Commentary
4 min read
One way to feel old is that it's been 14 years since Sellers Stamp Duty (SSD) was first introduced (and it's undoubtedly had a major impact on Singapore's property market). For the younger generation of home buyers, you might not even know there was a time when you could buy a house one day and sell it the next – hence the origin of the word “flipping”.
Still, there are cases where circumstances or very bold considerations have led to units being bought or sold within a week. Below are some of the most extreme resale cases we found.
Biggest profits in one week reversal
Project Price Size PSF Purchase Date Holding Period Area Margin of Profit Sales Type Sales Date Sales Price Number of Days THE LEGACY $2,603,920 2,604 $1,000 7/7/20 Freehold 10 $781,080 30% Resale to Resale 7/7/26 $3,385,000 6 CARIBBEAN AT KEPPEL BAY $4,603,300 3,541 $1,300 5/7/17 16/8/99 to 99 4 $637,380 14% Resale to Resale 5/7/18 $5,240,680 1 THE CLIFT$1,023,000775$1,3206/08/9923 16/08/99 to 04/04/9928041$632,00062% Subsale to Subsale26/06/08$1,655,0003SCOTTS28$2,669,0002,034$1,311/11/9529Freehold9$565,06021% Newsale to Subsale11/11/95$3,234,0604N.A.$970,0001,097$8837/1/05Freehold12$530,00055% Resale to Resale12/1/05$1,500,0005THE SAIL @ MARINA BAY$1,808,0001,259$1,43622/1/1099Year 12/8/20021$521,15029% Resale to Resale25/1/10$2,329,1503EMERALD GARDEN$1,191,0001,216$9791/5/9699Year 01/10/18 to 9Year 271$462,69039% New sale to resale3/5/96$1,653,6902MARTIN PLACE RESIDENCES$2,202,0001,420$1,5506/09/4FREEHOLD9$434,20020%NEW SALE TO RESALES11/6/09$2,636,2007ICON$949,200904$1,05012/1/07991/07 to 9/29/20022$406,80043%SUBSALE TO SUBSALE16/1/07$1,356,0004
Some observations from the above
Resale-to-resale transactions are something we don't see today (or, given SSDs, probably ever), so yes, it's absolutely amazing to see numbers like that being bought and sold today in the space of a week.
The vast majority of these sales also occurred in the central region. Some real estate agents believe this simply has to do with buyer demographics: properties in the Core Central Region (CCR) tend to involve more investors and wealthier buyers. This demographic simply has a higher tolerance for risk.
Conversely, RCR and OCR homes are more likely to involve owner-occupants dealing with their only home, and they also have to worry about their home and replacement home if they sell, so they are less inclined to take this action.
That said, many of the subversions mentioned above were probably unplanned.
Given the short one-week time frame, most of the transactions listed above likely relate to the unique circumstances of the buyer or seller.
The high profits are likely to come from wealthy buyers who are very particular about securing a particular property. As they are purely focused on homeownership, they are not particularly concerned about yields or profits and may be willing to pay significantly more for the property, and even more.
(We see similar behaviour in the social housing market, where homebuyers who have saved up cash by selling private properties sometimes buy apartments for well above their appraised value, especially if they have no intention of reselling the apartment.)
Notable ones include transactions at developments such as Scotts 28, The Sail at Marina Bay and Icon. Unsurprisingly, these properties have seen a wide variation in results, with some owners making seven-figure profits and others making seven-figure losses.
In any case, this mania was at its most pronounced in 2007, when the top two deals made $781,000 and $637,000 in profits in less than a week. Such irrational behavior is hard to explain, but it probably comes down to the allure of location – in the case of units at the Caribbean at Keppel Bay, it was the newest waterfront development in the area at the time. Still, making more than $600,000 in profits in a single day is now a pipe dream for many.
Can I still “flip” a property?
The traditional way to do this is to buy very early in the sales phase, such as during a VVIP or VIP preview, where developers sometimes use loss-leader strategies to lower the price (we'll cover some of these tactics in this article).
If you buy at launch with a 20% discount and the price normalizes during the rest of the sales phase, you may be able to realize a 20% profit immediately or relatively soon after completing a sub-sale. Still, it's highly unlikely that will happen in a week. Most of these “resales” happen in year 4, once the SSD period ends.
Also, remember that there is no guarantee that the developer won't lower the price later and ruin your strategy. Developers tend to lower the price if sales aren't going as they hoped. It's best to do this only if:
(1) You should choose a location where you can continue to own the property even if you are unable to resell it or make a profit, i.e., where you can rent it out or continue to live in it.
(2) The market environment is favorable and very vibrant. For example, doing this immediately after a cooling-off measure would significantly reduce the potential buyer pool.
For more information on Singapore's private property market, and reviews of new and second-hand properties, follow Stacked. If you'd like to discuss this further, get in touch with us here.