Overall, demand for resale condos continues to grow. In fact, this year, prices continued climbing even during the Hungry Ghost Festival, which usually coincides with a decline in sales. Resale prices are currently 7.9% higher than they were in August 2020.
COVID-19 has drastically altered our lifestyles and has been the cause of certain housing trends, especially for private properties. More buyers are now opting for larger homes to better accommodate work-from-home arrangements.
Due to housing priorities shifting from location to size, the lower prices of Outside Central Region (OCR) properties, and the removed need to commute to work daily, the popularity of Outside Central Region (OCR) properties has enjoyed a boost.
For those looking to buy a home right now, would it truly be better to opt for an OCR property, or should you choose one in the Rest of Central Region (RCR), which encompasses the districts surrounding the city core? Let’s compare different factors to find out!
1. Property Prices in OCR vs RCR
RCR properties are often located in highly desirable neighbourhoods on the city fringe, and thus command higher prices than OCR properties, which are further from the city centre.
According to URA data, in August 2021, the median resale price of properties in the RCR was $1,403 psf, while that of properties in the OCR was $1,164 psf.
If convenience and accessibility are priorities, RCR properties are more desirable. Those who prioritise space over centrality can opt for OCR properties.
2. Potential for Appreciation
Over the past year, after a slight decline owing to the pandemic, the rise in RCR condo prices has actually been comparable to that of OCR condos.
According to the URA’s flash estimate of the price index for private residential property in Q3 of 2021, prices in the RCR increased by 2.2%, while those in OCR actually decreased by 0.2%. In the previous quarter, RCR prices increased by just 0.1%, while OCR prices increased by 1.9%.
Both RCR and OCR condos come equipped with facilities and amenities that can improve residents’ quality of life, such as swimming pools, gyms, barbecue pits and tennis courts.
However, those opting to live in the OCR may be able to purchase a larger unit within their budget. The increased space can make for a more pleasant living experience with a larger number of rooms and/or more spacious bedrooms and shared areas, particularly if residents spend lots of time at home.
OCR properties command a lower psf price and are thus suitable for those who wish to purchase a larger and more spacious home.
For instance, a 3-bedroom, 947 sq ft condo unit at Queens Peak right next door to Queenstown MRT in the RCR is currently being sold for about $1,680,000, or $1,774.02 psf.
At The Centris, a condo located 2 minutes’ walk from Boon Lay MRT in the OCR, a 3-bedroom unit costing a similar $1,680,000 is much more spacious at 1,227 sq ft, with a psf price of $1,369.19.
Neighbourhoods in the RCR tend to be on the city fringe and are typically very sought-after. These include Tiong Bahru, Telok Blangah, Queenstown and Boon Keng. For those who work in the CBD or who frequently travel to the city centre for leisure, RCR properties can offer greater convenience.
OCR properties are located farther away from the city centre and include suburban areas like Jurong, Woodlands, Yishun and Changi. OCR properties located within walking distance of an MRT station tend to be more sought-after due to their better connectivity.
In Singapore, location and connectivity are some of the key factors that determine the price of residential property. And we’re not just talking about which neighbourhood you live in. For instance, there’s the MRT effect where a property near an MRT station commands about 10% to 15% more than its less accessible counterpart.
6. Investment Opportunities
RCR property prices tend to be more volatile, particularly in an economic downturn, as much of the demand for such properties comes from foreign investors and tenants.
OCR property prices tend to be more resilient thanks to their greater affordability and tendency to be purchased by local buyers and HDB upgraders. It’s clear OCR properties are popular with HDB upgraders, as they are fuelling mass-market condo sales in 2021.
In the long term, the best investments tend to be those in areas that the government has marked for growth, or those that stand to enjoy capital appreciation due to developments like a new MRT station nearby.
7. Number of Launches
In terms of volume, there tend to be more units in new launches available in the OCR than RCR. Huge developments comprising several thousands of units are more common in the OCR than RCR.
Amongst the 10 best-selling condos in Q2 2021, five were located in the OCR while only three were located in the RCR.
RCR vs OCR Condos: Which Should You Buy?
The choice of where to buy a resale condo ultimately depends on your budget and priorities.
For those who prioritise space and are on a budget, opting for a resale OCR condo is the most cost-effective solution. Thanks to lower psf prices, buyers can afford to go for a larger and more spacious unit.
This can be ideal for those who have the option to work remotely can thus reduce travelling time to the workplace. Larger or inter-generational families and couples who intend to have more kids can opt for an OCR unit with a greater number of bedrooms.
When it comes to location and connectivity, properties in the RCR are the better option. RCR resale condos tend to be located in sought-after, well-connected neighbourhoods with established amenities.
They are also closer to the city core and can thus reduce time spent commuting to work. Young professionals without children can opt for smaller RCR properties in order to live affordably in a central location.
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This article was written by Joanne Poh. A former real estate lawyer, she writes about property and personal finance and spends her free time compulsively learning languages and roller skating in carparks.
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