right the property cost should also increase, but do you know that developers are still giving discounts?
Advantages (NEW LAUNCH)
First Mover Advantage(*I will explain this at the later part of the article)
You have many units to pick from depending on your preferred layout, facings and level
Totally new unit with new fixtures like appliances and air-conditions
Modern layout and creative designs
Likely to get discounted prices during this period
Comes with 1 year Defects Liability Period, where developers will rectify any defects during this period
Multiple payment schemes to pick from, which will cater for better means of financing
Developers might also provide some “freebies”, for example 2 year free professional training like yoga, dance classes etc..
Fresh tenure of 99/103 years
Buyers who have agent representing them, usually do not need to pay for commission
Disadvantages (NEW LAUNCH)
Moving in or renting of the unit can only take place after a few of years, waiting for the completion of the building
Visualisation of the space and size can be slightly difficult as your perspectives are based on floorplans, show suites and virtual tours.
Commonly more expensive than resale properties
Buyers will have no negotiating power with the developers
Commonly smaller size as compared to resale property due to bigger project unit count
*First Mover Advantage simply means that the buyer who bought a new launch unit at the initial stage will generally benefit the most as the price point will be at the cheapest and the pricing will start to increase over time and/or after a certain number of units are sold which generates further “Paper Gain” for the first owner. A Resale buyer will unlikely benefit from this advantage as they will likely buy their resale unit at a higher price from the first owner who bought it from the developer.
Just remember the earlier you buy, the better it will be. Taking the first mover advantage will allow you as the first owner to have more control over the sale price as compared to the resale buyer who already bought the unit at a higher price from the first owner.
Let's take a look at a case study,
Mr Tan bought a 2 bedroom unit at $850k from the developer. Mr Tan has a neighbour Ms Chan who bought her 2 bedroom unit from the previous owner at $1 mil. Today Mr Tan and Ms Chan would like to sell their unit and so they both found an agent to market their unit. Based on transacted price and market valuation, they both price their unit at $1.15 mil.
Who will profit more if they both manage to sell at $1.15mil ?
If a buyer wishes to only offer $1.05 mil, who will have MORE capacity to say YES to the offer?
If you would like, you can message me your answer ;)
Food For Thoughts
With all the stimulus initiated to aid homeowners/sellers in strengthening their holding power for their home, why would any seller want to let go of their home at a huge loss?
With all the rising costs set for developers like taking up preventive measures/screenings for construction workers, higher material cost due to limited labour cost and deliverance of goods etc.. How can the price point be any cheaper?
Do you really believe that the property market can be any cheaper with the stimulus and implementation of the measures ?
All in all, with all the recent happenings in the world, we all should be expecting the cost of living to increase drastically.. Have you realised that your grocery costs have increased during the Circuit Breaker? I did :/
Long story short, the choice of choosing a Resale Private Property or New Launch, wholly depends on both you and your family. In my personal opinion, New Launch can be very attractive as it can really benefit the buyers who have the time to wait for the completion. At the same time, Resale Private Property will also be attractive for upgraders who are urgently in need for a place to move in.
Nonetheless as an agent, I can advise, recommend and shortlist BUT your decision is what matters the most.
What are your concerns? What would you wish to share or clarify? I would love to hear from you!
For more property insights,
Read More @ https://www.victorchua.com/blog
Victor Chua, Senior Associate Director of OrangeTee & Tie, is a up and rising leader making a stand in the real estate industry.
He enjoys working out during his free time and can sing a couple of songs decently without having any leftover food thrown at him. When not doing so, he enjoys spending time with his family and love ones as he sees family as his top priority.
Professionally, he is a licensed real estate agent, investor, team leader, and a Real Estate Salesperson (RES) trainer in Navis Living Group (NLG).
Throughout his career, he has helped many clients grow their wealth through meticulous and intentional real estate planning by selecting great property investments and also managing their portfolios actively.