Factors to consider based on the premise that investment is one of your key purchase objectives.
01. Price Movement Since Launch
For new launch projects of good investment quality (this will not be elaborated in this post as it is a different topic), we would typically see prices rise steadily over the launch phase.
This can be due to various reasons such as:
- Developer pricing-up strategy
- Low supply of units left but increasing demand towards TOP
- Upward market trends
The Key Question:
Is the price increase justifiable?
- What is the price gap between your price and the average initial launch prices?
- Are you paying more for better/similar attributes?
- Are you entering as the last few buyers or is there still sufficient stock left for further price increases?
A Quick Example | Meyer Mansion
- A 4-bedroom unit on level 4 at Meyer Mansion directly next to the expressway (ECP) is currently asking for $4.767m at $2769 psf.
- Prices of the newer launches in the area such as Liv@MB, Tembusu Grand and Grand Dunman, all 99-year leasehold properties, are just at a slightly lower psf.
- So technically, $2769 psf for a freehold project seems pretty alright.
- However, within the same stack at Meyer Mansion, a level 23 unit transacted at $4.763m at $2766 psf back in 2019.
- These higher floor units have mostly transacted around this price range, while having far better attributes such as sea views and being vertically further from ECP.
- Don’t be mistaken. We do firmly believe that we cannot compare prices now to prices in 2019.
- However, when unit attributes differ to such a great extent, is it much safer to purchase from a newer launch where your entry price is closer to the other purchasers in the same project?
(A) Holding Period
- For a shorter holding period, it would be safer to purchase in a newer launch where you are on a level playing field with the rest of the firsthand buyers.
- However, if you are only considering specific existing launches due to lifestyle / location needs, it does not mean that you need to eliminate them entirely just because prices have increased since the beginning.
- If you are planning to hold this as a family home for a longer term, there would likely be sufficient resale transactions in this project by the time you plan to sell your unit.
- Prices can increase further in the longer term, along with more second owners who would likely sell at higher prices eventually with each market cycle.
- We should also look at if there are other factors that can support long-term price growth, which brings us to our next point.
02. (B) Other Factors That Support Long-Term Price Growth
Here are some factors (not limited to just these):
- Are there any more residential land plots coming up in the vicinity that can help to support or boost prices in this area?
- What is the demand-supply balance of your unit type, layout and quantum?
- Is this area earmarked by the government for a major transformation plan? Do we foresee more demand coming into this area?