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

“Should we still go for a condo in today’s rising interest rates and property prices? Or should we just wait out this period?”

Many of my clients have been asking me this fantastic question that’s highly relevant in today’s rising interest rates. 

To answer this question, let me tell you a quick story about a family that grounded why a condo could be even MORE important in today’s market.

Back in 2020 during the pandemic, I was serving a family with 5 young kids looking for an upgrade from their HDB.

the Rani Family

The father, Mr Rani, dreamed of owning a condo, and understood that this was still possible while the kids were still between 3-7 years old and had no problem sharing rooms for the next few years.

But he was skeptical.

It was the height of the pandemic, where analysts were unsure whether property prices would fall anytime soon.

But after carefully analyzing the data and trends, the results shocked him.

He saw the opportunity in the situation — property prices were at a good deal due to public skepticism, and knew that he could cash out a 6-figure profit from a condo in 3-5 years and move to a HDB Executive Apartment (4 bedrooms).

He went ahead and bought a 3-bedder resale at Blossom Residences under my recommendation.

Fast forward around 2 years later to today…

His condo has now appreciated by $250K in value… which he can cash out and move to that Executive Apartment.

Meaning, his family enjoyed 3 years of staying in a condo while getting a 6-figure sum saved for rainy days.

This was how Mr Rani managed to leverage a condo to get the best of both worlds — profits and space.

My point here is that a decent condo gives you options financially, as it has higher likelihood to be an appreciating asset, whereas HDBs are constantly influenced by the government to remain affordable.

But who am I and why should you listen to me at all?

Hi, I’m Jenn Ee.

You’re probably thinking… “this lady is just a property agent trying to make me buy a condo to earn my commission… and does she looks so young, does she even own a condo herself?”

You’re right, I do earn commissions. But it doesn’t mean that I’ll push condos just for the sake of earning my clients’ money.

In 2022 alone, I have actively DISSUADED around 6 families from upgrading to their desired condo, for reasons ranging from age, finances, family situation, timeline, etc.

If your family’s situation and goals isn’t suitable for a condo, I’ll be the first to let you know.

Why?

Because as a single mother of a 6 y/o daughter, I can deeply relate to couples and families looking to provide the most suitable home for their family.

My daughter and me!

“What if I’m in my client’s shoes? — a single mother with kids, feeling anxious about where we are going to stay next, whether my kids will be comfortable, and whether I would land in serious financial troubles?”

That’s something I think about all the time.

This is why I believe that condos are NOT the “one size fits all” property that everyone should go for.

Why am I such an advocate for condos?

The undisputed fact is that condos have the highest probability of enjoying capital gains in the shortest timeframe (Excluding BTOs).

I don’t just hide behind data — 100% of my condo clients have made money in the past 3 years.

Such as Fahmi and Syaz, who made $358K with The Tapestry in under 2 years.

$358K capital gain in 2 years

Or Warren and Amy, who made $329K with Penrose in under 2 years.

$329K capital gain in 2 years

Or Rachel, who made $260K with Ki Residences in just 1 year.

$260K capital gain in 1 year

I put money where my mouth is as well — I’m currently invested in 2 investment condos.

The reason I’m telling you this is because I want to help you gain clarity over the property market, so that you can confidently make a decision suited to your needs (even if you don’t go through me as your agent, or go the condo route at all).

But this leads us to the next question…

Can condos still make us money in today’s high property prices?

The short answer? The property market is still predicted to rise in 2023 and beyond.

Even in today’s sky high interest rates, OrangeTee estimates that private homes will rise by 5-8% next year.

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.

Private Property Index, Source from URA

There’s a reason why foreign investors love Singapore property so much. Remember — investors go for things that will likely make them money.

Source: CNA

This got so out of hand that the government had to increase the ABSD from 20% to 30% for foreigners in the previous cooling measures.

Why high interest rates won’t matter

Source: The Business 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.

Best case scenario, 5 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.

My clients who bought resale condos 2-3 years back are now easily enjoying $1500K-$300K in capital gains. 

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.

Rising property prices is inevitable

Let’s take a look at the reasons WHY today’s record-high property prices are still predicted to keep rising.

Property rents increased by up to 70% in 2022.

To put that into perspective, a $3,000 rental skyrocketed up to $5,100 within a year.

Renters are left with no choice but to go for resale property instead, which further pushes up the already-high demand.

To top it off…

HDB upgraders coming from their BTOs would have the buying power to afford condos even at high interest rates.

(Which is not surprising, considering a significant fraction of these BTOs have almost DOUBLED in value upon the 5-year MOP)

Source: Uchify

Condo developers are also aiming to increase their new launch prices, due to the recent new launches getting sold out quickly despite the premium price tags.

Increase in construction costs, as well as Singaporeans’ willingness to pay a premium for new launches will make developers greedier with their pricing.

Here’s why I went down the condo route despite wanting a HDB initially

Believe it or not, I was initially torn between getting a HDB or a condo.

I really enjoy hosting family and friends, so I wanted a spacious home for such purposes.

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

Going the condo route meant that my money could grow me and provide me with a larger safety net down the line.

Going the HDB route meant that my home would be more comfortable.

It was a give-and-take situation — which one am I willing to give up for the other?

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?

It was a tough decision, but I ultimately chose the private property route.

I figured that if I sell in 5-10 years for a profit of $200K-$300K, I can use that money to fully buy a HDB in cash and have a multiple 6-figure sum saved for my retirement.

Then, when I pass on, my daughter can sell the HDB for additional 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, a condo may be a good choice.

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 a spacious home is the main priority, a HDB may be the way to go.

There is no “perfect” time to buy a condo

I truly believe that there is no such thing as the “right” time to buy a property.

People always say that they’ll buy the moment prices drop — for property, stocks, crypto, and basically every asset class. I bet you know people like them.

Well, the stock and crypto market have plunged by around 20% and 60% respectively in 2022.

Have those people bought yet? 

Probably not.

Because they’re fearful that it would drop even lower.

It’s the same thing with property — if property prices were to fall by 10-20%, people would start panicking and speculate that it would fall further, since “property is a highly resilient asset class, so that fact that it dropped so much means the property market / our economy is in a dire situation”.

This is why there’s no perfect time to buy.

No one can predict future property prices with 100% accuracy. It’s simply not within our control.

So what is within our control?

Strategically planning out the ideal property roadmap for your family

These are possible pathways that many upgraders have in mind when they go for a condo.

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.

Just like the Rani family who made $200K and got their desired HDB EA at the end of the day…

Or my other clients such as Fahmi & Syaz, Warren & Amy, or Rachel, who are now able to embark on the next step of their property journey with the $200K-$300K profit.

Condo is not the answer to every family’s situation. But it gives you more options at the end of the day.

Now that you know the outlook of the property market… what’s next?

Chances are, you’re still a little confused over what’s the right move for your situation.

Should you wait it out, get a condo, or a HDB? If HDB — EA, EM, or 5-Room? If condo — resale or new launch?

If you’ve read to this point, my guess is that you’re seeking for answers.

This was exactly what happened to Mr Teo, who viewed condos for 3 years but was still confused over which was the right property for his family.

This was because he didn’t have 100% clarity over his situation — which goals he prioritized most, what he was willing to compromise, and what the next 5-10 years property roadmap was.

Let’s see what he had to say, in his own words.

After sitting down with him, we managed to gain clarity on his situation, including detailed financial calculations to ensure he isn’t overstretching his funds.

He initially had The Tre Ver in mind, as it was close to his parents’ home.

But after I applied my 7 Key Investment Factors, I realised it wasn’t the best choice as he would be entering at a much higher price compared to the early buyers.

Moreover, in that location, there are many new developments upcoming and he may face challenges if he wishes to exit in 5 years. The developments will TOP together and his price and location may be at a losing position.

Based on his needs and suitability, I recommended Jadescape as it fits his requirement of size and location. 

My systematic analysis discovered that he would be buying in at a very good price due to the developer’s discount at that time… and he would actually buy cheaper than some of the early buyers. 

Additionally, there is only 1 launch at that location and there isn’t much competition, so it matched his exit timeline well.

This was how he confidently went ahead with my recommendation despite hesitating for the past 3 years.

$308K capital gain in 3 years

Fast forward to today, his 3-Bedder at Jadescape have appreciated by $308K in just 3 years and is ready to embark on the third milestone of his property journey.

All this was possible because he gained clarity on his current situation at the time.

What you should do right now

It’s impossible for me to accurately say whether a condo is the right move for your specific situation or not.

Every family is unique, and its highly possible that a HDB or even renting makes sense for some family situations. 

Even though condo has the highest probability of making money in the shortest timeframe, it is not always the answer if it doesn’t suit your family’s situation.

To make it highly convenient and easy for you…

Find out whether it’s a good time for YOUR specific situation to buy a condo by taking this short quiz.

Free Quiz: Discover if it’s a good time for YOUR specific situation to buy a condo

Free Quiz: Discover if it’s a good time for YOUR specific situation to buy a condo