Selling Your Home In 2024? 5 Realistic Hard Truths Sellers Need To Know

2022 and 2024 may only be two years apart, but there’s been a tremendous change in that short time. We’ve gone from a major housing shortage to a huge influx of new condos and flats; and on top of that, we still haven’t grasped the full extent of how much the new ABSD rules might change things. 

If you are looking to sell your property this year in 2024, here are some major things that you need to know:

Major changes that are impacting sellers in 2024

1. High cost of replacement properties

You may have noticed more flyers in your door lately, telling you how much your property is worth. Realtors have begun to focus their efforts on sellers because fewer people show an interest in upgrading. The reason boils down to the cost of a replacement property.

HDB resale flat prices were at around $583 psf, as of March this year, so as a ballpark, an upgrader might expect around $559,680 from the sale of a vanilla 4-room flat (about 960 sq. ft.)

However, new launch condo prices averaged $2,207 psf, whilst resale condo prices averaged $1,657 psf. 

As most families target three-bedder condos of at least 900 sq. ft., this places a new launch at around $1.98 million, whilst a resale unit would be around $1.49 million.

One of the realtors we work with, Daron, noted that prices have risen unsustainably over the past two to three years, particularly for condos and landed homes; and you can see this is the case for condos. 

If we just go by the averages on Square Foot, the minimum down payment for a new launch (25 per cent of the price) is about $495,000, almost the entirety of the sale proceeds of the flat; whilst even a resale condo has a minimum down payment of $372,500. 

Bear in mind that anyone selling their flat also needs to discharge the outstanding flat loan, and refund the cash used from CPF; so unless they’ve been diligently saving for a while, it’s now tougher to quickly upgrade right after the five-year MOP. All of this is also against a backdrop of higher mortgage rates, and a volatile economic situation. 

For sellers with two or more properties, ABSD rates are a powerful disincentive to let these properties go 

If you bought your second property when ABSD was much lower (or perhaps nonexistent), you have good reason to be hesitant about selling today. 

If you were to part with a second property, any attempt to replace it would now incur a 20 per cent ABSD tax (30 per cent for Permanent Residents). As such, those who want additional properties for rental income will be disinclined to sell. 

Foreigners in particular are likely to fight tooth and nail against sale attempts, such as en-bloc sales. This group is the worst hit by the new ABSD at 60 per cent; so if their locally owned property goes en-bloc, they may just have to resort to renting. Sellers hoping for collective sales should brace for a potential pushback from this group.

2. Co-broking issues remain unaddressed, and may even be worse than before

Some seller’s agents are shady when it comes to co-broking, refusing to answer calls from buyers’ agents (which also means you aren’t presented with the full range of offers, which you should be). 

So on the private property end, while seller’s agents are expected to co-broke with the buyer’s agents, they would much prefer to work with an unrepresented buyer; this allows them to pocket the full commission. 

While CEA has specified that realtors aren’t allowed to do this, it’s still a practice that’s rife in the industry; and some realtors have opined that it seems especially in recent years. It’s speculated that this was the reason for property agencies – particularly the “big three” (Propnex, ERA, and Huttons) inking a new pact in November 2023. 

It may not be working; one realtor told us in confidence that he often has to call with different numbers, as some agents don’t pick up when they recognise his number. 

This is quite tough to prevent, and it’s hard for sellers to catch their agents doing it. But sometimes just clarifying that you’re aware this happens, and cautioning your agent against it can remove the temptation. 

3. Temper your expectations over sale prices

Going back to the chart in point 1, you can see that HDB resale prices are levelling off. By Q4 2023, for example, some HDB towns had already seen prices dip by 10.4 per cent. However, realtors complained that some sellers have been slow to get the news. 

One example may be this $2 million asking price for a DBSS flat; and while that’s an admittedly extreme case, sellers do seem to retain high expectations over their flat prices. This is likely due to (1) the meteoric rise of flat prices in the recent aftermath of Covid, and (2) ironically due to the agents themselves, as their aggressive marketing to sellers hype up possible prices. The flyers in your front gate quite likely boast of the highest resale gains on your block; prices that are often outliers. This may also arise from sellers who are looking to make the jump to private condos and need to justify a high selling price in order to move. 

Simply put, the period of rapidly rising resale flat prices is drawing to a close. 2024 alone will see over 19,600 new flats, while last year saw 24,447 new flats. All of these will eventually add to the supply of resale flats; so sellers who still want to play the waiting game may be disappointed (or are perhaps already paying the price, if you factor in that private home prices rose even faster).

Meanwhile, the same situation is unfolding in the private market. Our realtor Daron also says that: 

“If you are a new agent, who started in the past three years, life was quite easy up till now – if the seller wanted a high price, you would just agree to avoid offending the owner. And guess what, it would sell because prices were moving up very quickly then. 

Your record price would then be the base price for the next unit.

But in 2024, when condos have already appreciated by $200,000 to $500,000, there will surely be a resistance point; the price has already grown as much as it can, for the time being. So the script of promising high prices to sellers is going to backfire on you in 2024 because the unit will stay in the market for very long.”

4. Interim rental may be a less frightening issue 

Some good news for sellers: rental rates may bottom out in 2H 2024, and HDB rental rates are also declining. Given the strong economic headwinds, we also expect that rental rates will stay low for the near future (companies tend to get more conservative, and trim housing allowances or expatriate workforces during downturns.) 

This has a positive side effect on upgraders, who often need some form of interim housing while their new home or renovations are being settled. 

On the flip side, weakening rental rates may also lower interest in residential property investment. But realtors said that, while this could happen, prospective buyers are mainly put off by ABSD rates at the moment.

5. High new launch prices may shift the focus back to resale  

One realtor, who spoke on condition of anonymity, is optimistic regarding the prospects of the resale condo market. He says that:

“The gap between new and resale in the same area like Tanah Merah or Paya Lebar is very big…the older ones are bigger (refers to unit sizes, not land area), lower maintenance, and are better spaced (the blocks are more spread apart). More upgraders can be able to discern the value in resale right now.”

(While he declined to mention any specific condos, we believe he is referring to Sceneca Residences and The Continuum, which are both new launches in the East.)

A number of realtors also pointed out that, for upgraders who prioritise living space, the higher quantum typically favours resale right now. Another realtor, whose focus is on central region properties, noted that some buyers might try to take advantage of a shrinking price gap between the RCR and CCR – and this could lead to interest in some of the older resale condos in districts like 9 or 10. 

(We have also previously covered this topic in this article.)

This may be of limited relief if you’re selling a CCR condo, as the recent ABSD hikes on foreigners have shrunk this buyer demographic; you might now find more local buyers at your door. 

It might not, however, compensate for the downward pressure placed on CCR condos.