Does holding a condo for more than 20 years mean higher gains?

Does holding a condo for more than 20 years mean higher gains?
PHOTO: 99.co

We recently compiled the top 10 condo gains by the regions (CCR, RCR, OCR) based on condo transactions from Feb 1 to 7, 2023.

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Among the top 10 condo gainers across the three regions, one of the transactions that stood out was the $1.56m sale of a unit at Blue Horizon.

As the unit was bought for around $672,000 in 2002, it was held for 21 years, before making a gain of around $888,000 when it was sold recently.

So we wonder if selling a condo unit that was purchased more than 20 years ago can translate to a higher gain.

In this follow-up article, we're reviewing condo gains with a holding period of more than 20 years, based on transactions from Feb 1 to 10, 2023.

Condo name Size (sq ft) Bought for/ Date bought Sold for/ Date sold Capital gain Years held Return Annalised return
International Plaza 1,507

$488,000

6 Jan 1999

$1.9m

9 Feb 2023

$1.41m 24 289 per cent 5.83 per cent
Jervois Lodge 1,238

$1.18m

16 Mar 1998

$2.33m

2 Feb 2023

$1.15m 25 97.5 per cent 2.76 per cent
Blue Horizon 1,216

$672,000

8 Jan 2002

$1.56m

3 Feb 2023

$888,000 21 132 per cent 4.09 per cent
Simei Green Condominium 1,249

$533,000

2 May 1997

$1.14m

8 Feb 2023

$605,000 26 114 per cent 2.96 per cent
The Warren 1,066

$490,000

16 Jan 2002

$1.07m

6 Feb 2023

$580,000 21 118 per cent 3.79 per cent
Orchid Park Condominium 1,249

$545,000

1 Oct 1998

$1.1m

3 Feb 2023

$555,000 25 102 per cent 2.85 per cent
Melville Park 1,044

$600,000

4 Jan 2000

$940,000

3 Feb 2023

$340,000 23 56.7 per cent 1.97 per cent

Among these seven transactions, five of them made a return of at least 100 per cent, with another transaction almost hitting a 100 per cent return.

Based on these transactions, it could be said that holding a condo unit for more than two decades can translate to a higher gain.

We also notice that for most of these transactions, the gains are more than the initial purchase prices when these units were bought more than 20 years ago.

But when we filter the data and look at the top 10 condo gains from Feb, 1 to 10, only two were held for over 20 years. Meanwhile, half of the top 10 condo gainers were held for 11 to 17 years.

Condo name Size (sq ft) Bought for/ Date bought Sold for/ Date sold Capital gain Years held Return Annalised return
Ardmore II 2,024

$4.21m

19 Oct 2006

$6.28m

8 Feb 2023

$2.07m 17 49.1per cent 2.38per cent
Draycott Eight 4,015

$7.22m

17 Aug 2017

$8.68m

1 Feb 2023

$1.46m 6 20.2 per cent 3.11 per cent
International Plaza 1,507

$488,000

6 Jan 1999

$1.9m

9 Feb 2023

$1.41m 24 289 per cent 5.83 per cent
The Cosmopolitan 1,141

$1.46m

24 June 2009

$2.8m

10 Feb 2023

$1.34m 14 91.8 per cent 4.76 per cent
Signature Park 1,421

$980,000

29 May 2007

$2.28m

3 Feb 2023

$1.3m 16 132 per cent 5.42 per cent
Allsworth Park 1,959

$2.71m

22 Mar 2012

$4m

9 Feb 2023

$1.29m 11 47.6 per cent 3.60 per cent
Thomson 800 1,399

$1.42m

14 Aug 2009

$2.6m

1 Feb 2023

$1.18m 14 83.4 per cent 4.43 per cent
Jervois Lodge 1,238

$1.18m

16 Mar 1998

$2.33m

2 Feb 2023

$1.15m 25 97.5 per cent 2.76 per cent
Clementi Park 1,873

$1.94m

10 Jul 2017

$3.08m

3 Feb 2023

$1.14m 6 58.8 per cent 8.01 per cent
Grange Infinite 2,701

$6.05m

12 Dec 2016

$7.18m

7 Feb 2023

$1.13m 7 18.7 per cent 2.48 per cent

So a longer holding period (20 years as opposed to 15 years) doesn't necessarily translate to a higher absolute gain.

More importantly, we shouldn't just look at the absolute capital gain.

A more accurate way would be to look at the respective annualised returns, which takes into account the effect of compounding. This also allows you to compare the transactions better.

In the case of the top 10 condo gains above, the transaction with the highest annualised return is the $3.08 million sale for Clementi Park.

Interestingly, it has one of the shortest holding periods of six years.

Nevertheless, there's a combination of factors that affects the sale price, which in turn affects the capital gain and annualised returns.

This includes the location, size of the property and the state of the property market at the time of its sale and purchase.

ALSO READ: Should you rent or sell your new launch condo in 2023? Here's how you can decide

This article was first published in 99.co.

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