The real estate market in Singapore is a dynamic landscape that offers numerous opportunities for savvy buyers who know where to look. One such opportunity lies in finding undervalued properties — homes priced below their actual market value.
Identifying an undervalued property in Singapore can be highly rewarding, whether you’re an investor looking for profitable returns or a homeowner seeking a good deal. But how do you go about spotting these hidden gems?
By leveraging market trends and understanding key indicators, you can identify undervalued condos for sale in Singapore and make informed decisions. Here’s how.
What is an Undervalued Property?
An undervalued property is simply one that is priced lower than its market value or bank valuation. Various factors, such as urgent sales by motivated sellers, developers rushing to meet deadlines, or older properties in prime locations, can lead to properties being listed below their true worth.
Experts typically consider a property undervalued if it is priced 5% to 15% below its market valuation. For instance, a property valued at $1 million but available at $850,000 to $950,000 could represent a significant saving.
How to Identify an Undervalued Property in Singapore
Spotting an undervalued property requires research, patience, and strategic thinking. Below are some proven methods to help you identify undervalued condos in Singapore:
1. Analyse Areas with Saturated Developments
One effective way to find undervalued properties is by focusing on areas where there are multiple developments within close proximity. Saturated areas, particularly those with many older developments, often experience price dips due to increased supply.
Take, for example, the area around Tanah Merah MRT station. Within a 1 km radius, you’ll find multiple developments like Grandeur Park Residences, Urban Vista, and East Meadows, among others. In such areas, older condos may be priced lower to stay competitive against newer launches. By comparing the price gap between a new launch and resale property, you can identify undervalued options that offer good value while still being in desirable locations.
2. Examine the Price Gap Between New Launches and Resale Properties
Another key strategy is to focus on the price difference between new launches and nearby resale properties. If the gap is significant — say around 20% — the resale property may be worth considering.
For example, you may find a resale condo in the same vicinity as a new launch that offers similar amenities but at a much lower price per square foot. In such cases, opting for the resale unit can provide better value for money while still allowing you to benefit from the area’s growth potential.
3. Target the “Worst House” in the “Best Location”
It’s a well-known real estate adage: buy the worst house in the best location. This strategy works particularly well if you’re looking to purchase property in Singapore for investment purposes. Properties in prime locations, even if they are older or slightly rundown, can offer better long-term returns, especially if you plan to rent them out.
However, caution is needed. Not all old properties in good locations are automatically undervalued. For instance, areas prone to crime or undesirable activities, like some parts of Geylang, may offer lower prices but could be challenging to resell. Additionally, renovation costs should be factored in, as they can quickly offset any savings from buying an older property.
4. Look for Motivated Sellers
Motivated sellers are often willing to accept lower offers for a quicker sale. These sellers may be under financial pressure, emigrating, or needing to offload their property to free up cash. For buyers, this can be an excellent opportunity to negotiate a lower price.
Identifying motivated sellers involves a bit of detective work. Check listings that have been on the market for several months or properties offered at multiple sales channels, including property auctions in Singapore. In such cases, sellers may be more flexible and willing to lower their asking price to secure a quick sale.
5. Monitor Projects Approaching ABSD Deadlines
Developers are subject to the Additional Buyer’s Stamp Duty (ABSD), which requires them to sell all units in a project within five years to avoid hefty penalties. As the deadline approaches, developers may offer discounts to clear remaining units quickly. This presents a prime opportunity for buyers to secure undervalued condos for sale in Singapore.
Projects nearing their ABSD deadlines often see fire sales, where units are sold below market valuation. Keeping track of such developments allows you to time your purchase strategically and secure a good deal.
6. Watch Out for Newly Married Couples or Investors
Young investors and newly married couples often purchase smaller properties as starter homes. When they later decide to upgrade to larger homes, they might look to offload their existing property quickly to avoid paying ABSD on their new purchase. In such cases, these sellers may offer their property at a discount to expedite the transaction.
Additionally, if a homeowner has already purchased a new property but hasn’t sold their existing home, they might be under pressure to sell within six months to qualify for ABSD remission. These situations often lead to more attractive prices for buyers.
7. Explore Property Auctions
Property auctions are another avenue for finding undervalued properties. Sellers at auctions are often looking for a quick transaction, which can lead to properties being sold below market value. Auctions also include properties repossessed by banks, typically priced to clear outstanding loans quickly.
Monitoring auctions held by real estate agencies can help you spot a deal. However, it’s essential to conduct due diligence before bidding, as some auctioned properties come with hidden costs, such as outstanding maintenance fees or legal complications.
Conclusion: Spotting Opportunities in the Market
Finding an undervalued property in Singapore requires a mix of market knowledge, patience, and strategic planning. Whether you’re an investor looking for an undervalued condo in Singapore or a homeowner seeking a good deal, understanding how to leverage these opportunities can lead to profitable decisions and substantial savings. Keep a close eye on developments, track property auctions in Singapore, and stay adaptable to market changes to make the most of your property search.
Get the best home loan in Singapore across all major banks and compare mortgage rates with the highest rewards. As an added advantage, we offer exclusive rewards and promotions when you refinance or get a new home loan through us
Comments