{"id":68244,"date":"2023-08-16T18:05:43","date_gmt":"2023-08-16T10:05:43","guid":{"rendered":"https:\/\/www.99.co\/singapore\/insider\/?p=68244"},"modified":"2023-09-21T19:10:06","modified_gmt":"2023-09-21T11:10:06","slug":"analysis-condo-psf-price-new-launch-widen-resale","status":"publish","type":"post","link":"https:\/\/www.99.co\/singapore\/insider\/analysis-condo-psf-price-new-launch-widen-resale\/","title":{"rendered":"Analysis: When did the psf price for new launch condos widen from resale, and why"},"content":{"rendered":"
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There have been many discussions about how the per-square-foot (psf) prices of new launch condos have been trending upwards recently. No one knows how far up it’ll continue to rise, so you should count your blessings if you can find good-location condos<\/a> below these psf pricing trendlines.<\/p>\n

The next question would probably be, how did this happen (or why is this happening)? Or, indirectly, if you’re a current condo owner, will we see similar patterns with resale and sub-sale prices?<\/p>\n

Based on 99.co Researcher data, we’ve put together several charts to figure this out.<\/p>\n

99-year-lease condos<\/h2>\n

First, let’s look at 99-year leasehold condos. From 2008 to Q2 2023, all three average psf prices for New Launch, Sub Sale and Resale condos in this category have been trending upwards. Occasionally, you’ll get speculative selling, such as after the Global Financial Crisis of 2009, when sub-sale prices<\/a> surpassed even average new launch prices in 2010 and 2011.<\/p>\n

The government stepped in, introduced Seller’s Stamp Duty (SSD)<\/a>, and sub-sale prices never surpassed new launch prices ever since.<\/p>\n

Fun fact:<\/strong> Since 2010, SSD taxes condo buyers who sell their recently purchased properties within the first 4 years. This rule was later relaxed to 3 years in 2017.<\/p>\n

\"Ave<\/a>But what about resale prices?<\/p>\n

From 2008 till around 2016, the average psf price of resale condos has trended upwards more consistently than new launch prices. There were three occasions when the gap between the two went below 15%: 2011, 2013 and 2016.<\/p>\n

The gap situation in 2011 was due to policies introduced, such as the change in loan-to-value (LTV) ratio<\/a> in 2010, which saw borrowers able to only borrow up to 80% of their home value in loans (from 90%). This would have put more sell pressure on new launches, as buyers hunt for cheaper resale units, and speculation in the sub-sale market abated.<\/p>\n

Similarly, the situation in 2013 – the closest resale prices have ever gotten near new-launch-price levels – was due to successive cooling measures. A buffet of curbs: new LTVs, Total Debt Servicing Ratio (TDSR)<\/a>, new ABSD rules<\/a> impacting Singaporeans, PRs and foreigners, and the Executive Condo<\/a> Mortgage Servicing Ratio (MSR)<\/a>, gave many home buyers, especially if they’re buying a brand-new condo, pause.<\/p>\n