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This homeowner made $3.5m in 6 months: Here are the biggest property flips since 2006

This homeowner made $3.5m in 6 months: Here are the biggest property flips since 2006
PHOTO: Stackedhomes

There's an old saying that your holding power determines your gains, when it comes to real estate. And while that's true in the conventional sense, there are some exceptions — within the prime central region, high-end condos were once flipped for remarkable profits, in a very short span of time.

For those old enough, those were the days when properties could be bought and sold within a day (here's our previous piece on some crazy quick ones). Here are some of the top transactions where it happened, and a snapshot of how crazy things got:

Top 10 property gains within six months 

Project Bought At Sold At Size (Sq Ft) $PSF Bought Date Days Held Tenure Gain ROI
THE OCEANFRONT @ SENTOSA COVE $7,284,510 $10,800,000 5985 $1,217 7/8/06 184 99 yrs from 10/08/2005 $3,515,490 48per cent
THE EDGE ON CAIRNHILL $6,408,000 $9,500,000 5673 $1,130 8/1/07 150 Freehold $3,092,000 48per cent
THE TOMLINSON $8,500,000 $11,500,000 4833 $1,759 30/1/07 136 Freehold $3,000,000 35per cent
BEAVERTON COURT $5,280,000 $7,800,000 9784 $540 21/2/07 97 Freehold $2,520,000 48per cent
FOUR SEASONS PARK $3,900,000 $6,250,000 2260 $1,725 13/2/07 160 Freehold $2,350,000 60per cent
ARDMORE PARK $5,950,000 $8,300,000 2885 $2,063 26/2/07 156 Freehold $2,350,000 39per cent
ARDMORE PARK $6,450,000 $8,800,000 2885 $2,236 22/5/09 145 Freehold $2,350,000 36per cent
URBAN SUITES $8,809,400 $10,892,716 3907 $2,255 29/1/10 34 Freehold $2,083,316 24per cent
REGENCY PARK $5,500,000 $7,550,000 3649 $1,507 1/3/07 181 Freehold $2,050,000 37per cent
MARINA BAY RESIDENCES $4,465,827 $2,046,173 2368 $1,886 28/12/06 162 99 yrs from 11/10/2005 $2,046,173 46per cent

How did the above happen?

1. Flipping was, and remains, more common among upscale properties

Notice that all the properties involved are in the prime districts: 10, 9, and 4. This was because in 2006/7, when most of the flips occurred, Singapore's luxury properties were the leading segment. Case in point, this article recollecting the 2007 peak. 

Wealthy foreign investors are a bigger buyer demographic in the Core Central Region (CCR), compared to other parts of Singapore; and as there was no ABSD on foreigners in '07, large numbers of foreigners were parking their wealth in Singapore property, out of fears of overheating equities markets. 

But even though things have changed in 2024, the tendency to house-flip remains a primarily central area phenomenon.

Buyers in non-central regions are more likely to be pure home buyers, who only have one property; so they're disinclined to sell and move so quickly (they've settled in, paid for extensive renovations, enrolled their children in the nearby schools, etc.) 

In an area like Orchard or Sentosa, however, you're more likely to find an owner who's an investor I.e., it's their second or subsequent property, and they don't live in it. It's much easier for this demographic to flip homes, as they usually have somewhere else to stay (and also because their prospective buyers tend to be less price sensitive).

2. Most of these flips occurred prior to a major market correction

Perhaps from this past event, we've learned to view rampant house-flipping as a red flag. The year after 2007, the Global Financial Crisis struck; and the luxury housing market was among the worst-hit segments.

More than half of the 2,200 luxury units built between '06 and '09 remained unsold; and only about 4,400 transactions took place in 2008, versus a whopping 14,811 in '07.

This was not within our control, as a lot of it was due to the subprime mortgage crisis in the US. But for the local property scene, the sharp correction explains why we see few successful flips in the immediate aftermath of '06 and '07 - a reminder of how quickly the property market can turn. 

3. The flips explain changes to the Deferred Payment Scheme (DPS)

Today, the Deferred Payment Scheme (DPS) is less common; where seen, it tends to apply only to completed projects. Only units that have received the Temporary Occupancy Permit (TOP) tend to offer this scheme. 

DPS was introduced in 1997, to help alleviate the crash from the Asian Financial Crisis. Under the scheme, buyers pay only a portion of the property price at the start and then have 24 months to pay up the rest. During the 24 months, buyers are free to sell or rent out the unit (if it's already completed).

Without the Sellers Stamp Duty (SSD), this led to buyers putting down a small down payment, and then having up to two years to find a buyer. They didn't even pay any home loans during this period, thus making it extraordinarily safe to try and flip a property. 

By the time the Government noticed how DPS was impacting the market, there were already rampant price increases. 

Today, because a property must have its CSC before developers can offer DPS, the payment scheme is much less popular. New launch units are typically the cheapest in the earliest sale phases - so by the time a property receives its CSC, anyone buying under this scheme will be purchasing at peak prices. 

4. With Additional Buyers Stamp Duty (ABSD) and Sellers Stamp Duty (SSD), we're unlikely to see a similar bubble in future

The property bubble that formed in '07, and its sharp decline the year after, taught the Government that we can't rely on free market forces alone. Cooling measures such as the Sellers Stamp Duty (SSD) were subsequently introduced to combat house flipping in 2010 and remain till today (although it's a bit different now).

The SSD is 12 per cent of the property price in the first year, eight per cent in the second year, and four per cent in the third year. This ensures that, even if someone wants to flip a property, they're inclined to wait at least until the fourth year. This helps to prevent runaway prices, from investors rushing into an exuberant market. 

There is also the Additional Buyers Stamp Duty (ABSD) to contend with, as it limits the number of properties buyers can buy.

Finally, when house flipping occurs today, it's mostly new-to-sub sale transactions

This is quite different from the '07 era of rampant (and highly profitable) home flipping, where transactions were resale-to-resale. Today, the flip is almost always after buying at "early bird discounts" from developers; and the sale tends to occur after developers raise prices, before the unit is even completed. 

Given the slew of measures taken to prevent it, the era of quick returns is most certainly over (barring a few outlying transactions).

ALSO READ: Will the new HDB resale listing portal really cut out agents?

This article was first published in Stackedhomes.

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