Selling your EC right after the Minimum Occupation Period: A killer or life saver?
Updated: Nov 6, 2020
You can only advertise an EC after you have satisfied the five-year MOP timeframe. So, what is the next line of action? Is this the right time to sell the EC and purchase a new property, or should you wait for more? I will give a logical approach to this topic: read on!
There should be a defined purpose of selling your EC immediately you complete the MOP, instead of waiting for the 10-year privatisation benchmark.
You need to ask yourself some crucial questions:
1. Are you doing this because you’ve seen your neighbours cashing out big on it?
2. Are you scared that your EC may depreciate in the future?
3. Do you plan to quickly make a profit on the EC and then reinvest the money into another property with good returns?
A quick look at the history of EC
During the early years of EC development in Singapore, there was a general belief that the best time to cash out on the property is after the 10-years privatisation.
However, such a notion has changed today. Many owners now prefer to sell their ECs immediately after completing the MOP, so that they can reinvest the money into one or two other profitable properties.
Consider these points before you sell your EC
1. What is the number of units in your EC that is selling at the moment?
2. What are the latest supply conditions for obtaining a TOP for condominiums in your region?
3. Is the neighbourhood a fast-developing site?
4. What is the possible profit margin that you will get from your next property purchase?
5. Are you facing any economic challenges?
1. What is the number of units in your EC that is selling at the moment?
There are various reasons why many EC owners choose to sell it off after the MOP duration. Some may sell it to either upgrade, downgrade, or invest in other properties.
Either way, it can be challenging to get a good bargain, especially if the area has other people selling too.
There are lots of choices for buyers to select, and more desperate sellers will trade first. Those who are patient enough will sell at a reduced competition and better prices.
I have witnessed this so many times, and in these cases, it can last up to 9 months before the demand can exceed supply.
2. What are the latest supply conditions for obtaining a TOP for condominiums in your region?
You have to monitor the latest TOP supply of condos in your region. Whenever new supply arises, there is a possibility of competition resulting from these new TOP supplies.
The most appropriate situation for MOP EC owners is to reside in an area that has older condominiums there and has a rise in MOP BTO flat owners coming on board.
Most times, HDB upgrades will want to upgrade to a private residence closer to them and, at the same time, make a profit from their BTO.
Case study: there is a current rise in demand for the canopy EC in Yishun. Right now, many owners are selling at budget profits because most BTO and DBSS owners in the area have reached their MOP and want to upgrade to private houses.
Also, in Fernvale, as BTO flats reached their MOP, the area has witnessed a healthy rise in demand for private houses.
Kindly check-out the recent study on MOP supply island; it will help you to manage the risks properly.
3. Is the neighbourhood a fast-developing site?
You need to study the developing plans for your neighbourhood before you sell your property. You need to understand not just your new location where you want to purchase, but also the current one where you reside.
Investing in an area with more government interest or activity is one of the best and safest.
It can grow rapidly in infrastructure such as MRT stations, townships, malls, parks, among others. Sometimes, it is good to wait for one or two years before selling your EC so that you can minimise risk and maximise profit.
Besides, your estate agent should be versatile and knowledgeable. He or she would advise you on the most appropriate time to sell your property.
You need to understand the possible risks and profits you may get if you sell it now or some years later.
4. What’s the possible profit margin that you will get from your next property purchase?
Most owners are tempted by the profit that they stand to gain from selling the property. However, you should ask yourself this question:
Have you studied your next option after selling the property?
Selling a property without knowing where next to invest the funds is a quick way to disaster, especially when the EC still has more profit potential in the coming years.
To make it worse, if you failed to study the profit potential of the new property that you want to purchase.
Generally, most EC owners sell their property to upgrade to private apartments closer to their former location, for some infrastructure or personal reasons.
Nevertheless, you need to assess both the local and investment factors so that you can make a decision that will be profitable to you in the long run.
5. Are you facing any economic challenges?
Typically, you shouldn't sell your property at a down price, except if you’re In a dire economic challenge. Or you have another property which offers a lower discount than your recent property.
Most times, when there is an economic downturn, high price properties usually get a more substantial price correction since investors will likely want to opt-out.
For example, a price correction of %10 on a $4M property is $400k compared to that of $100k on a $1M property. When it’s time to recover, you’re likely to make more profit than holding on to the property during the downturn.
It is during these downturns that some of the best deals occur. For example, with the recent case of COVID 19, we are likely to witness a reduction in buyers.
Besides, there are times when the market will face a sudden jerk due to a change in trends. During such times, the best is for sellers to wait and observe the coming approach.
The best approach is to be patient during the economic storms as a result of the cyclical nature of the property market. Patient sellers will always get rewarded.
In conclusion, MOP isn’t some imaginary enclosed years that should make you rush immediately to sell your property afterward.
You may think that is the best due to the constant articles, adverts, and media advertisements that you see. However, the best time to sell your property does not only depend on the MOP. You should consider other market factors, competition, investment pathway, and your family.
William Lee / Eileen Au
emailidealhome@gmail.com
Ideal Home is well-liked by both local and international clients for their friendly yet professional approach in the way it goes about helping them with their real estate goals in Singapore. They welcome the opportunity to have a no-obligation chat with you to see how they can help you to achieve your real estate goals in Singapore.
Contact us today @ +65 8666 4333 (William) or +65 8686 4333 (Eileen).