One of the common questions we get is “when is the best time to upgrade my property?”, while there is no best time, there are signs that you should consider making a move.
The two common factors that spurs the thought of moving to another property are usually about Opportunity Cost and Lifestyle.
The first factor, opportunity cost refers to whether the capital in the property working hard for the property owner.
The second factor, lifestyle broadly refers to user experience of living in your current HDB or Private Property, after all if the property is where we live at, we should enjoy living in it.
In this article, we explore 5 things that hints it may be time for you to consider making a move.
- The maintenance of your condo is deteriorating (prolonged)
A condo’s exterior and facilities condition are important factors in upkeeping the desirability of the development. As a condo gets older, the need for good maintenance becomes increasingly important.
The daily sweep of fallen leaves, overall cleanliness of the common areas in the condo and the regular repainting of the condo facade are a few important things that a good condo MCST will ensure are done.
Once the condo is not well taken care, potential buyers may be turned off even if the condo is attractively priced. This is mainly why some freehold property prices remain depressed for long periods of time.
- The area your property is located is already matured (oversupply) and there is no more positive catalyst
At the late stages of a property cluster’s growth, it is common that developers build up an area to its maximum potential. Take for example, at the Amber Road vicinity, there are literally no more land that can be sold. Developers will need to en-bloc existing developments to rebuild. However, if you own an older condo, will there be much growth opportunity today? Perhaps, there is if you get an en-bloc.
There are other areas where still has growth opportunity, and it could make sense to look at areas where there is still more room for development.
- There is a new launch nearby that suits your needs and premium is lower than 15% (in general)
The price gap (premium) between new launch and resale properties moves in cycles.
There are times where a new property is only priced 5-10% higher than resale properties, in this case, new properties could be better buys.
On the other hand, there are times where a new property is priced up to 40% higher than resale properties, which makes resale properties more attractive.
In either property pricing scenario, there are opportunities to take advantage of such pricing differences.
For example, we have clients who decide to move on to a new property as their current property price has remained stagnant. After their new property obtained TOP in year 2020, they have a sizable paper gain. If they would have held on to their stagnant property, the prices did not more up.
- If you have only breakeven or have small losses for more than 5 years
Small losses can be reversed, but large losses may not be easy to reverse. The opportunity cost is something property owners will have to consider when holding on to properties at a loss.
One of our clients held on to a 4-room HDB flat in the north west area of Singapore. For 10 years the prices did not rise but it dipped by about $100,000. In this scenario, we manage to reduce the losses from $100,000 to just $40,000.
The client went on to purchase a new EC, lived with parents for 3 years and manage to recover their $100,000 loss as the new EC had appreciated by $300,000 over the next 7 years.
The decision to cut your small losses and move on is not an easy one, but with the right decision-making process and plan, it could turn out well.
- If the price of your property is at similar price to a better district
When property prices move, there are districts that move faster than others. There are also times where property price in a district further from the city is similar to prices within the city or city fringe areas.
Take for example in 2021, price of Amaryllis Ville located in Newton is priced at $1,400-$1,600psf while price of The Trumps located at Kembangan is priced at $1,300-$1,500psf. The price premium is less than 10%, and if there is no reason for a property owner to live in Kembangan, a move to Newton could be a good option to explore.
Closing thoughts
Over the last 10 years speaking to a wide range of experienced property investors, one believe they have in common is they never fall in love with their property. They are always open to move to another property if there are better prospects. After all, many of us hope to grow our retirement nest egg from our property wealth.