Buying Condo in Singapore: New Launch Vs Resale Condo
Buying a condo in Singapore is what many Singaporeans aspire to achieve be it for a better lifestyle, a higher status symbol or simply to enjoy better capital appreciation as compared to public housing in Singapore.
Today’s article topic is for those who are looking at buying a condo in Singapore, understanding the condo options that are available for you to choose from, the main differences between them – New Launch vs Resale Condo, and which type of condo investors typically look at when buying a condo in Singapore for investment.
Just to give you an idea of how much prices have escalated over the years for a condo in Singapore: Back in 2016, a new launch 1 bedroom condo in the Outside Central Region (OCR) only costs S$400,000 to $500,000 on average. Now in 2023, a new launch 1 bedroom condo in the OCR easily costs about $1,000,000 to $1,200,000.
Nonetheless, those whom have bought previously or are planning on buying a condo in Singapore today are still in a good position to plan for retirement through real estate, given how property prices are still set to grow in the long run in Singapore.
2 Types of Condo in Singapore
1st Type of Condo in Singapore: Resale Condo
Buying a resale condo in Singapore means that you are buying from a direct owner in the secondary market or in other words, second-hand units. But buying a resale condo does not signify that you will be the second owner as there could a possibility of the unit having changed hands 3 to 5 times.
You will be able to find these resale condo units available for sale on property portals such as PropertyGuru, 99.co etc. As resale condo are condo developments that have already been built, you will be able to visit the actual units and see the actual physical thing.
2nd Type of Condo in Singapore: New Launch Condo
Buying a new launch condo in Singapore means that you are buying directly from the primary market – from the developers themselves. New launch condo are condo developments that have not been built yet, sold by local/foreign private developers, and marketed by real estate marketing agencies such as ERA and Propnex etc. for sale.
It could take 1 to 5 years for the new launch condo to be built depending on which phase you enter, as some new launch condo developments may have already started their sales a few years back.
As the building has not been built yet, the developers will build a show flat/showroom to help buyers visualize how the condo will look in future coupled with a few showroom units to showcase certain bedroom types, and the choice of fittings that will eventually be used in your actual unit.
10 Main Differences Between New Launch Vs Resale Condo
Difference #1: Move-in Date
A) New Launch Condo
For new launch condo developments, there are a few types. The first type are those that you buy at the very initial launch phase (which also requires balloting usually). These will typically take 4 to 5 years to be built.
The second type are those that you buy after the initial launch phase which will likely lessen the amount of wait time to 1 to 3 years instead. But do note that the developers would most likely have increased the prices slightly for this phase of buyers.
The third type are new launch condo developments that have met TOP (Temporary Occupation Period) already, but the developer still has unsold units and are ready for you to move-in immediately. However, do take note that these units are usually priced the highest as compared to the first 2 phases, given a no-wait time plus you get a brand-new unit.*
*(Sometimes, developers may also give a discount on these units if they would like to clear their stock so do check with your property agent on such available units).
B) Resale Condo
For resale condo, the usual transaction waiting time would be 14 weeks from when you place an option (deposit) on the unit before you would obtain your keys to the unit. However, as this is a private treaty arrangement with the seller, we have also seen contracts that go up to 6 months or longer for the total transaction time. Sellers may also request for a free 3 months extension stay even after you obtained the ownership rights to the unit.
Difference #2: Choice of Units
A) New Launch Condo
New launch condo developments typically have a wider range and variety of units for you to choose from. There could be a few floor plan variations for a bedroom type (e.g., 2-bedroom, 2-bedroom + study. 3-bedroom compact, 3-bedroom deluxe, 3-bedroom premium etc.) You can also get to choose your preferred balcony orientation facing and the level that you prefer, if they have not been sold yet.
B) Resale Condo
For resale condo, it really depends on what units are listed on property portals for sale. There could be limited options for you to choose from as not every owner could be looking to sell now. Therefore, what you see is what you get as per the units available. On average, there are usually approximately 1 to 3 units on sale per resale condo development.
Difference #3: Payment Timeline
A) New Launch Condo
The initial downpayment for a new launch condo is 5% cash whereby the Option to Purchase (OTP) will be issued to you. Subsequently, the developer will send a Sales & Purchase agreement to your law firm in the next 2 weeks, in which you will be required to exercise the Sales & Purchase agreement within 3 weeks’ time upon receiving it.
Thereafter, you will be required to pay your stamp duties and additional buyer stamp duties (if any) within the next 2 weeks from when you have exercised the Sales & Purchase agreement. 1 week later on, you will then be required to pay another 15% downpayment via either cash or CPF.
The total downpayment till date is at 20% right now, but there is still another 5% more payable by cash or CPF as the maximum bank loan is only 75%. This 5% will subsequently be deducted when foundation work of the construction begins. This could potentially be 6 months to 1 year later, depending on the construction progress.
Thereafter, your monthly instalment repayments will run on a scheme termed as Progressive Payment over the next 4 to 5 years. This means that your monthly instalments are progressive and cumulative, following the progress of the building construction. It could start in the hundreds, before accumulating to the thousands range. Each construction phase typically lasts between 3 to 9 months.
We shall further illustrate the above via the image below from the downpayment to the monthly instalment progressive repayment. Here's assuming a Singapore Citizen purchasing a new launch condo (first property) with a $2 million purchase price, a 1.5 million loan amount at 30 years loan tenure and 4% interest rate:
Progress | Payment Milestones | Payment Amount | Monthly Installment |
|---|---|---|---|
Option to purchase | 5% | $100,000 cash | - |
Receive S&P from developer within 2 weeks from OTP | - | - | - |
3 weeks to exercise S&P | - | - | - |
Pay BSD within 2 weeks from S&P exercise date | - | 69,600 cash/cpf | - |
Pay remaining 15% 1 week after BSD | 15% | $300,000 cash/cpf | - |
Completion of foundation work (6 months - 1 year later on) | 10% | 5% - $100,000 cash/cpf + 5% home loan disbursed | $477.42/month |
Completion of reinforced concrete framework of unit | 10% | Another 10% home loan disbursed | Installment cumulates to $1432.26/month |
Completion of partition walls of unit | 5% | Another 5% home loan disbursed | Installment cumulates to $1909.68/month |
Completion of roofing/ceiling of unit | 5% | Another 5% home loan disbursed | Installment cumulates to $2387.1/month |
Completion of door frames, window frames & plumbing | 5% | Another 5% home loan disbursed | Installment cumulates to $2864.52/month |
Carpark | 5% | Another 5% home loan disbursed | Installment cumulates to $3341.94/month |
TOP (Temporary Occupation Permit) - take keys | 25% | Another 25% home loan disbursed | Installment cumulates to $5729.02/month |
CSC - legal completion | 15% | Another 15% home loan disbursed | Installment cumulates to $7161.27/month |
b. Resale Condo
For resale condo purchases, you will be required to pay the 5% cash downpayment first, followed by the Buyer Stamp Duty (BSD) and/or Additional Buyer Stamp Duty (ABSD) if any; once you have exercised your Option to Purchase (OTP).
Subsequently once you have reached completion, you will then have to pay 20% of downpayment from your CPF OA or cash. Full instalment kicks in once you have reached completion. As we have mentioned previously, the whole timeline is usually about 14 weeks from when you have placed the initial deposit of 1% for your OTP.
Difference #4: Interest Cost & Cash/CPF Outlay
A) New Launch Condo
As new launch condo monthly repayments are based on a progressive payment scheme, the total interest costs payable in the years whilst it is building is significantly lesser as compared to a resale condo.
The reason being the bank only disburses a fraction of the home loan based on the progress of the building construction. For example, the bank may only disburse $100,000 of loan at the first stage of building. Hence, both your monthly instalments and interest costs are significantly lesser; which also means that your CPF/cash outlay will be lesser as compared to a resale condo over the course of construction.
Using the same example as above, a Singapore Citizen purchasing a new launch condo (first property) with a $2 million purchase price, a 1.5 million loan amount at 30 years loan tenure and 4% interest rate:
Source: ERA
You will realize that the total amount of cash/cpf outlay over the course of construction is relatively low - $69,226. If you intend to rent while waiting for the new launch condo to TOP, you may then add in your rental costs for example $3500 x 48 months = $168,000.
So your total cash/cpf outlay will be $69,226 + $168,000 = $237,226 over a course of 4 years.
B) Resale Condo
For a resale condo, the full 75% loan will be disbursed the moment your purchase transaction reaches completion. Therefore, you will be paying the full monthly instalment immediately once it reaches completion. The total amount of interest payable will be applied on the full loan amount as well.
Using the same example as above, a Singapore Citizen purchasing a new launch condo (first property) with a $2 million purchase price, a 1.5 million loan amount at 30 years loan tenure and 4% interest rate:
Source: ERA
As the full monthly installment is payable upon reaching completion, the total amount of interest payable will generally be much higher for a resale condo. Over a course of 4 years, the total cash/cpf outlay will be $343,740.
Adding in an estimated renovation cost of $100,000 and 48 months of MCST fees payable at $300/month, you will be looking at a total of cash/cpf outlay of $458,140. At this point, you may realize that a new launch condo does not have MCST fees which then brings me to my next point:
Difference #5: Taxes and MCST Fees
A) New Launch Condo
As a new launch condo has not been built yet, there will be no MCST fees payable during its building stages. Property taxes will not be applicable as well.
B) Resale Condo
For resale condo buyers, your MCST payment kickstarts the moment your purchase reaches completion. MCST fees are typically collected in quarterly amounts. For example if your unit’s MCST is $400/month, you will have to pay $1200 to your MCST upfront.
There will also be property tax payable yearly; either based on owner-occupied or non-owner occupied rates. Non-owner occupied rates refer to the scenario where you will be renting the condo out.
Difference #6: Renovation Costs & Property Condition
A) New Launch Condo
As new launch condo are brand new developments, they are typically of move-in condition once the condo reaches TOP (Temporary Occupation Permit) and require lesser renovation costs.
The developer also provides a 1-year warranty to all the fittings that they have provided such as the newly renovated bathroom, kitchen with appliances, flooring, and air-conditioning units. You can also have the developer rectify any defects that you may spot in this 1 year.
You will also get brand new facilities such as the swimming pool, communal areas, tennis courts and some of the developers even provide smart home features both in your homes and the facilities. New launch condo are designed to cater to the needs of modern-day living in general.
b. Resale Condo
As resale condo are sold by direct owners in the secondary market, the condition of the unit depends on how old the property has been, and how well the previous owner has taken care of the unit. If the previous owner has rented out the unit, the condition may or may not be as in such an ideal condition. This is something to take note of.
The typical amount to allocate for renovations for a resale condo will range anywhere from between $50,000 to $300,000 depending on the size, condition and the extent of the renovations that you wish to do. Older condo resale condo units may also carry with them plumbing or electrical issues, so do be sure to check properly first as this may incidentally add on to your renovation costs.
Should you be lucky and find a resale condo that has an interior design that fits your taste to a tee, then you will be able to save a lot more on your renovation costs. Else, you may have to allocate extra for hacking costs before being able to incorporate the interior design style that you prefer.
In terms of the facilities, one may possibly find that the condition of the facilities in much older developments are not as ideal due to wear and tear over the years. And there have also been instances where a resale condo development is relatively young, but have been poorly maintained by the MCST, therefore resulting in a quicker deterioration. These are also factors that will affect your resale “value” in the future, so be sure to keep your eyes peeled on them.
Difference #7: Years of Lease
A) New Launch Condo
As new launch condo are brand new developments, they come with a fresh new lease of 99 years.
B) Resale Condo
As resale condo are on the secondary market, their remaining lease will be dependent on the year that the land was bought. For freehold resale condo, there will be no remaining lease but do take note of the overall condition of the development to ensure that there will still be appeal/demand when you are trying to resell it in future.
Difference #8: PSF, Size & Quantum
New Launch Condo vs Resale Condo
The sizes of new launch condo are smaller in general as compared to the older resale condo developments due to Singapore being a land scarce country with lesser and lesser land available as compared to the older days.
The PSF for new launch condo is also higher as compared to resale condo. This is because of the higher cost of land sold by the government to developers through Government Land Sales (GLS) as well as from enbloc owners; coupled with a fresh new lease of 99 years.
However, the overall quantum for a new launch condo may or may not be higher than a resale condo. The reason being it depends on the age, size and location of the resale condo as well.
This is what we mean as an example:
Formula – Size (sqft) x PSF = Quantum ($)
An older resale 2 bedroom condo in Bukit Timah
1200sqft (Size) x 2200 (PSF) = $2,640,000
Vs a new launch 2 bedroom condo in Bukit Timah
700sqft (Size) x 2800 (PSF) = $1,960,000
As the increasing land prices translate to a higher PSF, developers also tend to build smaller homes to keep the overall quantum affordable. Based on a psf of 2800, should the 2 bedroom still be at a size of 1200 sqft like in the older days; the overall quantum will already translate to an amount of $3.36 million which can be out of reach for the majority of home buyers.
And instead of marketing 1200sqft properties as a 2 bedroom in this modern day; what the developers have done would be to add an extra room into this 1200sqft and market it as a 3 bedroom instead, as most home buyers require rooms more than size.
Difference #9: Floorplan Layout
New Launch Condo vs Resale Condo
New launch condo developments are typically now of standard layouts due to the developers using Pre-Fabricated Prefinished Volumetric Construction (PPVC). This means that every unit is construed in an off-site fabrication facility, which also includes doing up the internal finishes, fixtures, and fittings in the unit beforehand. These completed units are then delivered to the actual site, and stacked on top of each other like Lego pieces.
The reason why most developers are using PPVC now is because it is more efficient and takes a shorter amount of lead time to construct the whole condo. Off-site fabrication also means lesser dust and noise pollution. Production in a controlled factory environment will also allow developers to produce higher quality products.
Therefore, this is why you will realise that most new launch condo layouts are similar these days. Another interesting to take note is also the fact that new launch condo layouts though smaller but are much more space-efficient these days. What we mean by this is because in the older days, most resale condo developments may come with planter boxes and bay windows. These spaces are typically under-utilised but are included in your sqft count.
Therefore, do take note to account for the sqft that these planter boxes and bay windows take up, minus it off from the overall sqft; and you will get your actual usable space and sqft.
Some resale condo developments may also have irregular layouts and are not a typical square or rectangle, so be sure to be comfortable with that. But the good thing about resale condo developments will be that you are allowed to hack walls as they are not built in the PPVC model back in the days. This may then allow you to have more flexibility in terms of your interior design ideas.*
*(Note – some selected new launch condo developments may not be using PPVC and walls could be hackable too. This can be checked at the showflat.)
Difference #10: Investment Perspective
A) New Launch Condo
You may commonly hear developers offering early-bird or VVIP discounts to early buyers that attend the showflat preview when the new launch condo is first launched.
This holds true for majority of new launch condo launches as we have witnessed first-hand how developers have raised their prices significantly over the next 5 years after their initial launch and even more so, when the new launch condo is nearing TOP.
This therefore presents an opportunity to allow you as the first wave of buyer to buy-in at the lowest prices, as the subsequent phases of buyers (whom might be your direct neighbours) will end up getting the unit at a higher price or psf as compared to you due to the developers raising their prices over the years.
Therefore, you would have made a “paper gain” on your unit being an early entrant or as they call it – the first mover advantage. Being amongst the first-wave of buyers also equates to having the priority to choose your preferred units in terms of level and facing. However, do take note that balloting is required when it comes to buying a new launch condo during the showflat preview.
Most new launch condo buyers that are buying for investment may also sell their units once their 3 years Seller Stamp Duty (SSD) is up, prior to the new launch condo reaching its TOP.
But most of them tend to sell at TOP as resale buyers will then get to see the actual unit and do not have to wait to move into a new home; and therefore will be willing to pay a premium for these new homes. This is what we call the TOP effect.
Some buyers may also end up moving into the new launch condo themselves, or rent it out to collect rental yield after enjoying this capital appreciation. Should a new launch condo be strategically located; it can also see favorable returns in the long run.
B) Resale Condo
Most resale condo buyers looking to buy for investment prefer to see and touch the physical thing prior to buying. The benefits of a resale condo also include being able to obtain rental income almost immediately. The rental income is also much more easily predictable as one can draw inferences from the latest past rental transactions and its transaction volume.
Buying a resale condo also allows you to head down to the unit itself to determine its physical attributes such as the noise level, the amount of light, the actual view, the profile of your neighbours, the upkeep of the facilities and its condition as well as the overall vibe of the resale condo development.
Past transactional sales trends of the resale condo development may also be more predictable as there is direct data to infer from, you will be able to tell if the past trends have been stagnant, upwards or declining.
Nonetheless, do take note that resale condo units may come with Cash Over Valuation (COV) as resale sellers may not be realistic with their selling prices. COV will also likely burst your budget a lot more than you would expect.
Paying above valuation also equates to paying a premium and paying for more than what the resale condo unit is worth. This would likely be a disadvantage as it may take you a longer time to be profitable as compared to earlier buyers of the resale condo development.
At the end of the day, both options new launch vs resale condo have their own set of advantages & disadvantages. And your choice ultimately depends on your personal preferences and circumstances.
One final thing to take note is that be it you are buying a new launch condo from a developer or buying a resale condo from an owner, both represent the same end of being a seller.
Macro-environmental forces of supply and demand will ultimately affect the selling prices of sellers.
What we mean by this is that supply is made up of both the new launch condo (new land supply) and resale condo market (existing supply); while demand comes from our local Singaporeans, foreigners turned PRs/locals, foreigners and not forgetting aspiring millennials whom are moving out of their parents’ homes and hoping to own a condo.
In the event of a supply shortage like what we have experienced in 2021 and 2022, both developers and resale sellers raised their prices significantly throughout this period. Those that have bought early from the developers when there was an abundance of supply therefore made a significant paper gain in these 2 years, while resale buyers faced much more difficulties due to the high Cash-Over-Valuation required.
In 2023, as we are entering into a high supply situation gradually with a lot of new launch condo developments supply coming into the market in 2023. For resale condo buyers, prices and seller’s expectations may soften (slower acceleration).
For new launch condo buyers; as these developments gets gradually sold out over the next 4 to 5 years, we may then encounter a supply shortage situation with the developers increasing prices rapidly again.
Therefore, do you see an opportunity to enter the condo market now?
We leave it to you to decide.
To sum this article up, Singapore's current population figure is at 5.9 million and By 2030, Singapore's population is projected to reach 6.5 to 6.9 million based on a government White Paper released on Tuesday.
With limited land and increasing housing demand, our take is that land and property prices can only consistently move upwards in the mid to long term time frame.
Let us know what you think in the comments below.
Do speak to us if you require any assistance with buying a condo in Singapore: new launch condo vs resale condo, we are able to assist with both types of condos. We endeavor to provide you with the most guided experience and assistance; helping you to find your dream home/investment!**
**Note - No commission is payable should you decide to engage us to help you with purchasing a new launch executive condo (EC), resale executive condo (EC), a new launch condo or a resale condo.
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Ultimate Checklist Guide for Under 35 Singles Buying Condo in Singapore