Subsales of condos hit a ten-year high amid price surge
Subsales in the third quarter of 2018 were a bumper crop, exceeding the 765 transactions recorded in 2022. They are far from the record. In 2007, the number of subsales reached 4,863 — the highest ever since 1996, when data began to be available.
Riverfront Residences are the top 10 subsale projects in Singapore this year, followed by Treasure at Tampines, Parc Esta and Riverfront Residences.
In Q3, over 60% of all subsale transactions were for condominiums in the Outside Central Region. The Core Central Region accounted for the remainder.
A subsale occurs when a developer sells a unit of condominium to another purchaser before the project has been completed.
In the first nine month of 2023, 99 percent of all subsales are profitable.
URA Realis shows that the average profit from subsales was more than S$252,800 for each transaction and a profit annualised of over 20 per cent.
Subsale volumes that are high have traditionally been interpreted as an indication of speculative purchases or distressed sales. However, market watchers have attributed recent numbers to the flurry in completions for 2023 following Covid-19-induced delays as well opportunistic selling as market conditions began to improve.
This year, 19050 private residential apartments (excluding executive condos) will be completed. It is the highest number since 2016.
Subsales of condominiums in suburban areas are rising as buyers profit from a sharp rise in price.
Data from the Urban Redevelopment Authority(URA) showed that there were 355 transactions of subsale in the third-quarter of 2023. This was the highest figure for a quarter since Q1 2013, which saw 395 transactions.
This includes projects that should have been completed earlier, but were not due to the pandemic.
If they sell the property more than 3 years after purchase, buyers of residential properties can avoid having to pay Seller’s Stamp Duty. Any home that is sold within 3 years of the purchase date will be subject to SSD.
Several of the sellers involved in the Q3 subsale transactions had purchased their units between the years 2018 and 2020. They would have likely been able enjoy a higher price due to the more buoyant market in the past couple of year.
The median price per square foot of non-landed private homes, excluding executive condominiums, in the OCR has increased over time. It went from $1,382 in Q1 2018 up to $2.080 by Q3 2023.
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The property market has been booming in recent years. Some owners may have decided to sell their unfinished houses.
It is common for owners who want to maximize their gains to decide to sell on the secondary property market.
It is possible that some buyers have chosen to profit from their property rather than holding onto it despite the high interest rate.
Interest rates are expected to remain high in 2022. Investors who don’t buy for themselves may now be faced with high mortgage payments. Some buyers may have decided to sell because they were scared of the high mortgage payments.
The three-month average Singapore Overnight rate (Sora) increased to approximately 3.8 percent in November 2023 from around 1.5 percent in January 2019.
URA’s private residential price index rose by 43.5 percent cumulatively from Q3 2017 to Q3 2023.