Which is better? New property or secondary property?
My first property was from the secondary market (Relau, Penang). My second property was from the developer (Sungai Ara, Penang). My 3rd property was from the developer (Kota Kinabalu) and my 4th property was from the secondary market. (Kelana Jaya). By the way, all of these are high-rise units. I have only recently purchased my first landed unit.
Since they are high-rise, it has to be in levels. In terms of levels, first purchase was on level 5, second one was level 5, third one was level 2, fourth one was level 7. Hey… all are low floors! People say anything below 10 floor is considered low floors. Haha. Okay, the highest level I have bought thus far was level 21. That’s out of 42 levels.
This has always been the same case for me even after so many years of property investment experience and I do not think I have any special preference for new property or secondary property. I love both, as long as it meets my requirements.
Today, we look at just the primary properties, both the advantage and the disadvantages. The next article, we will look at the advantages and disadvantages of a secondary property.
Advantages of Primary Property (New / from the developer)
- Contemporary. It is usually based on current trends. Thus, it will look better, nicer and more modern compared to a 10-year old property. Of course, we need to be reminded that new today would still mean old tomorrow. (perhaps 10 years later)
- Easier Entry Financially. Home loans of 90% is quite usual from the banks for the particular property. With the current market, this down-payment of 90% could be even lower depending on project and the developer too.
- Promotions. These days, developers are more focused on selling versus trying to maximise their profits via high prices. We have developers who are more open to offer something extra such as renovation packages, electrical goods and more.
- More unit choices There are more choices in terms of unit availability. Even if the development is left the final 50 units for example, there are still 50 units versus the usual one unit when it comes to secondary unit. There are more choices whether high-rise or landed ones.
- Fixed price. Price is fixed versus the many different prices when we buy from the secondary market. Even if there are price differences with the view, the direction, the layout and other circumstances but generally, the price is more fixed.
Disadvantages of Primary Property (New / from the developer)
- Initial furnishing cost. Usually, when the unit is new, renovation is needed. In fact, the typical number when it comes to renovation is around 20% of the property price. This is not within the property price and thus is not part of the home loan. Thus, buyer will need to prepare this in advance too.
- Possibility of abandonment. While this possibility is not considered high, it is still happening. There are still developers who could not complete the project due to financial difficulties. Sometimes, it may also be a delay and this will mean the buyer will have to continue paying rental while waiting for the new home to be completed.
- Not immediately available. Okay, at this moment, this is not entirely true because there are projects which has been completed and there are still unsold units from the developer. However, generally a buyer would have to wait 3 years in order for the project to be completed. Even then, inspection rectification will take another few months followed by renovation which will take more months.
If you like mature neighbourhoods, it’s no longer possible to buy new landed homes. Perhaps high-rise units may be available. If you prefer new townships with lots of amenities and super wide internal lanes for example, then new property would be the only way to go. Older neighbourhoods would have narrower internal lanes. As for all the other reasons, look back above. Then decide if this is indeed for you. Else, wait for the secondary property article tomorrow.
Next suggested article: Unsold property news?