Condo subsales hit 10-year record amid price hike

High subsale numbers are often viewed as indicators of speculative or distressed buying. But market watchers attribute recent quarters’ numbers to an influx of completions that occurred in 2023 due to Covid-19’s delays, and to opportunistic purchases as the market conditions improved.

This year is expected to see the completion of 19050 private residential homes (excluding executive condominiums). It’s the highest annual number since 2016.

The figure includes those projects that were to be completed earlier and were delayed because of the pandemic.

More than 60% of Q3 subsale sales were condos located outside the Central Region. The Core Central Region was the rest.

A subsale involves the sale of a condo unit purchased directly from a developer to a third party before the construction is complete.

The Seller’s Stamp Duty can be avoided by buyers of private residential properties if the homes are sold more than three years following their purchase. For any property sold within the first three years, SSD up to 12% is applicable.

Most of the buyers in the subsale transaction in Q3 purchased their properties between 2018 and 2021, meaning they could have enjoyed price gains due to a more buoyant real estate market over the past two years.

URA’s Private Residential Property Price Index has risen cumulatively by around 43,5% between Q3 2017, and Q3 of 2023.

The median transacted unit prices of new non landed private homes outside executive condominiums in the OCR have increased from $1382 psf (per square foot) in Q1 2018. This will increase to $2080 psf by Q3 2030.

Subsales for suburban condos are increasing, as buyers capitalize on a rapid rise in the price.

Read also: Cape Royale by Ho Bee

According to data released by the Urban Redevelopment Authority, there were 355 subsale sales in the third quarterly of 2023. This is the highest quarterly number since Q1 2013. There were 395 transactions.

Riverfront Residences (including Treasure at Tampines) and Parc Esta are amongst the 10 top-selling subsale project this year.

In the first quarter, the number of such transactions has increased to 883. This is more than the 765 in 2022. They’re still below the record. In 2007, subsales were at 4,863, the highest number since 1996.

URA Realis’ data shows that, during this period, the average subsale profit was over S$252,800. The average annualised profit is also more than 20%.

You may also find buyers who are looking to make a quick profit rather than keep their home despite high interest rates.

Interest rates continue to rise and are likely to do so until 2022. It could be that a group is investors, not buyers for their own use. They are now facing high mortgage repayments. Some people may have been frightened by the thought of high payments and decided to move.

The average Singapore Overnight (Sora), a three-month rate, rose from 1.5 per cent to 3.8 per cent by November 2023.

The property market was booming over the last couple of years. That could have encouraged some owners to move their unfinished homes.

Due to the boom in property prices in recent years, many owners are looking to make a profit and sell their house on the second-hand market.

In 2023’s first nine months, 99 per cent (without taking into account transaction costs and taxes) of the subsales will be profitable.