At a time when home prices are at their peaks, it can seem like it’s a good time for home owners to sell off their properties. And more often than not, home owners are able to make a profit from the sale.
Today, 99.co looks at the condo resale transactions in April 2023 (from URA data, captured as of May 12, 2023). Among the units that changed hands last month, we noticed that 10 of them made a capital gain of at least 200 per cent.
Figures (except floor area) are rounded off to three significant figures.
All 10 units were held for at least 15 years
For these home owners, playing the long waiting game has paid off. After a holding period of at least 15 years, they have managed to get a profit that’s at least twice the purchase price.
In fact, among these 10 units, two units had the shortest holding period of 17 years. Both units, one from One Amber and the other from Orchid Park Condominium, were bought in 2006 when prices were soaring, before reaching a peak in 2007.
Meanwhile, another six units were bought in 1999, 2004 and 2005, when home prices had started increasing after a drop.
Notably, while these eight units were bought when home prices were rising, they were bought at least a year before prices peaked. On top of that, property prices then weren’t as high as they are now. By selling off the properties during a peak, these home owners were able to maximise their capital gains.
Meanwhile, the remaining two units were bought in 1998 and 2003, when prices were at their lowest.
90 per cent of the units were at least 1,000 sqft
Another trend we observed among these 10 profit-making units was that all but one had a floor area of at least 1,000 sqft.
These nine units had a floor area ranging from 1,012 sqft to 1,765 sqft, signalling higher demand for bigger space.
At the same time, these units don’t go beyond 2,000 sqft. In fact, looking at last month’s transactions, out of the 28 profit-making units with a floor area of at least 2,000 sqft, only four made a gain of at least 100per cent. The remaining units made a capital gain ranging from 7.1 per cent to 91.1 per cent.
Based on these transactions, it seems like properties ranging from 1,000 sqft to 1,800 sqft are more likely to bring in the highest returns.
70 per cent of the units are lower-floor units
Interestingly, among these 10 units, seven came from the lower floors (i.e. below the 10th floor).
It goes against the general notion that upper-floor units tend to command higher demand and prices, given the higher preference for them.
In the case of these units, a likely reason is that these units were bought for owner-occupation in the first place, especially given the big size of the units and the long holding periods. The owners of these units probably didn’t buy with property investment in mind, so the floor level may not be a huge factor in their buying decision.
Now, we’re not encouraging our readers to time the market. But looking at last month’s transactions, what led to the huge capital gain for the owners can be attributed to entering and exiting the market at the right time. They bought the units at a good time when prices weren’t at a peak, and sold them when prices hit record highs.