Pros and Cons: Buying Resale Condo vs New Launch Condo

The ultimate dilemma that confounds both home buyers and investors alike is an understandable one: Do I buy an existing condo on the resale market? Or a newly launched condo fresh from the TOP date?

But before you even begin considering the different factors that would come into play with buying a resale or new launch condo, you first have to decide whether you’re buying for your own stay or investment.

Are you buying a home for own-stay or investment?

It’s crucial to know your intentions before buying a property. As one of the key milestones you’ll reach in life, having a clear direction and goal for your property purchase or investment is crucial.

Why? Mainly because it will help you decide whether a new launch or resale condo suits your needs best.

If you’re buying a home for own-stay…

If you’re buying a home for your own-stay, your home should grow with you. This means anticipating whether a new baby will be joining the family soon or if your elderly parents will be moving in to help raise your children. The home you choose, be it a new launch or resale, should have enough space to accommodate all residents.

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Another factor to consider is the neighbourhood you’re moving into. Quieter neighbourhoods are usually quite far from town centres, which could have two effects: (1) It could bring your child closer to their school and (2) move you further from your workplace. On the other hand, living closer to city centres could have adverse effects.

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If you’re buying a home for investment…

But buying an investment property is vastly different from buying a home to live in. If you’re buying a home for investment, the first thing you need to do is check if the property can generate a steady rental income, which refers to the payments you’ll receive when you lease out your property. (Meanwhile, rental yield refers to the amount of rental income you can obtain in a year as a percentage of the property’s price.)

Are you buying a home for own-stay or investment? It’s crucial to know your intentions before buying a property because it will help you decide whether a new launch or resale condo suits your needs best.

You should also check the capital growth potential of an area. Remember: capital appreciation occurs when the value of a property increase above its purchase price over time. Therefore, the lower the purchase price, the higher the potential for upside, which is why it’s crucial to find a property with a good entry price point.

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Other factors to look out for include:

• Location
• Property tenure
• Modes of public transport
• Proximity to MRT stations
• Condition of the unit and its facilities
• Nearby amenities, including schools and malls
• Significant infrastructure developments
• URA Master Plan

Once you’ve decided if you’re buying a home for own-stay or investment, you need to consider various pros and cons for resale or new launch condos:

Pros and cons of buying a new launch condo:

Pros of buying a new launch condo:

1. Developer incentives

While you are able to negotiate with sellers to get a better deal when buying a resale condo, it’s hard to ignore the lucrative deals provided by the new launch developers in the first place. Some projects do come with luxurious furnishings, exclusive discounts, potentially making developing projects a much better deal.

2. A fresh start (no historical rental data)

For new launch condos, you set the benchmark when it comes to selling and setting rental prices. This assumes, though, that you are a seasoned investor with a high level of real estate acumen to estimate a condo unit’s rental yield and capital appreciation.

3. Brand new condition

Another appeal that draws buyers to a new launch condo is its brand new condition. Everything about it is pristine and untouched-from the fixtures to the plumbing, even the facilities. Unlike a resale condo, gym equipment and swimming pools at a new launch condo will be bright and shiny and unused.

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Cons of buying a new launch condo:

1. Financial lockup

If you are looking to buy property by securing a loan, be mentally prepared to be financially locked up during this period of time before you can even get to experience living inside the home, which leads to the next point:

2. Longer waiting period

Patience is the name of the game, and once your home is completed two or three years down the road, you will have your keys to your brand new home. So, if you need to urgently move into a new place, a new launch condo might not be for you.

3. Rental competition

Also, you can expect to face competition from other investors looking for tenants, and it might take some time for the prices to correct itself.

Pros and cons of buying a resale condo

Pros of buying a resale condo:

1. What you see is what you get

Unlike new launch condos, you won’t have to visualise what a resale condo will look like once construction is done as what you see is what you get. Homebuyers can prospect the property properly with a clearer understanding of the layout of the house and the costs needed for repairs and furnishing.

2. Accurate rental rates

Having the option to know the existing rental rates of a resale condo can play an important role in investing because it allows you to plan out the finances and calculate your returns on investment. There are also times to see the actual rental rates for the specific resale condo you’re buying. If you engage a property agent, they will have access to the past rental transactions of a condo, so you can roughly work out the unit’s vacancy rate.

3. Ready to rent or move-in condition

Another upside to buying a resale condo is you can move in or rent it out immediately. In contrast, a new launch might take two years before it gets the Temporary Occupancy Permit (TOP). In fact, the resale condo you buy might already be leased out to tenants if the previous owner was a landlord.

Unlike new launch condos, you won’t have to visualise what a resale condo will look like once construction is done as what you see is what you get.

Most investors would also not want to fork out their own cash to pay for their mortgage repayments and use their rental income to cover it. As such, having sufficient rental income is important. Therefore, the faster their property investment is rented out, the easier it will be to cover or subsidise their loans.

Cons of buying a resale condo:

1. Higher upfront cost for immediate repairs

One good thing about new launch condos is that most developers have a one-year defects-liability period. That means they are required to fix any problems with a new unit for free. For resale condos, there is no such period. Plus, the older the resale condo is, the more likely it is to have maintenance issues, which means higher bills.

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2. Missing out on developer incentives

It’s become widely known that most developers offer discounts to entice potential buyers. It could be a direct price discount for early birds, vouchers, or it might have something to do with stamp duties. Developers, for example, will have a fire sale-where they give out attractive discounts-for projects that are nearing the five-year Additional Buyer’s Stamp Duty (ABSD) period.

3. “Used” condition

One of the greatest draws of a new launch condo is its brand new condition. From the fixtures to the plumbing, even the facilities, are pristine and untouched-not to mention the bonus services, like concierge, and smart home features that are featured in most new homes nowadays.

With a resale property, however, you still have to worry about repairing issues and problems of the new home. (See point #1 above.) Another thing you should look into is the history of complaints of the development, like if they regularly maintain the facilities and so on.

Regardless if you are looking for a property from the resale or new launch condo market, or maybe you already have an existing investment property urgently looking for tenants, Ohmyhome has got you covered. Our dedicated agent services will assist you in achieving your home rental goals! Here’s What To Expect From Ohmyhome Condo Buyer Agents.

But if you’re specifically looking for a rental investment property to grow your net worth, there’s a slew of outstanding new launches worth your consideration.

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