As Q4 2024 unfolds, Singapore’s residential property market remains resilient amid macroeconomic stability and declining borrowing costs. These favourable conditions are sustaining market activity while influencing buyer behaviour in a unique way—shifting preferences towards higher-tier or harder assets.
Additionally, November 2024 saw the greatest number of new launches in a month – where developers launched six new residential projects. These include City Developments’ 366-unit Union Square, SingHaiyi and its joint venture partners’ 367-unit The Collective at One Sophia, Sim Lian Group’s 846-unit Emerald of Katong, MCL Land and Sinarmas Land’s 552-unit Nava Grove, the 504-unit Novo Place by Hoi Hup and Sunway Developments, and the 916-unit Chuan Park by Kingsford Group.
One key trend that has been observed and is shaping the landscape is the narrowing price disparity between new launches and resale condos, complemented by increased supply from Government Land Sales (GLS). This phenomenon, captured in PLB’s Disparity Effect®, nudges buyers to explore premium options as the perceived value gap diminishes. For many, this represents an opportunity to move up the higher tier asset class for a new launch unit which we will be discussing in this article.
The Disparity Effect®: An Upgrade to the Next-Tier Asset Amid Evolving Buyer Preferences
Consider a typical couple planning to upgrade from their HDB to a private condo in District 21. Their choice lies between a resale condo and a new launch condo. In a market where the price disparity is significantly reduced, the value proposition of the new launch becomes more attractive. While resale condos provide more immediate affordability and larger unit sizes, new launches deliver modern designs, advanced facilities, and potentially higher long-term appreciation along its longer remaining lease terms.
As shown in Figure 1, this disparity effect creates a preference for new launches, even at a slight premium, as buyers are incentivised in moving up the asset class as prices between resale and new launch condos narrow.
Strategic Pairing: Maximising Value in a Narrowing Market
When operating in a market with reduced price disparities, a tailored Pairing Strategy is crucial for decision-making. Figure 2 illustrates this approach, focusing on aligning a property’s attributes with buyer priorities to optimise investment outcomes.
Taking Nava Grove as an example, its appeal lies in its location in the Rest of Central Region (RCR). However, beyond the region, several factors must be considered, including:
This comprehensive pairing strategy enables buyers to confidently navigate the narrowing price gap and secure the property that aligns with both their lifestyle aspirations and financial objectives.
Understanding Disparity Gaps with Bubble Charts
Bubble charts serve as an effective tool to visualise the price disparity among projects. In this article, we will leverage bubble charts to discuss the pricing disparities opportunities in D21 as well as to compare 4Q 2024 New Launch Projects. By categorising asking prices based on bedroom types and price quantum, these visualisations provide actionable insights for potential buyers and investors navigating the current market conditions.
The comparison between Nava Grove and nearby developments in D21 highlights the pricing dynamics within the same RCR. Bubble charts for 1-bedroom, 2-bedroom, 3-bedroom, 4-bedroom and 5-bedroom categorise prices in terms of:
Analysis of Disparity Gaps based on Asking Prices by Bedroom Types (Nava Grove VS Surrounding Projects)
Analysis of Disparity Gaps based on Asking Prices by Bedroom Types (4Q New Launch Projects + Pinetree Hill)
Conclusion
As the price gap between new launches and resale condos narrows, buyers are increasingly drawn to projects like Nava Grove, Emerald of Katong and Chuan Park, which offer modern amenities and strategic locations without the upfront renovation costs often associated with resale properties. While resale units provide larger layouts and lower price PSF, they require additional expenditure for renovation, making new launches more appealing to buyers seeking convenience, long-term value, and capital appreciation.
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