Where Is The Market Heading? Weekly Sales Data From 1st March to 7th March 2021

Welcome to our weekly sales update, where we share with you the latest happenings in the first-hand market. The reason why we do this is simple. Demand for real estate is one of the hardest things to predict. If making predictions was so easy, developers would not need to take years to sell their projects. Nor would the government come up with so many cooling measures to tame the property market. This unpredictability is also why so many analysts get it wrong when they try to anticipate what will happen in the future.

However, do take note that the weekly update is a guide for your reference only. Do not be distracted by all the condos on the list. It is far more important to understand the why before looking at all the “what”. This decision-making process will ensure that you acquire a property that fit your requirements. And never live a day regretting your selection.

Understanding Demand Is The Most Important Thing To Determine Capital Appreciation

While it is impossible to predict what will happen tomorrow, it is still possible to identify certain products with consistent demand in the future. Future higher demand automatically translates to capital appreciation. Hence, the more in-depth you understand demand, you better you would pick out properties with higher capital appreciation. One example of this is covered in my earlier analysis of J Gateway. There were so many analysts back then who said that J Gateway was a terrible buy due to the higher PSF. They claim that buyers were jumping on the FOMO train without thinking about what they were doing. Well, look how that turned out.

Recent Prices At J Gateway. Source SRX.

1) WEST ZONE – 36 units

Ki Residences – 4 units
Forett @ Bukit Timah – 3 units
Mayfair Modern – 2 units
Midwood – 6 units
Parc Clematis – 3 units
Daintree Residence – 1 unit
Normanton Park – 6 units
Dairy Farm Residences – 2 units
Clavon – 3 units
Whistler Grand – 4 units
Verdale – 2 units

2) CENTRAL ZONE – 14 units

One Pearl Bank – 1 unit
Avenue South Residences – 1 unit
Sky Everton – 2 units
Stirling Residences – 2 units
Pullman Residences – 1 unit
Kopar at Newton – 1 unit
The Iveria – 1 unit
Van Holland – 2 units
Fourth Avenue Residences – 1 unit
Royal Green – 1 unit
Uptown at Farrer – 1 unit

3) NORTH ZONE – 22 units

Jadescape – 4 units
The Garden Residences – 1 unit
The Florence Residences – 5 units
Affinity at Serangoon – 1 unit
Riverfront Residences – 6 units
Park Colonial – 5 units
Sengkang Grand – 1 unit

4) EAST ZONE – 30 units

Treasure @ Tampines – 10 units
Coastline Residences – 1 unit
The Jovell – 1 unit
Parc Esta – 1 unit
Amber Park – 4 units
Tedge – 1 unit
Nyon at Amber – 1 unit
Penrose – 8 units
Casa Al Mare – 1 unit
One Meyer – 1 unit
Parc Komo – 1 unit

5) EC CLUSTER – 4 units

Parc Central Residences – 2 units
Parc Canberra – 1 unit
OLA – 1 unit
Piermont Grand – 4 units

6) LUX CLUSTER – 47 units

The Reef at King’s Dock – 4 units
Riviere – 2 units
8 St Thomas – 4 units
Meyer House – 4 units
RV Altitude – 29 units
Leedon Green – 2 units
Nouvel 18 – 1 unit
Martin Modern – 1 unit

For the first week of March, sales in all zonings have gone down (compared with last week of Feb) except for the luxury cluster. This cluster’s sudden jump is mainly contributed by RV Altitude, with a whopping 29 units sold. Due to a “once in a lifetime” flash deal offered by the developer, prices were discounted up to $360k off what was sold previously. Selected stacks are now available at only $24xx psf instead of the usual $26xx psf that were sold earlier on.

Why Did the Developer Cut Prices For RV Altitude?

So why did the developer cut prices for RV Altitude? Since this developer is cutting prices, isn’t it better to wait for more flash deals to come along and pick them up for a song? The market seems to be rewarding those who are patient, isn’t it?

RV Altitude, The Best Selling Development For The 1st Week Of March 2021

First, you must understand what type of development RV Altitude is. Consisting entirely of 2 bedrooms and 2-bedroom dual-key units, RV altitude is a product that caters mainly to investors. Those looking for their own consumption may find other projects with bigger sizes more suitable for their needs. Since an investor already would have a primary residence, the secondary property would require the payment of Additional Buyer’s Stamp Duty (ABSD).

How Tax Planning and ABSD Affects Demand

As a result of this ABSD, some Singaporean couples will do decoupling of their matrimonial home or primary residence. This is a form of tax planning where one party transfers their existing share of the property to their partner before purchasing a new one. Because there is only one purchaser, only that name can be used as a borrower. A co-borrower would need to insert his/her name to the property, which defeats the purpose of tax planning in the first place. This MAS regulation back in 2018 ensures that the purchaser has sufficient financing power to make that purchase independently. And of course, also guaranteeing the taxman their dues.

So, what does this implication have for products like RV Altitude? To understand this better, I will be comparing the affordability of the prices before and after the discounts.

Change In Prices Can Affect Demand Significantly

Previously, a 2-bedroom unit at RV Altitude was going for $1,428,000. To finance this unit with a 30-year loan quantum of $1,071,000, you would need to have an income of around $8,015.  The initial 25% deposit works out to be $357,000 as well.

RV Altitude Is Now Made Available To The Top 20% of the Population. Source: Singstat

Now, with the new price of $1,247,000, the loan quantum drops to $935,250. 30-year financing of this mortgage would require an income of $6999.48. The new 25% deposit is also lower at $311,750. From Singstats, we know that the average household income per member from the 81st to 90th percentile is $6712 in 2020. Previously, buyers of RV Altitude are most likely in 91st to 100th percentile of the population. As a result of the price drop, buyers in the 81st to 90th percentile are now able to afford a unit there. Effectively, doubling the number of buyers who can purchase a unit there. Of course, some buyers will still go ahead with the purchase despite paying the ABSD. After all, it is a sizeable discount.

Why Timing May Not Be The Most Important Thing When It Comes To Real Estate

Demand for RV Altitude is what we can refer to (in terms of economics) as an elastic demand, mostly because it is an investment-related product and loan restrictions due to ABSD.

The interest in such properties is like the experience of heading to Starbucks and buying that $7 café latte. Some people will go ahead and buy it because they love the product. Of course, you have others who will wait for Starbucks to come up with offers and discounts before making any decision. That said, some products out there that are like your $1.10 Kopi found at our Singapore coffee shops. You can wait and wait, but it is not possible to buy anything lower than this.  And of course, do not be surprised if the prices become $1.20 tomorrow.

Understanding the property market of today is not as simple as before. Not everything you buy will automatically increase in price. In fact, it may be better to wait in certain circumstances. Just like this recent promo at RV Altitude. Why not get some help along the way? Contact us today, and we will share further insights on how we can help you achieve your objectives.

Article contributed by Jerry Wong.

Jerry Wong is a realtor with Propnex Realty. He loves coffee, cookies and condos and has been in real estate for ten years. Most importantly, he loves connecting people to properties and gets enormous satisfaction when they acquire their dream home. Or making well-informed decisions that see their assets grow. Book a video call appointment, and Jerry will share with you the following.

  1. How certain factors affect real estate prices. Why some condos can make a million dollars while others can lose that same million.
  2. Why timing is not the most important thing. Because some people can buy the same condo at the same time, but one end up making $100k to $200k while the other suffers losses of the same amount!
  3. Understanding your requirements and craft a solution for your real estate needs. Be it in asset progression, tax planning, financial calculations, rentals, sales, etc.

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