Are Singapore’s mass-market condos still appealing?

Resale or new launches

Resale properties are the best option for buyers who have a limited budget and want to buy larger units. They also offer lower entry prices. But they also need to consider if they are willing to accept the possibility of a slower capital growth in older resale homes.

Consider factors such as a deteriorating lease and the condition of the building. The resale property market can also mean that any future sale will be up against other buyers who purchased their home directly from developers, and may have paid less for it.

There are some buyers who prefer buying new launches despite paying a premium. In addition to the prospect of a more positive capital increase, new launches also provide a fresh 99 year lease, a one year defects liability period, and modern facilities as well as smart homes and wellness features.

At the beginning of February, there were still more than 1,100 OCR homes available for sale. About 45 per cent of these units are three-bedders while 26 per cent of them are four bedroom units. The market will also see several OCR projects in 2024. These include Lentoria Mansion, Sora Yuan Ching Road and a mixed development on Tampines Avenue 11.

OCR private houses are appealing to the majority, due to their wide variety and more affordable prices. This makes mass-market housing a cornerstone in the private sector.

The price of suburban condos has risen sharply, boosted by the new benchmarks for launches, but is expected to drop in 2024

Many Singaporeans believe that owning a private condo unit and living there is a sign for upward mobility. This is also part of building capital. In fact, many people have made the leap.

In recent years, more Singaporeans have moved to private condos.

The Singapore Department of Statistics estimates that in 2022 237.500 households will live in condos or apartments. That’s an increase of 70 percent from the 139.900 households of 2012.

Is OCR condos now less affordable with higher launch price?

Over the past few decades, prices for non-landed OCR homes have increased. The price index of the submarket grew by 13,7% in 2023 after growing by 9.3% in 2022.

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Mass-market buyers tend to be price sensitive, and greater resistance may kick in if the prices continue to increase unabated. OCR prices may rise much more slowly – probably by 3 to 5 percent – throughout 2024.

The average price of new OCR launches on the primary market exceeded S$2,000 per square foot last year.

J’den Jurong East set a new benchmark price of over S$2,400 at its launch in November. Sales of the project were brisk, which helped drive up OCR home prices during the fourth quarter 2023.

Does this mean that the price of OCR launches will increase in 2024, or stay the same?

Most projects don’t share the same features that made J’den appealing to buyers.

The new OCR launch pricing will continue to be around S$2,100 to S$2,100/sqft in the near future.

What can S$2,000,000 buy in OCR

A number of OCR homes can still be purchased by many households at prices as low as S$2,000,000. Around 66 per cent (of the new OCR non landed private home transactions in 2023) were priced under S$2million. This proportion is higher on the OCR’s resale property market. It stands at 88 %, according to data from caveat.

Sales in Bukit panjang and Bukit batok planning areas in District 23 accounted for 30% of all sales.

The OCR resale home market saw a 45 percent increase in the size of homes sold below S$2,000,000. Units between 600 sq ft and 800 sq ft accounted for 17 percent of transactions. Twenty-eight per cent of OCR home resale sales were in District 19, which includes Serangoon Garden (Serangoon Garden), Hougang (Punggol), and Punggol.

In 2023, districts 22, 26 and 17 had the highest differences between the new and the resale unit prices. District 17 had a low volume of new sales, with only four transactions at The Shorefront.

The LakeGarden Residences, and J’den are the benchmarks for the huge 70 percent difference in Jurong. The Lentor area saw a 62-percent average price difference between new launches and resale properties in District 26.

Entry in the private housing sector

Most house-hunters start by looking at the segment of mass market or Outside Central Region. Prices of private housing are cheaper in suburbia than in more central and city-edge locations.

In 2023 the average unit price for non-landed private houses sold in OCR will be S$2,145 psf in the primary marketplace, and S$1,383psf in resale.

There was a significant price gap between properties in the OCR region and those in the Rest of Central Region, as well as those located within the Core Central Region. The difference ranged from 18% to 55%.

Families that wish to trade in their Housing and Development Board flats for private housing will also find the OCR segment more appealing.

From 2019 to 2023 the percentage of private home buyers with HDB addresses accounted collectively for 45 per cent of all non-landed OCR sales of new homes and resale properties.

According to caveats, the RCR had a 32 per cent rate and the CCR had a 17 per cent rate during the same period.

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