Singapore is heading into its first recession in years and property prices have fallen across the board.Many Singaporeans may have wanted to wait for prices to drop, and time the market but could this be a mistake?So is this the best time to buy a property? Or how low would the price go?This post will cover the profit analysis of the resold units from 2007 to Q1 2020 and past economic recessions to help you make a more informed decision on your investment.
The properties in Singapore are classified into 3 regions:
Core Central Region (CCR) – Areas that are usually closed to the financial district, zone around the area tend to be the most expensive.
|
District |
Area |
|
9 |
Cairnhill, Killiney, Leonie Hill, Orchard, Oxley |
|
10 |
Balmoral, Bukit Timah, Grange Road, Holland, Orchard Boulevard, River Valley, Tanglin |
|
11 |
Chancery, Dunearn Road, Newton |
|
1 (considered part of The Downtown Core) |
Boat Quay, Chinatown, Havelock Road, Marina Square, Raffles Place, Suntec City |
|
2 |
Anson Road, Chinatown, Neil Road, Raffles Place, Shenton Way, Tanjong Pagar |
|
6 |
City Hall, High Street, North Bridge Road |
|
Part of District 4 |
Sentosa |
(Source: Iproperty.com)
Rest of Central Region (RCR) – Areas that are somewhat close to the city fringe. Known to house mid-tier properties and hold higher value when compared to OCR.
|
District |
Area |
|
3 |
Alexandra Road, Tiong Bahru, Queenstown |
|
4 |
Keppel, Mount Faber, Telok Blangah |
|
5 |
Buona Vista, Dover, Pasir Panjang, West Coast |
|
7 |
Beach Road, Bencoolen Road, Bugis, Rochor |
|
8 |
Little India, Farrer Park, Serangoon Road |
|
12 |
Balestier, Moulmein, Novena, Toa Payoh |
|
13 |
Potong Pasir, Macpherson |
|
14 |
Eunos, Geylang, Kembangan, Paya Lebar |
|
15 |
Katong, Marine Parade, Siglap, Tanjong Rhu |
|
20 |
Ang Mo Kio, Bishan, Braddell Road, Thomson |
(Source: Iproperty.com)
Outside Central Region (OCR) – Located outside of the core regions with extensive transport options. Prices of homes tend to be lower than CCR and RCR.
|
Sub-region |
District |
Area |
|
East Planning Region |
16, 17, 18 |
Bedok, Chai Chee, Changi, Loyang, Pasir Ris, Simei, Tampines |
|
North East Planning Region |
19, 26, 27, 28 |
Hougang, Punggol, Sengkang, Serangoon, Ang Mo Kio, Seletar |
|
North Planning Region |
24, 25, 27 |
Kranji, Lim Chu Kang, Sungei Gedong, Tengah, Admiralty, Woodlands, Admiralty, Sembawang, Yishun |
|
West Planning Region |
21, 22, 23 |
Clementi, Upper Bukit Timah, Hume Avenue, Boon Lay, Jurong, Tuas, Bukit Batok, Choa Chu Kang, Hillview Avenue, Upper Bukit Timah |
(Source: Iproperty.com)
Looking at the 3 charts, you’d noticed that the CCR made the highest average profit ($330,931) as compared to RCR($240,719) and OCR($192,401) respectively.
However, only 7 in 10 properties managed to make a profit in CCR, while RCR and OCR profited at an average of 8 in 10, 9 in 10 properties.
Despite the lower gross profit margin from the property sale of RCR and OCR, one must also take into consideration the capital outlay required to purchase properties of the different regions.
Based on the chart above, properties bought during the 2007 to 2009 financial crisis period gave a higher average gross profit range of $200,000 – $350,000 with shorter holding time. Compared to the properties bought from other periods i.e 2013 to 2015 only made an average gross profit of $50,000.
You can also see that whenever there is an economic downturn, the sales volume would spike and peaked. In conclusion: Singapore is still one of the safest places to invest in properties because the chances of one making a loss are very low. Given the past trend, the best time to make a purchase is usually during an economic slowdown.