William Tan Real Estate

Scenario & Key Assumptions

• Property Type & Budget: 99-year leasehold condominiums in the same neighborhood (to isolate property age effects) with a purchase price of ~S$1.2 million each.

• Financing: 75% Loan-to-Value (LTV) bank loan (≈S$900,000 loan) and 25% down payment (≈S$300,000 cash/CPF). Interest rate assumed ~3%–4% p.a. over 5 years.

• New Launch Case: Buying a unit at launch (Building Under Construction). No rental income for 5 years (property is under construction and then owner-occupied or left vacant upon completion).

• Resale Case: Buying a completed resale unit. Rented out for the full 5 years (tenanted shortly after purchase). Owner does not occupy the unit.

• Holding Period: 5 years for both scenarios, with sale at end of Year 5 (no Seller’s Stamp Duty, since property is held >3 years). We assume sale in Year 5 at prevailing market value.

• Location: Both properties are in a similar location/segment (e.g. Outside Central Region), to ensure comparable market conditions (same neighborhood, similar unit size category).

We will compare financial metrics over 5 years, including initial outlays, ongoing costs, rental income, capital appreciation, and exit costs. All monetary figures in Singapore Dollars (S$). Recent market data (2024–2025) is used for estimates and trends.

Initial Costs Comparison

Both new launch and resale purchases incur significant upfront costs, though there are key differences:

• Purchase Price: Assumed S$1,200,000 for both. This determines subsequent costs like down payment and stamp duties.

• Down Payment (25%): S$300,000 (cash/CPF) for each. This is paid to the seller/developer upfront.

• Buyer’s Stamp Duty (BSD): A tiered tax on the purchase price, ~S$32,600 for a S$1.2M property. (Calculated as 1% on first S$180k, 2% on next S$180k, 3% on next S$640k, 4% on remaining amount above S$1M.) We assume this is the first property (no ABSD). Both new and resale buyers pay this BSD.

• Legal & Conveyancing Fees: Approx. S$2,500 – S$3,500 for each purchase (lawyer fees, title search, etc.). Similar for both scenarios.

• Agent Commission (Purchase): Typically 0% for private property buyers (the seller usually pays the selling agent’s commission). We assume no commission paid by buyer.

• Renovation and Furnishing: This is a major difference:

  • New Launch: Usually brand new, move-in-ready with developer-provided finishings. Renovation cost is low or optional – perhaps only minor works (lighting, built-ins). Assume ~S$0–$20K. (Average reno cost for a new 2-bedroom condo is ~$25–35K, but many buyers can move in with minimal additional work since everything is new.)

  • Resale: Often requires upgrading and renovations to modernize or replace worn fittings. Assume ~S$50,000 renovation for a mid-sized resale condo (e.g. 2-bedroom unit) to make it attractive for rental. (Older resale units typically incur $40–60K reno for 2-bed condos, higher if larger or in original condition.)

• Misc. Upfront Costs: Option fee, valuation fee, mortgage processing fee, etc. (modest amounts, say a few hundred to a couple thousand dollars). Similar for both.

Summing up initial cash outlay:

• New Launch: ~S$300K down + S$32.6K BSD + S$3K legal + ~$10K minor works = ~S$345,000 (approx).

• Resale: ~S$300K down + S$32.6K BSD + S$3K legal + S$50K reno = ~S$385,000 (higher due to renovation).

(The resale buyer must invest more upfront cash because of renovation needs. The new launch buyer pays more “progressively” – as explained below – but the initial 25% and stamp duties are comparable apart from reno.)

Financing & Ongoing Costs (Years 1–5)

Once the property is purchased, the owners face ongoing expenses over the 5-year hold. We compare these, noting a key timing difference in how the loan is serviced:

• Mortgage Interest & Principal: Both take a S$900K loan (75% LTV). For the resale condo, the loan is fully disbursed at purchase, so the buyer starts paying the full mortgage (principal + interest) immediately. For the new launch, Progressive Payment Scheme applies – the loan is disbursed in stages as construction milestones are reached, so monthly payments start small and “progressively” increase. This means:

  • Resale: Pay full monthly mortgage from Month 1. For example, at ~3.5% interest on a 25-year loan, monthly payment ≈S$4,500. Over 5 years, ~S$147K in interest cost would be paid (plus ~S$123K of principal repaid, reducing the loan balance to ~$777K after 5 years).

  • New Launch: During construction (say ~3 years), you only pay interest on the portion disbursed. Early on, monthly payments can be just a few hundred dollars. The loan might not be fully drawn until completion (e.g. 3 years later), meaning significant interest savings in first few years. Roughly, the new launch buyer might pay only ~50% of the interest a resale buyer pays during the first 3 years (since the loan on an uncompleted unit is only partially drawn). For the final 2 years (after building is completed and loan fully disbursed), they pay full mortgage. Estimated total interest paid over 5 years for new launch might be on the order of ~S$80K–$100K, significantly less than the resale buyer’s ~S$147K. (This staggered payment lowers holding costs for new launches in the initial years.) Principal repayment for new launch will also be lower in the first 3 years (interest-only payments), leaving a larger outstanding loan by Year 5 (potentially the full S$900K if sold at completion without servicing principal).

• Maintenance Fees (MCST fees): Both owners must pay monthly condo maintenance charges. These can range ~S$300/month (for mass-market condos) to higher for larger units or luxury projects. Assuming ~S$300/month, that’s ~S$3,600 per year. Over 5 years:

  • Resale: ~S$18,000 in maintenance (5 years).

  • New Launch: If the project is under construction, no MCST fees are due until the property obtains TOP (Temporary Occupation Permit) and the management corporation is formed. If TOP occurs around year 3, the owner pays perhaps 2 years of fees by year 5 (~S$7,200). (If the new launch is completed only at year 4–5 and sold soon after, maintenance cost is minimal.)

• Property Tax: Annual property tax on non-owner-occupied residential property, based on Annual Value (AV) (estimated rental value). In Singapore, investment properties (or vacant non-owner units) incur higher property tax rates than owner-occupied homes. For an annual rental value ~S$40K (typical for a ~$1.2M condo), the yearly property tax is roughly in the ~$5K–$6K range under 2024 rates (progressive tax starting at 11% of first S$30K AV, then 16% of next segment, etc.). We estimate:

  • Resale (tenanted): ~S$5,000–$6,000/year. Over 5 years ≈ S$25K–$30K total property tax. (Landlord doesn’t get the owner-occupier tax discount, but this is accounted as an expense against rental income.)

  • New Launch: During construction, no property tax (no issued Annual Value yet). After completion, if the unit is left vacant or used by the owner, the non-owner-occupied tax rates still apply unless the owner formally occupies it. Assuming the owner does not move in (keeps it as an investment), they’ll start paying tax only once TOP is obtained. So maybe ~2 years of tax by Year 5, roughly ~S$10K–$12K total.

• Repairs and Maintenance: The resale unit, being older, might incur higher maintenance/repair costs (appliances, A/C servicing, wear-and-tear fixes). The new condo is under developer warranty for defects in the first year and has brand-new fittings, so minimal repair costs initially. We will assume any such costs are negligible or covered under maintenance for this 5-year horizon.

• Insurance: Both owners might carry fire/home insurance (often required by the bank). This cost is minor (a few hundred dollars yearly) and similar for both; we omit it for simplicity.

In summary, ongoing cost outflows for the two cases differ mainly due to financing timing and rental offset (next section). The new launch buyer benefits from lower upfront interest burden (progressive payment) and slightly delayed taxes/maintenance until completion, whereas the resale buyer must service the full loan and costs from day one – but the resale’s rental income will counter these costs. We will account for net cash flows after considering rental in the next section.

Rental Income and Yield (Resale vs New Launch)

A critical difference is rental income: the resale property generates rent for 5 years, whereas the new launch generates none (assuming it’s not rented during construction or the initial years).

• Resale Rental Income: For a ~$1.2M condo, we estimate a gross rental yield ~3%–4% in the current market. (As of 2025, private condo gross yields average ~3.3% across Singapore, with 2-bedroom units around 3.3–3.8% yield. In the suburbs, yields can be slightly higher ~3.5%+.) Assuming a ~3.5% gross yield, the unit rents for roughly S$3,500–$3,800 per month. Let’s take ~S$3,600/month for calculation (~S$43,200/year). Over 5 years (with full occupancy) gross rent ≈ S$216,000.

  From this, the landlord pays expenses:

  • annual property tax (~S$5–6K/year as above, say S$25K over 5 years),

  • maintenance fees (~S$18K/5yr),

  • perhaps agent fees for finding tenants (commonly one month’s rent commission every 2-year lease cycle). If we assume two leasing cycles in 5 years, that’s ~S$7K in agent fees total.

  • Minor repairs and insurance (budget ~S$5K over 5 years).

  Subtracting these, the net rental income is roughly: S$216K – (25K+18K+7K+5K) ≈ S$161,000 net over 5 years. This net figure (~S$32K/year) would go towards servicing the mortgage. In effect, the tenants are covering a large portion of the resale owner’s mortgage costs.

  Note: Gross yields ~3–4% have been seen in 2024–2025 due to high rents; however, net yields (after taxes, maintenance, etc.) are about 1.5–2% points lower. This aligns with our rough net yield (~1.5–2% of S$1.2M is S$18K–$24K/year net cash flow), which in our estimate above came to ~$32K/year before mortgage, or ~2.7% net yield. The slight discrepancy might be because we did not account for mortgage interest yet – which is the next consideration.

• New Launch Rental: No rental income for 5 years. The unit is not generating cash flow during construction (and we assume the owner does not or cannot rent it out immediately after completion within this horizon). This is a major opportunity cost – essentially, the new launch investor foregoes five years of rental that a comparable resale could earn. The rationale is that many new launch buyers either plan to occupy the unit (after completion) or hold it vacant until sale, and during the construction period renting out is impossible. In our scenario, the new launch buyer has to service the loan entirely out-of-pocket (no tenant to help).

Cashflow Impact: In the resale case, the ~S$161K net rental over 5 years can substantially offset the ~S$270K of total mortgage payments (P+I) the owner owes in that period. In fact, after paying interest and costs, the resale owner might only contribute a relatively small amount of cash each month to cover any shortfall. By contrast, the new launch owner must cover all interest costs on their own during the hold.

To illustrate: if the resale owner’s net rental is ~S$161K/5yr, and total interest paid was ~S$147K, the rental almost covers all interest (in an ideal scenario, rent can even pay the interest and part of principal). Meanwhile, the new launch owner might have paid ~S$80–100K interest (thanks to progressive payment), but had zero income to offset it. They had to pay that out-of-pocket. This difference will reflect in the net profits calculated at exit.

Rental Yield vs Interest Rate: It’s worth noting that in recent years, rental yields (~3–4%) have been similar to or slightly below typical mortgage interest rates (~3–4%). In our scenario, the resale investment is roughly cashflow breakeven – rental income approximately covers the interest and basic expenses, with perhaps a small positive cashflow or slight shortfall. The new launch is cashflow negative (all interest costs are outflow). Investors often accept this because they anticipate capital appreciation, which we discuss next.

Capital Appreciation Trends (New Launch vs Resale)

Capital gain on sale after 5 years is a crucial part of the returns. We look at how new and resale condos have historically appreciated, and apply assumptions for our scenario:

• Price Growth Factors: In Singapore, new launches are initially priced at a premium (developers charge more for new builds, plus they often include “early-bird” discounts). Resale units are cheaper on a $/psf basis (often older, less modern facilities, shorter remaining lease). As of 2024/2025, new private condos average >$2,200 psf while resale condos average around $1,600+ psf. (In prime areas, new launches exceed $3,000 psf, whereas resale condos hover ~$1,500–$1,700 psf depending on location) This gap means new buyers pay more per unit area initially.

• Historical Appreciation: Despite higher entry price, new launches can appreciate as they move from construction to completion. Recent data (2018–2022) show both new and resale condos saw significant gains in a rising market. One study of 2,621 transactions found average 5-year returns on resale-to-resale sales were about +14.9%, while new-to-resale sales were +12.3%. In fact, resale purchases slightly outperformed new launches in that period on average. The highest gains were seen by those who bought new and sold before project completion (~15% gains, i.e. “flipped” via sub-sale) and those who bought resale and sold later (~15% as well). This counters the notion that “new launches guarantee higher profits” – not always true. Well-bought resale properties can appreciate strongly too (especially if purchased below market value or in an improving locale).

• Market Conditions: In the past 5 years (2020–2025), Singapore’s private home prices surged (ultra-low interest rates, pandemic-driven demand, etc.). For instance, resale condo prices climbed from around $1,200 psf in 2013 to ~$1,600+ psf by 2024, and new launch prices rose from ~$1,350 psf to ~$2,300+ psf over the same period. The COVID era (2020–2022) saw especially sharp jumps in the new-vs-resale price gap– construction delays and high land/build costs pushed new launch prices up ~20%+ in just 2 years, and resale values were pulled up as buyers competed for ready homes. By 2023–2024, new launch prices stabilized (even dipped slightly on average), while resale prices caught up somewhat.

• Depreciation Factors: A resale unit is older – over 5 years, it ages further. If it was, say, 10 years old at purchase, it’ll be 15 years old at sale, possibly less appealing relative to newer options. Leasehold condos’ value growth can slow as the lease runs down (though 15 years old is still relatively young for a 99-year lease). In contrast, the new launch will be brand-new upon completion and only ~2 years old by Year 5 (if completed around Year 3), so it’s still very “new” at sale – often commanding a price close to new launches in the area (unless the developer had overpriced it initially).

• Expected 5-Year Appreciation (2025–2030): For our analysis, we must assume a sale price in Year 5. Let’s assume moderate growth: The market normalizes with ~2%–3% annual growth. The new launch might see a larger % uplift if it was bought at early-bird pricing and the area grows in popularity; the resale might see steadier, modest growth. We will use the following estimates for illustration:

  • New Launch Sale Price (Year 5): S$1.44 million (20% above purchase price). This implies ~3.7% compounded annual growth over 5 years – a bit above inflation, reflecting some new-launch premium realization. (E.g. a $1.2M new unit in 2025 could sell for $1.44M in 2030 if market conditions are favorable.)

  • Resale Sale Price (Year 5): S$1.32 million (10% above purchase price). This ~1.9% CAGR reflects more conservative growth for an aging unit, though actual performance could be higher if the unit was undervalued or the neighborhood saw big improvements.

  These are hypothetical for comparison; actual outcomes vary. Notably, if both scenarios are in the same neighborhood, broad market trends affect both similarly – the new launch’s higher assumed gain might come from starting at a lower psf relative to future launches or simply market optimism for new projects.

• Capital Gains Tax: Singapore has no capital gains tax on property for individuals (as long as it’s not a frequent trading business). So any appreciation is tax-free. The only tax on sale would be Seller’s Stamp Duty (SSD) if sold within 3 years, but after 5 years, SSD = 0%.

In summary, capital appreciation is expected to be positive for both given Singapore’s general uptrend in property values. New launches often aim for a higher absolute gain (especially if sold post-TOP when the unit is “brand new” to the resale market), while resale condos can also appreciate, albeit typically at a slower pace, unless bought below market or during a market lull. Next, we factor these sale proceeds and subtract exit costs to get the net returns.

Exit Costs at Sale (Year 5)

When selling the property at the 5-year mark, both owners will incur some costs:

• Seller’s Stamp Duty (SSD): None in our 5-year scenario. (SSD applies only if sold ≤3 years from purchase; it’s 4% for sales in year 4 and 0% beyond year 4.)

• Agent Commission (Sale): It’s typical to pay a 2% + GST commission to the seller’s agent for marketing the property. On a ~$1.3–$1.44M sale, 2% is ~$26–$28.8K, and with 8% GST that becomes ~S$28K–$31K deduction. We’ll include ~S$30K (approx 2%+GST of the sale price) for each.

• Legal Fees (Discharge & Conveyance): Small amount (~S$1K–$2K) to handle paperwork for selling and loan discharge. Negligible relative to the other costs; we include it in rounding.

• Return of CPF with Accrued Interest: If CPF funds were used (for downpayment or mortgage), upon sale the used CPF (plus accrued 2.5% interest) must be returned to the CPF accounts. This isn’t a cost per se (it’s your own forced savings), but it means not all cash from the sale is “free cash” – some goes back to CPF. We will ignore this in the profit calc (treat CPF used as part of initial cash investment), but note it affects cash liquidity after sale.

After paying off the outstanding loan balance and these selling costs, the remaining amount is the owner’s equity cash – which we compare to the initial investment to gauge profit.

Loan Repayment at Sale: Each owner will use sale proceeds to pay off the remaining mortgage:

• Resale scenario: After 5 years of normal amortization, the loan might be ~S$777K remaining (from original S$900K)【34†】.

• New launch scenario: If interest-only during construction and minimal principal paid, the loan could still be near S$900K (worst case). If the owner started paying principal after TOP for 1-2 years, it might be slightly lower, say ~S$850K. We’ll assume ~S$870K remaining for new launch (average of scenarios).

Now, let’s bring it all together in a comparative table.

5-Year Returns: Side-by-Side Financial Comparison

Below is a summary of cash flows and returns for the New Launch vs Resale condo over 5 years:

(PPS = Progressive Payment Scheme. Note: Figures above are estimates for one specific scenario; actual outcomes can vary widely. Bold entries highlight key differences.)

Analysis of Results:

In this hypothetical calculation, the New Launch condo shows a higher 5-year net profit (~S$99K vs S$22K) primarily because of the larger capital appreciation assumed (20% vs 10%) and the benefit of progressive payment lowering interest costs. The resale condo, while it earned ~S$161K in rental net income, did not appreciate as much and also required a bigger initial cash investment (reno) and ongoing cash injections (though largely offset by rent). After paying the loan and sale costs, the resale investor ends up with a smaller percentage gain on cash.

However, these results depend heavily on assumptions:

• If the new launch appreciated less (say only 10% increase) or the resale appreciated more (common in a hot market), their positions could flip. For example, many resale condos bought in 2020–2021 saw 20–50% gains by 2023–2024 due to the market boom – far exceeding conservative forecasts.

• Rental yield and interest rate dynamics matter. If interest rates rise further or rents fall, the resale’s net cashflow could turn negative (requiring more out-of-pocket support). Conversely, if rents climb or stay high, the resale owner might achieve a neutral or positive cashflow, effectively having tenants pay for the asset.

• The new launch’s profitability often hinges on entry price. If one buys at a high launch price and the market stagnates, there could even be a loss on sale (not uncommon for some overpriced launches). Meanwhile, the resale was generating income regardless of price movement, cushioning the investment.

Discussion and Considerations

Cashflow vs Capital Gain: The resale strategy provided immediate rental returns (~S$43K/year gross) which substantially offset costs, making it easier to hold without significant cash drain. This suits investors seeking passive income. The new launch strategy was a negative carry (money paid out each month with no income in) – it relies on a payoff at the end via price appreciation. This is a more speculative play on future value.

Risk and Opportunity Cost: By not renting out the new launch, the investor misses out on ~$160K of potential rental net income. The bet is that the property’s value growth (and possibly the benefit of getting a “new” unit at an early-bird price) will more than make up for that. There’s also an opportunity cost if the investor had to live somewhere else or rent another place in the interim.

Progressive Payment Advantage: We saw that the new launch buyer’s financing costs were effectively lower in the first few years. This often enables investors to commit to a new project with less financial stress initially – sometimes paying just interest in the low hundreds of dollars for many months. It’s almost like a forced saving plan, with the big payments only kicking in upon completion. This can be advantageous for those who anticipate higher future income or those managing multiple properties. The resale buyer, in contrast, had to service a big loan from day one or use the rent to cover it.

Maintenance & Condition: New condos for the first decade typically have lower maintenance issues and enjoy modern facilities, which can sustain demand and values. Older resale units might face higher upkeep or upcoming renovation of common facilities, which could mean special fees or just a drag on value if the development looks dated. On the other hand, older resale projects often offer larger unit sizes for the price (our resale might have been a larger unit than the new launch for the same budget), which can be appealing to some buyer/tenant segments.

Exit liquidity: When selling, the new launch (now ~5 years old) might appeal to buyers who want almost-new homes without waiting for construction – a strong selling point. The resale (now even older) might have a more limited buyer pool unless its price is attractive. This can affect how quickly or at what price each can be sold.

Market trends: The analysis used recent data showing new launches are significantly pricier per square foot in 2024/25, and that gap had widened. If this trend continues, future new launches will set even higher price benchmarks, potentially lifting the value of our 5-year-old “new launch” unit (a newer resale) as the cheaper alternative. Resale values generally track but often lag new launches. However, if too much new supply enters the area, the resale unit could stagnate. Macro factors (interest rates, cooling measures, economic growth) will impact both similarly.

In conclusion, the new launch vs resale condo investment trade-off can be summarized as: New launch = higher potential capital gains but negative carry (no interim income); Resale = immediate rental returns and lower entry price, but possibly slower appreciation. The right choice depends on the investor’s financial situation and goals. In our scenario, the new launch yielded a higher net profit over 5 years (given our assumptions), but with more cash outlay upfront in monthly payments and no help from rental – essentially a bet on future capital appreciation. The resale strategy was more about steady returns and shared cost burdens with a tenant, yielding a smaller profit mainly because we assumed moderate appreciation.

Ultimately, one should consider personal cashflow needs, risk tolerance, and do careful research on the specific property’s value prospects. A well-chosen resale property can outperform a mediocre new launch, and vice versa. Always account for all costs (upfront duties, renovation, financing, taxes, agent fees) to calculate true net returns. With accurate numbers, an investor can make an informed choice between enjoying rental yields now or banking on capital growth later.

Sources:

• StackedHomes – “New Launch Vs Resale: Which Is More Profitable? (5-Year Transactions Analysis)”stackedhomes.comstackedhomes.com

• StackedHomes – “Is The Price Gap Between New Launch And Resale Condos Worse in 2024?” (Price trends 2013–2024)stackedhomes.comstackedhomes.comstackedhomes.com

• Seedly (Ohmyhome) – Condo Renovation Cost Breakdown (New vs Resale reno costs)seedly.sg

• Global Property Guide – Rental Yields in Singapore (2025)globalpropertyguide.comglobalpropertyguide.com

• Ohmyhome – Progressive Payment Scheme vs Resale Timelineohmyhome.com (explaining loan repayment differences)

• Daryl Lum Property Blog – Stamp Duty in Singapore (BSD rates formula)ohmyhome.com

• YourPropertyMatters – “New Launch vs Resale: 15-Year Perspective” (case studies of gains)yourpropertymatters.sgyourpropertymatters.sg