32 condo units sold at a loss in April, the biggest at $4.65m

With home prices at an all-time high, it can seem like a good time to sell your property. Because there’s a higher likelihood of getting some capital gains.

Earlier this week, 99.co did an article covering condo resale transactions in April 2023 that made a gain of at least 200 per cent.

Today, we’re focusing on the condo resale transactions in April 2023 (from URA data, captured as of May 16, 2023) that made a capital loss.

Figures (except floor area) are rounded off to three significant figures.

Biggest capital loss in April 2023 was $4.65m

Among these loss-making transactions, the one that stood out the most to us was the sale of a 3,272 sq ft unit at Marina Collection in Sentosa Cove, as it made the biggest capital loss of $4,645,000.

Bought in 2008 for $9,295,000, the unit was sold last month for $4,650,000 — around half of the purchase price.

On top of that, it made the biggest capital loss in the month in terms of percentage. It also recorded the second-highest annualised loss in the month at 4.51 per cent.

The Marina Collection unit isn’t the only condo unit in Sentosa Cove that made a significant loss, though. The other loss-making unit was from Seascape. In fact, it had the second-highest loss last month at $4,100,000.

Bought in 2011 for $9,600,000, the 3,380 sq ft unit was sold at $5,500,000 last month. Compared with the other loss-making units, it recorded the second-highest loss percentage-wise. But when annualised, it made the highest capital loss at 4.54 per cent.

At the same time, it should be noted that among these 32 units that sold at a loss last month, only eight units (or 25 per cent) made a capital loss of at least 10 per cent. Meanwhile, the remaining 75 per cent made a capital loss ranging from 0.3 per cent to 9.5 per cent.

In terms of quantum, four units (12.5 per cent) clocked a loss of at least $1 million last month, while 13 units (40.6 per cent) made a loss of at least $100,000. The remaining 15 units (46.9 per cent) recorded a loss ranging from $3,000 to $93,100.

When broken down by regions, the CCR saw the highest number of loss-making units in April 2023 with 19 units (59.4 per cent). This is followed by the RCR at seven units (21.9 per cent) and the OCR at six units (18.6 per cent).

59.4 per cent of these loss-making units were smaller than 1,000 sq ft

Another trend that caught our attention was that more than half of the loss-making units (19 out of 32 units) last month were smaller than 1,000 sq ft.

Smaller units such as one-bedders and two-bedders tend to be investment units, which home owners rent out for rental income.

Now, given the sky-high rental prices, it may be a good time to be a landlord. Amid a supply crunch, some tenants are willing to pay more to secure a rental unit.

At the same time, interest rates are rising, leading to higher monthly instalments for home loans.

Of course, there are many reasons why investors may decide to sell off their properties. But for those who depend on rental income to cover their monthly instalments, the rising interest rates may be too much for them to stomach.

Rather than risk getting overleveraged, some investors may decide to exit the market.

87.5 per cent of these units were bought during the previous property booms

99.co also noted that 23 (71.9 per cent) of the loss-making units last month had a holding period of at least 10 years.

In fact, when we looked closer at the purchase dates, 28 (87.5 per cent) of the loss-making units were bought during the previous property booms, such as in 2007, 2010 - 2013 and 2016 - 2018.

Given that most of the units were purchased when prices were high, home owners may have been reluctant to sell them off, hoping to get the right price to exit the market.

But with several factors such as economic uncertainties, interest rates and cooling measures threatening to slow down private property prices, it may seem like a good time to sell it off sooner rather than later.

ALSO READ: 5-room HDB DBSS flat in Bedok sold for $1m

This article was first published in 99.co.