When is the right time to sell The Reserve Residences?
Figuring out when is the right time to sell your house is hard. Even more so in the current property market, when prices are at an all-time high, but interest rates are increasing and there are signs of an impending economic slowdown.
Can you really time the market when it comes to selling your house?
Whether it’s buying or selling a house, it’s hard to predict when prices will hit an all-time low or reach a new peak.
Even with property transaction data, it’s hard to predict the direction of the price movement. After all, these are historical data; they’re recorded after the deals have been sealed. There’s a time lag between what’s happened in the market and what’s recorded.
And who could have predicted that a couple of years after the pandemic hit, housing prices here would reach an all-time high?
Speaking of all-time high prices, let’s say you decide to sell your condo unit now because condo resale prices are now at their peak and have been increasing for the 28th consecutive month (at the point of writing).
As of 22 Dec 2022, the average price psf of a resale condo in the respective market segments are S$2,135 in the CCR, S$1,601 in the RCR and S$1,269 in the OCR.But that would also mean you’ll miss the opportunity to sell at a higher price and gain more profit, should prices soar even higher.
Rather than trying to predict if prices will continue to increase, it may make more sense to consider the current market we’re in (which is a seller’s market at the point of writing). But this may be more applicable if you treat your house as an investment. If the main reason to sell the house is to maximise gains, it makes sense to sell it during a seller’s market.
Why it’s good to sell your house during a seller’s market
A seller’s market occurs when there’s high demand. More people are willing to buy and pay higher prices because there’s little supply in the market.
1. You can potentially sell higher than your asking price
Given the high demand and low supply of houses, you can get more viewings and offers.
Potential buyers are more likely to meet your asking price (or even start a bidding war) if your property is highly coveted. Such as this DBSS flat.
Selling a house in a seller’s market will also give you the opportunity to earn a higher profit.
On the contrary, in a buyer’s market when supply is high, but demand is low, buyers may be less willing to meet your asking price.
2. You can unlock the gains faster
Unless the property has many unfavourable features (eg. near the rubbish chute, on a low floor, etc.), if you list it during a seller’s market, there’s a high chance you can sell it quickly. This also means you can unlock the gains faster.
“Woah, I really didn’t expect the house to be sold that fast.”
When it’s not good to sell your house during a seller’s market
It can be very tempting to sell your house in a seller’s market. At the same time, you should be cognizant of the next step in your home ownership journey.
1. You need to buy a replacement home
If the house you’re planning to sell is your only property, and moving to live with your family or renting is out of the question, chances are you need to buy a replacement home. In a seller’s market, you’’ll have to buy your new home at a high price.
If the price of the next home isn’t within your means (even with the sale proceeds and home loan), you may want to hold off the home-selling plan.
2. You recently refinanced your home loan
Depending on your home loan, it typically has a lock-in period of two or three years after the refinancing. The bank will charge you an early redemption penalty if you sell your house within this period. This will reduce the gains from selling your home.
Nevertheless, the best time to sell depends on the reason you’re selling
You shouldn’t sell your house just because it’s a seller’s market and everyone around you is selling. The right time to sell depends on why you want to put it up for sale.
1. You’re selling it for financial reasons
For instance, you need to sell your house due to financial difficulties. You may have run into financial trouble and can’t keep up with the mortgage. Or you may want to reduce your debt obligations because interest rates are rising, so you’re considering downgrading to a more affordable home.
Or you just want a newer home, because the current house is getting old and harder to maintain. You feel it’s pointless to spend more money to renovate and maintain it any longer.
In these cases, you should sell the house as fast as possible. It’s not worth waiting longer for prices to go up higher.
2. There are lifestyle changes that require you to move to another house
Perhaps you have another child. Or your two children no longer want to share a room, but the house is too small to accommodate this.
Or maybe your house has stairs, but you’re sick of running up and down the stairs.
“Maybe I should just sleep downstairs instead, even if it means sleeping on the sofa.”But in order to move to a new house, you need the proceeds from selling the current house.
It doesn’t make sense to wait till prices are high to sell, all while enduring the problems that arise because you don’t want to make the move.
3. There’s no significant price growth
The house may be in a good location. But the price has been stagnant for years. On top of that, the URA master plan doesn’t indicate any future developments nearby to support any significant price growth.
In such a case, you may want to sell it and channel the funds to a better-performing property, for instance, one that’s near an upcoming employment hub.