Condominiums for cheap? There is a trade-off

Want a private home, but not willing to pay the hefty price? Industry watchers say homebuyers can get their hands on reasonably-sized condominiums for less than $1 million. The catch is they have to forgo trendy styles and prime locations.
( 1,249 private homes sold in the first quarter of 2012 measured at least 1,000 sq ft and were priced below $1 million. Image courtesy of Thinkstock.)
This trade-off has proven popular so far; 1,249 private units, measuring at least 1,000 sq ft and sold for less than $1 million, were snapped up between January 1 and May 4 this year, revealed head of research at SLP International Property Consultancy Nicholas Mak to The Straits Times.
The figure includes new and resale private apartments, as well as executive condominium units. Mak noted that most of these sales were made in suburban 99-year resale condominiums. Freehold deals were mainly at city fringe areas.
Homes below $1 million could be found in both primary and secondary markets. However they were rarer in the former, as surging land prices has forced developers to offer smaller units at higher per sq ft (psf) prices, said Ong Kah Seng, R’ST Research director to The Straits Times.
Where to find them
Newly launched flats that are both at least 1,000 sq ft and below $1 million can be found in north-eastern areas like Hougang, Sengkang, and Punggol. From January to April, 74 such transactions were done at The Minton (Lorong Ah Soo) and 36 at Riversound Residence (Sengkang).
Such purchases could turn out to be a good deal if the condo is situated somewhere to be developed or redeveloped. “[These areas] are more valued propositions as the north-east promises exciting future growth while Pasir Ris is an established and refreshing resort-living area,” explained Ong.
Indeed, Pasir Ris saw 24 such sales at The Palette, and 12 at Ripple Bay. At Ripple Bay, one 1,076 sq ft home went for almost $902,000 ($838 psf) last month. Similar transactions were also found in Yishun and Sembawang.
According to Ong, these areas also offer such deals for resale homes; finding an apartment as big as 1,400 sq ft, and priced below $1 million is possible. Completed condominiums that transacted such bargains are Regent Heights, Changi Rise Condominium, The Mayfair, The Warren and Hillview. A 1,346 sq ft unit at Melville Park in Simei went for $888,000 last month.
Homebuyers are not limited to a certain type of private home. Shoebox units, older condominiums, executive condos, and landed homes have offered such bargains.
Shoebox units are widely available, but these below-$1 million apartments measure 540 sq ft at most. Older condominiums have decent sizes, but may look dated.
“When a property is older […] there will be more maintenance issues which may require higher upkeep,” said Lee Sze Teck, senior manager of research and consultancy at Dennis Wee Group. He told The Straits Times that major repairs will “dip into the sinking fund of a strata-titled property”, and if that is insufficient, home owners will have to fork out cash.
“Private condos that are more than 10 but less than 20 years old can beat newer launches in size and price, even though there might be some wear and tear,” Mak added.
Landed homes have also recently sold for lower prices. Lee spoke of a Lorong 3 Geylang terraced home that had seven years of lease remaining, and went for $90,000 this year. “People who buy such homes are likely to be looking at getting passive rental income […] it is unlikely that they will be able to resell it for gains,” said Lee.