I'm SORRY But New Launch Condo Prices Are Just...

Summary

In this video, the speaker critiques the current hype surrounding new condo launches in Singapore, highlighting the inflated prices and speculative nature of such investments. Drawing parallels to the Pied Piper story, the speaker warns that real estate agents, motivated by high commissions, often exaggerate potential profits, leading buyers into risky investments. Comparisons are made with resale properties, which offer better value in the long term. The speaker cautions against the short-term speculation mentality, urging buyers to consider the true risk/reward ratio and long-term market trends before jumping into new launches.

Takeaways

• 😀 The hype around new launch condo prices in Singapore may be exaggerated, with many real estate agents pushing inflated prices for their own benefit.
• 😀 Real estate agents often have high commissions at stake, which creates a strong incentive to promote new launches as great investment opportunities, regardless of actual market conditions.
• 😀 The 'Pied Piper' analogy is used to warn against blindly following the trend of purchasing new launches without considering the risks involved.
• 😀 Many advertisements for new launches focus on success stories and profits, but they don't mention the risks or failures that can occur in these types of investments.
• 😀 The price premiums on new launch condos, such as Norwood Grand and Tusu Grand, may not be justified, especially when compared to nearby resale properties, which are often priced much lower.
• 😀 There is a growing disparity between the prices of new launches and resale properties, with new launches commanding 30-50% higher prices, which may not guarantee a better return on investment in the long run.
• 😀 The risk/reward ratio for buying new launch condos at inflated prices may not be favorable, and buyers may end up losing money if they overpay.
• 😀 Many buyers of new launch condos are hoping for a quick exit within 3 years, which raises concerns about speculative behavior and the potential for future losses if the market doesn't continue to appreciate.
• 😀 The speaker warns against the notion of easy, fast profits from new launches and emphasizes the importance of understanding long-term market trends and risks before making such investments.
• 😀 While new launches can seem attractive due to their modern amenities and low initial down payments, they come with significant financial risks that should not be overlooked.
• 😀 The speaker advocates for a more balanced approach to real estate investment, focusing on undervalued assets rather than getting caught up in the hype of new launches with high price premiums.

Q & A

What is the main concern raised by the speaker regarding new launch condominium prices?

The speaker expresses concern that new launch condominium prices in Singapore are being inflated and hyped up, which may not be sustainable. They warn that this could lead to financial losses for buyers, as the risk-reward ratio of purchasing at these inflated prices is unfavorable.

How do real estate agents influence the hype around new launch properties?

Real estate agents have a vested interest in promoting new launches due to the high commissions they earn, which can sometimes reach as much as $50,000. This financial incentive may cause them to exaggerate the potential for profit, painting a very optimistic picture for potential buyers.

What analogy does the speaker use to explain the current property market situation?

The speaker compares the current hype around new launch properties to the story of the Pied Piper, where people blindly follow without fully understanding the risks, leading them into a situation that may not benefit them in the long term.

What is the key difference between selling new launch properties and resale properties?

Selling new launch properties typically requires less effort in convincing buyers, as they are presented with a glossy and appealing sales pitch. In contrast, selling resale properties is more challenging and requires more effort. However, the commission for selling new launches is often higher.

What role do resale properties play in the comparison with new launch properties?

The speaker uses resale properties as a benchmark to highlight how new launch prices can be inflated. They emphasize that resale properties, often priced significantly lower than new launches, can offer similar or better value, making the premium for new launches harder to justify.

What are the risks associated with purchasing new launches in the current market?

The main risk is that buyers may be overpaying due to inflated prices, especially when the property market is at a peak. There's also a risk that buyers may struggle to sell the property or make a profit within the short timeframes they expect, as the market may not always support such high prices.

How does lease decay factor into the pricing of new launch properties?

The speaker explains that while new launch properties have the advantage of being leasehold with less decay initially, this advantage diminishes over time. In the first 10 to 15 years, the difference between leasehold and freehold properties is minimal, but over longer periods, lease decay can lead to a substantial devaluation of new launch properties.

Why does the speaker believe some buyers are overly optimistic about the potential for quick returns from new launches?

The speaker believes buyers are influenced by misleading narratives and past success stories presented by agents, which show high profits from previous new launches. However, this optimism overlooks the inherent risks and the unpredictability of the market, particularly in a short-term window like three years.

What does the speaker mean by ‘speculation’ in relation to new launch properties?

Speculation refers to the practice of buying properties in the hope of selling them quickly for a profit, rather than with a long-term investment strategy. The speaker warns that this speculative approach, based on timing the market, can be risky and may not lead to the anticipated returns.

What is the speaker's advice for people considering investing in property?

The speaker advises potential buyers to be cautious when purchasing new launch properties, recommending a more balanced approach based on undervalued assets rather than hype-driven, inflated prices. They also suggest looking for better opportunities in the resale market or waiting for a cooler market period before investing.