3 factors to consider when buying a resale property

Rennie Whang

Prices of new private homes reportedly recorded a 9.8 per cent rise in Q3 2019 from a year earlier, compared with a 1.6 per cent increase in resale home prices. This widening price gap may lead to a shift in focus towards resale condos as value purchases.

We check in with Mr Chris Koh, director of real estate consultancy Chris International, to learn more about the private property resale market.

Difference between new and resale 

Apart from the price differential, a major advantage of buying a resale condo instead of a new unit is efficiency.

Mr Koh says that buyers may obtain their resale condo unit in about three months. On the other hand, buyers who are only interested in new apartment launches may have to wait for up to two or three years before receiving the key to their new homes. He adds that this element of speed makes resale condos more appealing to those who are buying a property to live in, rather than for investment.

The buyer is also able to view the completed unit, and have a better sense of the place, including the size of the property, the direction it faces, and the location of the unit.

There are clear advantages to buying a resale property. However, potential resale home buyers should note that they will need to sort out their financing at the time of purchase. In contrast, buyers of brand-new properties will be able to pay for their unit progressively and work out their loan financing details after they make the 20 per cent down payment for their home.

Hidden costs of resale property

Mr Koh would advise buyers to be aware of the Buyer’s Stamp Duty and Additional Buyer’s Stamp Duty (ABSD).

The Buyer’s Stamp Duty is a tax that is payable when you buy or acquire a property. The amount that is paid is based on whichever is higher — the purchase price of the property or the market value of it. ABSD is levied on top of the Buyer’s Stamp Duty and applies to people buying additional properties.

Apart from that, every buyer should be aware of the legal costs and stamp duty linked to mortgages. They should also find out if the seller is liable to pay Seller’s Stamp Duty, which applies to all residential properties that are sold within three years of their purchase date.

Location and X-factor

Properties in the central area and near MRT stations, schools and amenities are recommended. It is likely that these will be easier to sell in the future or to rent out.

“I always recommend looking for a property with an X-factor. For example, what makes a specific unit in a development special? Perhaps its location on a higher level, unobstructed views or a spacious layout? A buyer would want something with this X-factor,” says Mr Koh.

A potential buyer may want to consider the intent of his or her purchase. If they are buying a second home for investment, then the unit’s location is important.

“Even if it’s in a suburban area, a unit that is near public transportation nodes like an MRT station might have more value in the long run and is easier to rent out,” he adds.