CONDOMINIUMS IN SINGAPORE - A COMPARISON OF CAPITAL VALUE CHANGES AND PERFORMANCES

Abstract

Over the past seven years, the property market has experienced the "boom", "decline" and "recovery" phases. Capital value changes of properties during the different phases have always interest investors and homeowners as significant capital appreciation would mean windfall gains whereas significant capital depreciation would mean losses and greater mortgage burdens. As condominium units have become an increasingly popular form of investment, this study seeks to analyse the performance of condominiums based on their capital value changes and inflation hedging ability. The finding was that there is a general preference towards western district condominiums as they enjoyed the highest capital appreciation in the various phases, however central district condominiums experienced the least capital depreciation in the decline phase. There is also a trend towards leasehold condominiums as most of them enjoyed higher capital appreciation than freehold condominiums of the same locality. This shows that the performance of different types of condominiums depends very much on market fundamentals like demand and supply of housing, pricing and what is affordable to the majority of people. Another finding was that condominiums bought three years before the economic crisis hit Singapore were not a hedge against inflation, irrespective of location or tenure. This warrants some attention from potential investors as the timing of acquisition and disposal determines the viability of the investment.