Should families still buy a condo in today’s high property market?

Interest rates are easily 3-4% now.

Private property prices have continued rising for 28 consecutive months.

Source: The Straits Times

A resale 3-bedder condo in residential areas used to cost $1M. Now it’s easily $1.3M on average.

The private property market is at its all-time high now.

Yet Singaporeans still seem to be snapping up units left and right?

AMO residences sold 97% of units on launch day in July 2022.

Source: EdgeProp

Lentor Modern sold 84% of units on launch day as well.

Source: EdgeProp

So did Sky Eden, which sold 75% of units on launch day.

Source: The Straits Times

It’s clear that Singaporeans have an undying love for property.

But following the herd isn’t the best strategy — the worst thing we can do is jump into a 7-figure decision because “everyone else is doing it”.

In this short article, we’ll dissect if buying a condo in today’s market is really the right move for you.

The biggest roadblock to choosing the condo route

After speaking to over 80+ families in the past few months, finances was the biggest concern for 95% of them.

“Can we really afford a condo without having to sacrifice our lifestyle to meet the mortgage?”

“Does this mean we have to continuously work for the next 30 years just to pay off the mortgage?”

“What if something happens to us halfway while we’re servicing the mortgage?”

These concerns are more valid than ever in today’s market.

A resale 3-Bedder condo is easily $1.3M, while a 4-Bedder is around $1.5M. (Assuming residential areas like Choa Chu Kang or Punggol).

This is around $200K-$300K higher compared to pre-covid prices.

If you’re looking at more central locations, this can be bumped up to $1.6M+ and $2M+ for 3 and 4 bedders respectively.

And we still haven’t factored in a 3-4% interest rate.

Assuming a 3% interest on a $1.4M condo over 25 years, your mortgage would be $5K/month with $440K total interest paid.

Back when interest rates was at 2.5%, the total interest paid in this same scenario would be $363K.

This means you could be paying around $80K in extra interest compared if you bought pre-covid.

But why are people still buying condos despite these concerns?

Source: PropertyGuru

Even though condo prices are at all-time highs, there’s a good reason why people still flock to both new launch and resale condos.

It’s because private property prices are forecasted to keep going higher.

Data has shown us that the Singapore property market has been arguably one of the most resilient asset classes.

Each time the private property market saw a drop (due to factors like cooling measures, Covid, SARS, etc), it rebounded a few years later before breaking the previous high.

SG's Private Property Market Price Index

The Singapore government won’t be panicking about the private property market being on an uptrend.

(Their pledge to Singaporeans is to keep public housing affordable, not private.)

Plus, with foreign investors snapping up S$5M luxury condos in BULK, imagine the property tax revenues.

Source: CNA

Remember the September 2022 cooling measures? Foreigner stamp duties increased from 20% to 30%.

It’s clear that foreign investment is an excellent revenue stream for the government.

That’s why private property prices continually broke new highs at each turn, with the lows never going past the previous low.

The fact is that Singaporeans can afford today's high prices

Source: The Business Times

Assuming a family is cashing out their newly MOP-ed BTO, the cash proceeds + their existing CPF could be enough to cover the downpayment needed for a $1.3M condo

(Downpayment of 25% is about $325K).

Let’s assume the family loans the full 75% ($975,000) at a 3% interest rate over a 25 year tenure — this translates to a $4.6K monthly mortgage.

With a household income of $8K, this means their monthly CPF would be $2960.

They can use this CPF to service the monthly mortgage, which brings the total cash outlay to be $1,640/month for this family. 

Can this family afford to pay $1.6K in cash every month?

The bigger question for you is — can your family afford paying an extra $1.6K in cash each month?

If your answer is yes, then do you see why condos are still getting snapped up despite high interest rates and property prices?

What about high interest rates?

Source: Straits Times

Most people are concerned about high interest rates, and feel like they should wait for this period to tide over.

But they forget about how condos can quickly increase in value.

Let’s go through a hypothetical scenario together.

Let’s say we’re eyeing a $1.3M condo, but we would be paying an extra $100K in interest if we bought today compared to 3 years later.

So we decide to wait it out.

Sure enough, 3 years later, interest rates fell back down to ~2%.

But the catch is, that $1.3M condo has now become $1.5M.

This price jump is not rare, considering the people who bought in at $1.3M will try to aim for a profit.

This means we would have saved $100K in interest, but spent an extra $200K in the condo purchase price.

Meaning, we netted a $100K LOSS despite having a lower interest rate.

The most common reasons for going down the condo route

Remember your neighbours who sold their HDB flats and upgraded to a condo?

Chances are, they don’t plan on staying in that same condo forever.

They probably plan to cash out before they retire, and downgrade back to a HDB as their retirement home.

For couples in their 30s/40s buying a condo, they have a huge number of options.

Option 1:
> Sell off the condo for 6-figure profit after 5 years

> use the profits to upgrade to a 4/5 Bedder condo

> Cash out once they hit retirement, have a tidy $500K-$1M cash proceed remaining even after fully paying off a HDB flat

Option 2:
> Sell off the condo for 6-figure profit after 5 years

> fully pay off a HDB Executive Apartment/Maisonette/5-Room flat (probably their retirement home), and still have cash proceeds leftover.

Option 3:
> Sell off the condo for 6-figure profit after 5 years

> buy 1 HDB for ownstay, 1 condo to rent out for passive income

There are lots of possibilities based on the family’s situation, goals, and risk tolerance.

But the most common theme is families using their condo to build a retirement fund.

The DOWNSIDES of buying a condo

Sure, condos can be a highly profitable investment. 100% of my condo clients have made 6-figure profits in the past 3 years.

But condos come with their own set of drawbacks that you need to decide if it’s worth going down this path.

The most obvious drawback is the SIZE.

Its no secret that new condos are getting smaller and smaller every year.

People have even compared the state of today’s new condos to shoeboxes, and I wouldn’t disagree.

Source: Stacked Homes

If space is your family’s #1 non-negotiable priority, and a 4/5 Bedder condo is out of budget…

Then you might want to consider a HDB Executive Apartment.

The exception here is older condos, where their 3-Bedder sizes are possibly bigger than today’s 5-Room flat BTOs.

(But you need to be prepared for older condos to potentially drop in value).

Additionally, if you’re going for new launch condos (which generally has higher profit potential compared to resale)…

Then you’ll need to consider if the 4-6 years waiting time is acceptable to you or not.

Keep in mind, not every condo = confirm make money

Behind the news headlines of condos appreciating by $300K-$500K in the past 5 years, there are dozens of unprofitable condos that we don’t hear about.

Source: AsiaOne

It is entirely possible for you to lose money from your condo.

Even if the entire property market rises as a whole, it’s still possible for a specific development to NOT appreciate in value due to a variety of reasons.

Stiff competition from new condos nearby, lease, government policies, etc.

Like all asset classes, there’s no 100% guarantee guarantee for property as well.

Remember, we still have to factor in all the extra costs like stamp duties, agent fees, levy, etc — all of which eats away your profit.

Alternative to Condos

Throughout my years as a real estate consultant, “space” was and is a huge priority for many growing families.

That’s why upgrading from a 4/5 Room HDB flat to a 3-Bedder condo could feel like a downgrade for many families due to the smaller space in condos.

The remaining alternative would be:

  • HDB Executive Apartments
  • HDB Executive Maisonettes
  • HDB 5-Room flats

However, if you and your spouse is below 40 and do NOT intend to stay in this new property all the way until both of you pass on…

You might want to avoid HDB Executive Apartments and Maisonettes

Here’s why:

Let’s say you and your spouse (both 35 years old) choose to buy into an Executive Maisonette @ Bukit Batok for $900K.

This unit probably have 60 years of lease left.

The benefit is that your family now has tons of space! Your kids and maid all have their own rooms, which they grow up comfortably in for the next 20 years.

The problem comes after that.

The house would feel too big and empty after your kids move out, so you choose to sell and downgrade to a smaller flat.

But with 35 years of lease left, you’ll have a much harder time selling the flat.

(It’s still possible, but you’ll likely have to sell it for a LOT cheaper than the $900K you paid).

After all, would you pay $900K for a flat with only 35 years left?

You’ll realise that it’s not worth selling the flat anymore due to the low price.

Essentially, that property will be you and your spouse’s retirement home, with 0 capital gains from the property.

That’s why younger couples/families shouldn’t go for EA/EMs

Your wealth would be stuck in a property that you cannot liquidate.

However, if you’re okay with that EA/EM being your forever home…

…and you are perfectly okay with your property not preserving your wealth (it will be a depreciating asset), then you can ignore what I just said.

The other alternative would be newer 90+ years 5-room flats, where it’ll likely still hold its value when you want to sell 20 years later.

But it will probably not increase in value as much, because our government prioritizes keeping public housing affordable.

My perspective as a single mother of a young daughter

Me and my daughter!

As a single mother of a 7 year old daughter, I want something that I can pass on her in the future.

Like many families, I love a huge space as well. Hosting family and friends over at my place is something I enjoy a lot.

This is why I faced a huge dilemma — should I go for a spacious 5-Room/EA HDB flat, or go the condo route?

I pondered long and hard, but what finally gave me courage to make a decision was one question…

At the end of the day, what do I really want? Am I okay not having something that I can pass on to my daughter in the future? Or is space still my #1 priority?

That’s why I ended up choosing the private property route.

So that when I cash out in 5-10 years for a $200K-$300K profit, I have the option to downgrade to a HDB, fully pay it in cash, and have a multiple 6-figure sum saved for my retirement.

When I do pass on, the HDB flat would still has a decent lease left…

And can be sold at a good amount for my daughter’s savings.

But this is just my perspective as a parent.

At the end of the day, there is no “one-size-fits-all” property for every family.

It all boils down to what you prioritize the most.

Is a bigger space the #1 priority? Or are you okay with sacrificing a large space and go for a property that would increase in value instead? (for your retirement fund, children’s university tuition, etc).

There is no right or wrong here — it all depends on your desired end outcome and lifestyle.

If making a 6-figure profit to save for rainy days or your retirement is a priority for you, then you might want to look into the condo route.

90% of my clients chose the private property route, and are sitting on multiple 6-figure profits currently, regardless of whether they bought a resale or new launch.

But if ensuring your family has a huge space to comfortably grow up in is the priority, then perhaps a HDB EA/EM makes more sense.

Depending on your situation, you could have the best of both worlds -- profits & space

I had a client with a family of 7, who originally wanted to purchase a HDB EA for the size, but was also considering a condo as it was always his dream.

Mr Rani, 34 y/o civil servant

Normally, when the family has 5 children, it’s a no brainer that an EA/EM is the best choice.

But for this particular family, their kids were still very young at ages between 2-6.

Meaning, a 3-Bedder condo would still be comfortable enough for the next 5 years, as their toddlers would have no issues sharing rooms.

Mr and Mrs Rani understood that going for a resale condo now meant that they could sell it off after 3 years, and buy a huge HDB still with a sizable cash surplus for their retirement.

Fast forward 2 years later to today, their 3-Bedder unit at Blossom Residences have now appreciated by $250K, and they’re thinking of moving to an EA soon.

At the end of the day, they would have their huge HDB EA plus a $200K+ cash surplus saved for retirement.

This is how the Rani family strategically leveraged their situation to enjoy the best of both worlds. 

A word of warning... condos could be unprofitable due to this TRAP

Most Singaporeans think that location is what matters the most when buying a profitable condo.

That the condo must be “walkable to MRT”…

Or must be “situated in an area with upcoming developments”…

Or that should be in a “prime location”.

But what if I told you that location ISN’T the most important factor in determining the profit potential of a condo?

Now, location is definitely important…

But it won’t matter much if the condo developers are taking advantage of you with this dirty trick.

Let me explain.

If you’ve seen the pricing of new condos these days…

Then you probably noticed that some condos are significantly pricier than others.

Now, it’s not surprising if your Orchard condo is significantly more expensive than your average condo.

But it becomes a problem…

When you’re paying a huge premium compared to the condo down the street.

This is called “Future Value Pricing”,

Where buyers will be paying high prices for the POTENTIAL of the area.

(like new MRTs and shopping malls being built nearby in the future).

“But since the area will develop, my condo will appreciate in value right?

Not exactly — if you buy in at a “future price”.

Because it means you’re letting the developer profit from your condo’s capital appreciation — instead of YOU…

As you actually paid for the “future capital appreciation” when you bought in at the premium pricing.

This is a trap I’ve seen many condo buyers fall into.

(Without them even knowing it!)

A trap that could cost people to buy the WRONG new home, with disappointing capital appreciation.

To save you the trouble of researching, I’ve compiled a list of of the 5 clear signs to tell if a condo is profitable or not:

5 Clear Signs to Buy a Condo with Multiple 6-Figure Profit Potential.

I’ll reveal data-backed analysis and case studies with easily implementable techniques you can use.

So that you know which condos to avoid (even if the public thinks they’re amazing)…

And which are the underestimated condos with secretly high capital appreciation potential.

These insights stem from the expertise and knowledge of over 133+ condo specialists, and dozens of real life incidents I’ve personally witnessed myself.

And the reason I’m sharing my research for free is simple.

There is so much misinformation and misleading claims flooding the internet right now.

I don’t want you to be deceived into making a 6-7 figure condo purchase that you would regret later on.

That’s why the least I can do is to educate the public, one family at a time.

Conclusion

There is no one-size-fits-all “ideal” property — it all depends on your objective and family situation.

At the end of the day, what do you want the most out of your home?  

Once you get clear with your objective and needs first, then it will be easier to narrow down on the ideal property for your situation.

Just because many families choose the condo route for capital gains doesn’t mean you have to follow.

If you’re just looking for comfort in a home without expectations to profit from it, then a large HDB flat like an EA/EM is worth considering.

But if earning $100K-$300K in 5-10 years is important to you, then a condo is more suited for you to achieve that goal.

Remember — we don’t have to necessarily sacrifice one for the other.

We don’t have to sacrifice our family’s comfort just because we want to make good money by getting a condo.

There are many possibilities around your situation, just like how the Rani family maximized their situation to profit $200K and still get an EA for the space.

Choosing a spacious, older condo is an option too.

My point? Don’t rule out possibilities before exploring them.

If there’s a chance that you’re considering the condo route, then you should read my free report on the 5 Clear Signs to Buy a Condo with Multiple 6-Figure Profit Potential.

This is where I pull back the curtains on the key profitability factors that MUST be present in a development.

I’ll also share stories of similar families in your position, and what they did to hugely profit from their condos.

Click the button below to download an exclusive copy now.

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Free Report: 5 Clear Signs to Buy a Condo with Multiple 6-Figure Profit Potential

“Identifying the last few profitable condos in today’s market”

“Identifying the last few profitable condos in today’s market”