For many households, owning and living in a private condominium unit is a sign of upward mobility and part of capital-building – a page from the playbook of the Singapore Dream. Indeed, many have made that leap.

While the vast majority of Singaporeans still reside in public housing, more households have moved into private condos over the years.

In 2022, there were 237,500 resident households living in condos and apartments, up by nearly 70 per cent from 139,900 households in 2012, based on figures from the Singapore Department of Statistics.

Entry into private housing market

The first port of call for many house hunters is usually the mass market, or Outside Central Region (OCR), segment. Prices for private housing in suburban locations are comparatively more affordable than those in the city fringe and more central locations.

In 2023, the average unit price of non-landed private homes sold in the OCR was S$2,145 per square foot (psf) in the primary market, and S$1,383 psf at resale.

This represented a sizeable price gap – ranging from about 18 per cent to 55 per cent – between properties in the OCR and the Rest of Central Region (RCR), as well as the Core Central Region (CCR).

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The OCR segment is also considered more accessible to families who wish to trade up their Housing and Development Board (HDB) flat for private housing.

Using the purchaser address indicator data as a proxy for HDB upgrader demand, the proportion of buyers with an HDB address accounted for a sizeable portion of OCR non-landed new and resale private home sales, at 45 per cent collectively from 2019 to 2023.

This is compared with 32 per cent in the RCR and 17 per cent in the CCR over the same period, based on caveats lodged.

Are OCR condos less affordable now with higher launch prices?

The prices of OCR non-landed private homes have strengthened over the last few years. The sub-market’s price index climbed by 13.7 per cent in 2023, following a 9.3 per cent growth in 2022.

Buyers of mass-market homes tend to be the most price-sensitive group, and greater resistance could kick in if prices continue to rise unabated. PropNex believes that OCR prices could rise at a much-slower pace – likely to the tune of 3 to 5 per cent – for the whole of 2024.

In the primary market, the average price of several OCR new launches crossed the S$2,000 psf mark last year.

J’den in Jurong East achieved a new benchmark average price of more than S$2,400 when it hit the market in November, and the project’s brisk sales helped boost OCR home prices in the fourth quarter of 2023.

Will this spark an upward spiral in OCR launch prices in 2024?

This is unlikely, since most projects do not share the same attributes that made J’den attractive to buyers.

PropNex anticipates that new OCR launch prices will continue to average at around S$2,000 to S$2,100 psf in the near term.

What can S$2 million buy in the OCR? 

Observations suggest that OCR homes are generally still within the reach of many households, based on the volume of sales at prices up to S$2 million. About 66 per cent of OCR new non-landed private home sales transacted in 2023 were priced below S$2 million. In the OCR resale market, that proportion is higher, at 88 per cent, according to caveat data.

Among new non-landed units in the OCR that sold for less than $2 million, about 62 per cent were smaller units, spanning between 600 square feet (sq ft) and 800 sq ft. By district, 34 per cent of sales were in District 26 (mainly projects in the Lentor estate), while 30 per cent were District 23 sales in the Bukit Panjang and Bukit Batok planning areas.

In the OCR resale market, meanwhile, about 45 per cent of the non-landed private homes resold for below S$2 million were sized between 900 sq ft and 1,300 sq ft, while units ranging from 600 sq ft to 800 sq ft made up 17 per cent of the transactions. District 19 (Serangoon Garden, Hougang, Punggol) had the biggest proportion of resale transactions of OCR homes priced below S$2 million, at 21.8 per cent of sales.

Looking at the unit price gap between new and resale units in 2023, the districts which had the largest differences of more than 60 per cent were districts 17, 22 and 26. In the case of District 17, the volume of new sales was thin, with four transactions at The Shorefront.

The whopping 70 per cent price gap in Jurong (District 22) was driven by benchmark prices at The LakeGarden Residences and J’den. Meanwhile, new launches in the Lentor area opened up a 62 per cent average unit price gap against resale deals in District 26.

Resale versus new launches

Generally, if buyers have limited budgets and are after larger units, resale would be the way to go, with lower entry prices. However, they should also think about whether they are prepared to accept potentially slower capital appreciation in the case of older resale properties.

Factors to consider may include a declining lease and building condition. Buying in the resale market also means that any subsequent sale faces competition from other owners at the development, who may have paid a lower price for their homes if they had purchased directly from the developer.

Despite the price premium over resale units, there are buyers who prefer new launches. Aside from the prospects of more positive capital growth, new launches offer a fresh 99-year lease, a one-year defects liability period, modern facilities, as well as smart home and wellness features.

According to PropNex’s sales team, there are more than 1,100 units of OCR new homes that are still available on the market as at Feb 1 – of which about 45 per cent are three-bedders and 26 per cent are four-bedroom unit types. There are also several OCR projects entering the market in 2024, such as Lentoria, Lentor Mansion, Sora on Yuan Ching Road, as well as a mixed development at Tampines Avenue 11, and the Champions Way project.

On the whole, OCR private homes remain appealing to the masses, owing to their variety and relatively more affordable prices, making mass-market homes a cornerstone of the private housing sector.

Ismail Gafoor is CEO and Wong Siew Ying is head of research and content at PropNex Realty