We Bought This EC For $835,000 — Should We Sell Now That It’s Worth $1.6 Million To Reinvest In A New Launch?

Hi Stacked,

My wife and I each own a unit in a privatised executive condominium (EC). We live at The Rivervale, while our former home at Waterbay is rented. We’re a family of five with two young children and a domestic helper, and we don’t plan on selling the unit at The Rivervale.

We balloted for the unit at Waterbay when the project launched, and stayed there for a few years after it was completed. As our family grew, we needed more space. So, we decoupled the property and I purchased the unit at The Rivervale under my own name, while my wife owns the unit at Waterbay. We kept that unit because I felt the area still had good potential for future price growth.

• The Rivervale: a resale 1,303 sq ft three-bedroom unit purchased for $1.18 million in 2023
• Waterbay: a 1,093 sq ft three-bedroom unit purchased from the developer for $835,000
• The Waterbay unit is rented for $4,300 per month, which covers the mortgage and expenses
• Both properties have outstanding loans of about $700,000 each, but we are able to service the loans with our income
• We utilised our CPF OA for both property purchases

After 14 years, do you think we should sell the unit at Waterbay, and recycle the proceeds into another investment property? Would the potential capital appreciation of a new investment property, which would be a new launch project, yield a greater return compared to what we collect now?

We may be able to sell the Waterbay unit for about $1.6 million and use almost all of the proceeds to purchase another investment property at a similar price, supported by a new loan. Given prices in the new launch market, we’re likely able to only afford a new two-bedroom unit.

Our priority isn’t to increase our rental income. But we wonder if we could achieve better long-term capital appreciation by selling the unit at Waterbay and buying another property instead. Would a new two-bedder actually outperform my existing three-bedroom unit at Waterbay over the next several years?

Thank you.

(This is part of an ongoing series where we answer reader questions about the property market. If you have one of your own, send it to stories@stackedhomes.com.)

Hi, and thanks for writing to us!

Based on what you’ve shared with us, here’s a snapshot of your current property holdings.

In general, we would say that you’re in a good position in terms of your property portfolio. The question you’ve poised is whether you should replace an already relatively successful investment property with a newer asset.

As an investment property, it would be reasonable to say that the unit at Waterbay has delivered so far. So, the challenge is whether you can improve on what you already have. Specifically, we want to weigh the certainty of an existing investment, against the possibility that a new launch property could generate stronger returns over the next growth cycle.

In your case, a caveat is that switching to a new launch investment property would mean exchanging a larger three-bedroom unit for a smaller two-bedder. From our perspective, that makes this less of a “should I sell?” question, and more of an asset allocation decision.

Let’s work through the numbers and the factors we’d consider.

First, let’s analyse the performance of Waterbay since 2012

Rental yield for 3-bedroom units in Waterbay

Rental yield for your unit specifically

Based on the data that we’ve compiled, three-bedroom units at Waterbay usually transact for less than the average resale price in District 19, in terms of $PSF prices. However, that’s largely a reflection of its larger unit size; since  larger units tend to have a lower $PSF.

We would suggest that the important factor to consider is that your unit likely delivered an annualised price growth of around 5.1% since the launch of the EC. This is ahead of the 4.52% for private residential developments in District 19, as well as the overall market for three-bedders (around 5%).

This reinforces that Waterbay has generally been a well-performing project. The development’s average rental performance is typical – ranging from 3 to 3.5% – and comparable to most condos in that area. In your specific case however, you’re doing much better than most landlords.

Your purchase price of $835,000 for the unit is well below today’s market value, and since you collect about $4,300 per month in rent, this works out to a gross rental yield of about 6.2%. This is a notable yield, given that it’s increasingly challenging for most landlords to reap yields over 5% in 2026.

Would a unit in a new launch project realistically outperform what you have at Waterbay?

You would doubtless have been told, by an agent or otherwise, that new project launches have good potential to realise gains due to competitive developer prices relative to the average for that area.

In general, it is true that new launch prices tend to increase in the period starting from the sales launch to the development’s completion, and then when units start to enter the resale market. The Progressive Payment Scheme for EC projects also means you’re not paying the full loan repayment immediately, which positively contributes to your overall capital return.

However, this doesn’t automatically mean that a new launch project will outperform an existing investment property.

A significant factor to consider is that new launch projects today are entering the market at significantly higher price points compared to a decade ago. The price gap between the primary market and the secondary market has narrowed.

While new developments may still see price appreciation after they are completed, these owners are also starting from a much higher base price relative to the surrounding resale market. It’s the oldest conundrum in the property market: when you’re able to sell high, that also means you’ll buy high.

We also want to point out that not every new launch project goes on to outperform the resale market. Some new developments have delivered exceptional returns, while others have seen more modest price growth after attaining their TOP.

For example, we examined 450,000 property transactions in 2021 and found that, while new launch projects have historically produced a sizeable number of profitable transactions for the initial group of owners, they didn’t consistently outperform the resale market.

But let’s take a more updated look. Below, we looked at projects completed between 2020 and 2022, and then compared their performance with the broader resale and subsale market: 

Interestingly, the new data that we compiled shows that newer projects have not outperformed the wider private residential market. Their annualised price growth of 3.07% is lower than the 3.91% for the broader resale and subsale market.

To be fair, a difference of less than one percentage point is not a wide margin. But it should challenge the assumption that newer developments will  “naturally” outperform older ones.

This doesn’t mean new launch projects are poor investments. Instead, our point is that being new is not, in and of itself, sufficient to guarantee a stronger return. The replacement property needs to have sufficiently compelling reasons besides just being newer compared to the 14 year-old Waterbay, and that means analysing the usual fundamentals of price, location, as well as stack facings among other attributes.

The trade-off in moving from a three-bedroom unit to a two-bedroom unit

A notable consideration in your case is that, with a budget of around $1.6 million, selling the unit at Waterbay likely means downsizing to a two-bedder.

A drawback you need to consider is that while two-bedroom units typically command a lower price quantum compared to other large-sized units in a development, this unit type also limits your exit strategy.

Most resale condo buyers tend to be HDB upgraders and while some families might settle for a two-bedder, it is generally the case that most HDB upgrader families would be on the look out for a unit that is at least 900 sq ft to over 1,000 sq ft – likely a three-bedder – if they can afford it.

Below, we compared the annualised price growth of resale and subsale transactions across the various unit sizes, over the past decades:

Average $PSF

Average price

The data indicates that over the past decade, three-bedroom units recorded the strongest annualised price growth of 4.42%, very slightly ahead of two-bedders which notched a price growth of 4.17% over the same period.

But this is such a slim difference to nearly be negligible.

Optimistically, we would say that switching to a two-bedder may not seriously affect your future capital gains later. But perhaps it’s more useful to frame it this way: downsizing to a two-bedder, and owning a smaller sized unit, may not pay off as much as you hope down the line.

We reiterate that this should all be subject to further scrutiny once you’d identified the specific replacement unit. But going by the averages, the result for you might not be a net gain; you would be getting a smaller-unit that might be more difficult to find a buyer in the future, for very little difference in terms of investment return.

Our thoughts

Overall, based on the information you’ve shared, we would be inclined to hold on to the unit at Waterbay for now. That property has already proven itself to be a successful investment. Since you purchased it at launch, it has more than doubled in value while continuing to generate consistent rental income.

More importantly, we don’t see a deeply compelling reason to sell it today. Going by the broad market averages that we’ve analysed, there’s no strong guarantee that a new launch unit will outperform what you have.

Moreover, given the launch prices in the primary market today, making the switch would also likely mean moving from a three-bedroom unit to a two-bedder. Which means that you’re effectively paying a similar amount for a smaller unit. Based on the historical transaction data that we’ve shown in this article, this trade-off also doesn’t appear to offer any clear advantage.

That said, our opinion may change depending on which specific new project you are eyeing. Depending on the project, it could have better long-term prospects than what we have been able to analyse so far.

Ultimately, property investment decisions should be assessed on an individual case-by-case basis. There is only so much that broad market assumptions can reveal in cases like this. But we reiterate that simply being a new launch project should not – in and of itself – be justification for you to reinvest.

For now, your unit at Waterbay continues to tick many of the boxes that led you to buy it in the first place.