For a lot of buyers who bought their new launch units before the pandemic, we are now entering a period where a lot of properties are nearing completion and hitting TOP.
TOP stands for Temporary Occupation Permit.
When a development has hit TOP status, this means that it is time for owners to collect their keys an move into their brand new condo development.
As an agent who specializes in subsale condo sales, this period before TOP is a very exciting period.
Here are some factors for you to consider as you wait for the completion of your unit.
Factor #1: New supply of completed units enters the market
Now, if you bought the unit for your own stay, this might not apply to you.
But if you bought the unit for investment purposes, you have the chance to cash out from the paper gains your property has made.
As time passes, do consider that more and more property supply will enter the market.
In 2023, more than 20,000 units are due to be completed.
This means more and more sellers will be entering the market as well.
Right now, there is a golden opportunity to let go of your unit as your unit:
- only has half the waiting time
- no previous occupant
I wrote about this in an article called “The TOP Effect” in greater detail.
But this period of golden opportunity becomes limited once more supply floods the market.
Here are some supply numbers from various developments that will TOP in 2023:
1Q23
- Kent Ridge Hill Residences 548 units
- Avenue South Residences 1,074 units
2Q23
- Affinity At Serangoon 1,052 units
- Riverfront Residences 1,472 units
3Q23
- Treasure At Tampines 2,203 units
- The Florence Residences 1,410 units
You can refer to this list for more information: https://www.propertyguru.com.sg/property-guides/singapore-condo-top-2023-75050
Factor #2: Progressive payments start to kick in
As the development enters various stages of construction, you will be asked to pay down more and more.
At the beginning, the amount being paid is less than even $500 per month.
But it will progressively increase as the ceilings, doors and windows are completed.
Here is an example if you bought a $2M property with a $1.25M loan.
The interest rate in this case is 3%.
You can see the full amount of the mortgage payment kicks in once the Certificate of Statutory Completion is received.
Factor #3: Cash out when you can before market turns
You might think this is the salesman part of me talking.
But the truth is, we don’t know how uncertainty can affect property prices.
Some people say 2023 will be a period full of uncertainty especially with rising interest rates.
While sentiment is currently still positive and people who need homes are looking to buy, this presents a chance to cash out from the gains you made.
You made a wise decision to purchase your new launch unit back in 2018-2019 when supply was high and there was not much demand.
Today, demand is much higher from people who are:
- unwilling to wait or
- tired of delays in construction
- foreign buyers
There is a chance here for you to make good returns from your property investment but it won’t last forever.
Conclusion
I am sure when you bought your new launch unit years ago before the pandemic, you felt the prices were high back then.
But today it has climbed even higher.
If you are looking to make money from rental, it is possible. But again, I like to highlight this period of “high rentals” may not be so sustainable.
Not too long ago, there was a period where the rentals were not enough to cover the monthly mortgage.
We can’t escape the fact that property highs and lows will always come in cycles and are in tandem with the economy performance.
We just need to make sure we are on the right side of the property cycle.
If you have questions on what are your options for your current property, feel free to contact me for a no-obligation discussion. We can sit down and explore what are the options available to you.
