Singapore Condo Flippers Score 100% Gains Without Even Moving In
A recent Bloomberg’s article (provided below) caught the headline. In short, let me explain what happened.
Singapore’s sub-sale property market has surged, driven by strong demand for newly completed condos. The trend is fueled by construction delays caused by COVID-19. Many property projects were delayed, but demand for new homes remained strong. Buyers who wanted to move into a new property had to turn to the sub-sale market, purchasing units that were already completed or near completion.
This situation highlights a crucial lesson: there will always be demand for newly built homes, regardless of market conditions. Supply and demand dynamics play a significant role, and when supply is low, prices surge.
The article also highlights how flipping has become a profitable venture for many investors. Buyers purchase units at new project launches and sell them before completion at a profit. The average sub-sale transaction in recent years has yielded significant gains, sometimes doubling initial investments due to the progressive payment scheme in Singapore. However, this speculative activity has led to concerns that the government may introduce more cooling measures to curb excessive price increases.
Perhaps more aggressive Seller Stamp Duty to cool these flippers?
Another key takeaway is that Singapore’s private property market remains highly competitive. The recent surge in demand has led to many new launches selling out within days. With supply still below historical averages in the coming years, this trend is expected to continue.
Bloomberg Article
On Valentine’s Day evening, more than a hundred people packed into a Singapore condominium showroom to learn about how to make quick profits from flipping homes in the city-state.
“If you want to be rich, you just buy property!” proclaimed Eric Chiew, a social media influencer who runs a small real estate investment consultancy.
The audience, which included millennial couples with kids in tow and middle-aged locals wearing flip-flops, listened as Chiew mapped out how to make a windfall from buying and selling homes— sometimes without even having to move in.
Year after year of rising prices in Singapore’s private housing market has led to a significant pick up in “sub-sales,” where people offloaded homes they bought at new project launches before the units were fully completed. Last year, there were about 1,300 such transactions for condos and other private apartments, the highest annual number in more than a decade, according to public records. Property agents say many more buyers have caught on to the home-flipping trend and are hoping to do the same.
The activity has helped fuel a resurgence in the city-state’s property market since late 2024, pushing prices higher and leading several Wall Street analysts and developers to predict that the government will try to rein in the sector with more cooling measures. Crowds have thronged property showrooms in the past few months, and sales of new private units likely surpassed 3,200 in the first quarter, according to estimates from realtor Huttons Asia — the highest for the same period since 2021.
“It’s relatively short-term speculation,” said Wilson Ng, a Morgan Stanley analyst who has researched the phenomenon. “The fact that it’s picking up and potentially driving demand for new launches is going to be a concern for policymakers.”
Singapore private home prices rose 3.9% last year, and have climbed 36% since 2019, according to data from the Urban Redevelopment Authority. The median cost of a condominium unit in the densely populated island nation was over S$1.9 million ($1.4 million) in the first two months of this year. On a per square foot basis, apartment prices outside of the city center are close to similar properties in Hong Kong and Manhattan.
In the five years to June 2024, Singapore’s residential property price increases have exceeded a 23% gain in UK home prices, and contrast with a 22.4% drop in Hong Kong, according to real estate consultancy Knight Frank. House prices in the US climbed 54.5% over the period, the data showed.
The practice of flipping homes is not unique to Singapore, but it poses a challenge to the country’s authorities, which have been trying to prevent a property bubble from forming.
Rising private home values have a bearing on prices of Singapore’s public flats, which house four in five of the country’s residents. A price index of second-hand government-built homes gained 9.7% last year, and has broadly increased in tandem with an index for private residences over the past decade. That’s feeding into broader concerns about housing affordability and rising costs of living in a year when Singapore has to hold a general election.
In January, National Development Minister Desmond Lee said the government is not averse to implementing more property cooling measures if needed. In response to Bloomberg News queries, a ministry spokesperson said there have been several rounds of measures in recent years “to manage demand and promote a sustainable property market,” and the government has also progressively ramped up supply through its land sales program. That has helped “moderate the momentum in the private housing market,” the spokesperson said, noting that 2024’s price increase was lower than a 6.8% gain the prior year, and 8.6% in 2022.
“We will remain vigilant in watching market trends and adjust our policies where necessary, to promote a stable and sustainable property market,” the spokesperson added.
About 7% of Singapore’s apartment and condominium transactions in 2023 and 2024 were sub-sales, according to Morgan Stanley’s research. Their average profit during this period before taxes and other costs was close to S$270,000, reflecting the difference between the purchase price of a home and its selling price. Put another way, the average home that was sold prior to its completion — typically a few years after the project launch — rose 21% in value, the research showed.
For many home flippers, the actual return on investment was far greater, because their outlay comprised a down payment, about three years of mortgage payments, and other fees before they sold the units at the higher prices. New private developments in the country typically take years to complete, with a so-called system of progressive payments. That means that buyers pay smaller installments at the beginning of the loan, and they increase with different stages of a project’s completion.
That was the experience of 30-year-old Claudia Ng (who is not related to Morgan Stanley’s Ng). Five years ago, the former financial adviser bought a S$1.15 million three-bedroom apartment at a new project launch in Tampines, an eastern Singapore suburb. In 2023, she sold the 915-square-foot unit to another buyer at a price that was about 30% higher, reaping a S$298,000 profit.
In essence, Ng was able to double the amount of money she spent on a 25% down payment and close to four years of relatively low mortgage installments while the condominium was under construction. “The good thing about new launches is that you don’t pay the full amount like what you do in resale properties,” she said, referring to the mortgage payments.
Ng, who became a real estate agent around the time she made that first property purchase, bought another new condominium for S$1.66 million a day after she sold the first one. She said about seven in 10 of her young clients want to emulate what she did earlier on. “They buy into the idea of the flipping system,” she said. “Property prices are only going to get higher and higher.”
Property prices are only going to get higher and higher
Singapore authorities have installed various taxes to stop property prices from spiraling out of control. Most foreigners who are not permanent residents have to pay a 60% stamp duty on purchases of private homes. Singapore citizens and permanent residents also have to pay high additional taxes if they buy more than one property.
There is also a seller’s stamp duty, first introduced in 2010, that currently penalizes people who sell private properties within three years with a tiered rate of 4% to 12%. There used to be a tax for the fourth year, but that was eased in 2017. The government may have to increase the seller’s stamp duty or change the period back to four years to discourage sub-sales, according to Morgan Stanley’s Ng. “Property prices cannot keep growing at the current rate,” he said. His expectation is for Singapore private home prices to drop 3% this year.
Online influencers and self-styled property gurus have been egging on potential buyers, and encouraging Singaporean couples that jointly own public flats to sell their existing homes and use the profits to purchase two private properties, one under each spouse’s name (to avoid incurring additional buyer’s tax). Under that strategy, the couple could live in one condo unit, and sell the other one after a few years — or rent it out.
Buyers have largely focused on condos in Singapore’s suburban neighborhoods, on the expectation that soaring prices for resale public flats will provide a ready catchment of future buyers who want to upgrade to private homes. More than 258,000 resident households lived in condos and other private apartment units in 2024, up 17% from five years prior, according to official data.
The resurgence in private residential property sales and prices late last year led Barclays Plc analysts to forecast in January that Singapore’s property market “looks set to fire up further in 2025 if the government does not respond quickly with more cooling measures.” A survey conducted in December by a local university found that government intervention was the top concern for real estate firm executives, with nearly 78% seeing it as a potential risk, up from about 39% the preceding quarter.
More than 1,000 housing units were sold in the first month of 2025, the best January for new private condo sales since 2021. February’s new private home sales, to be released on March 17, are likely to exceed that number with more than 1,500 transactions, preliminary data shows.
Ku Swee Yong, a local realtor who runs his own firm, says that potential house flippers are now suffering from “blindness” amid market hype, and could be underestimating the possibility of being saddled with losses if a downturn hits.
The 55-year-old bought his first private home in 1996, before the Asian financial crisis hit. He only sold the condo unit a decade later and still incurred a loss of over S$100,000. “Not every long-term investment in real estate is profitable,” Ku said.
