Should I buy a new launch or resale condo?
Recently, The Business Times published this chart on 16 March 2020 comparing the affordability of different types of housing over the years.
Affordability is calculated based on the property median prices for each of the property types, divided by median annual household income. On the left is the implied number of years one household have to save to buy a 1000 sq property.
From this chart you can see that the prices of new sales/launches of non-landed private have been going up steadily, it is the steepest of all.
On the other hand the prices of resale non-private have been going up my a small margin of 0.1 from 2019 to 2020. For prices of resale HDB, it has also went up from 2019-2020.
What does this article tell us? It gives a overview on the disparity of prices between new launch non-landed private as well as resale non-landed private. This is important if you are looking out to purchase a condo and is undecided if you should purchase a new launch or buy a resale.
Since there is a large differences between the prices of new launch and resale, it makes more sense for one to buy a resale condo as opposed to a new launch.
Here are some pros of buying a resale condo
1. Price - Cheaper as compared to new launch (especially from the graph above)
2. What you see is what you get - You get to see the neighborhood, neighbors and facilities of the condo that you are purchasing. For new launch, you get to view it in the showroom which might not reflect the reality when the condo is built.
3. Transparency in prices - You can get to view the last transacted prices online on URA/SRX for houses around that area to get a rough gauge if the price you are paying is reasonable, or if there is room for negoitation.
4. No need for waiting - You can get to move in to the resale condo after signing the papers, as opposed to waiting a few years for the new launch condo to be built.
Here are the cons of buying resale:
1. Find out the reason for sale - Someone has stayed in the condo before, and there might be a reason that they are moving out. Be sure to find out the reason for the sale of the condo. Could it be due to disturbing neighbours or unrepairable defects? Some sellers might not tell you the real reason.
2. Defects Liability Period - There is a Defects Liability Period (DLP) for new launches where the developer is responsible for any defects in the units. You can report the defects to the developer who will arrange for repairs for free. This does not apply to resale condo that are more than a year old. All repairs are to be made by the new owners themselves.
3. Renovation - if you buy a new condo the items, wall, sofa and appliances are new and included. Thus you would need to purchase lights and do minimal renovation. Whereas for a resale condo, you have to spent more to engage a contractor to renovate the house. This include rewiring or renovating the whole toilet which is a must if you find it unhygienic to use the toilet bowl used by previous owner.
4. Maintenance fees - depending on the age of the condo you are purchasing. Maintenance fees tend to increase for older condos as it costs more to maintain.
All in all it depends a lot on location as well as if you like the condo. While resale packs a good value and is not as pricy as new launch, there are other factors you got to take note of.
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