“Price gap between new and resale units in this region (OCR) stands at 47%, widest in 25 years”
With such a statistic, there’s only going to be two trains of thoughts here. One, new launches are overpriced. Or two, resale units are undervalued.
The truth is, comparing new launch and resale prices on a psf basis isn’t always the most accurate way of looking at things (we’ve done that before) – mainly because it does not take actual affordability into account.
Let me illustrate.
For example, let’s say District 5 has an average psf of $1,000 for new launch, and resale condos are at $500, this would mean that the price gap between the two is at $500, or 50%.
In an ideal scenario, all homes (whether it is a new launch or resale) start from the same size level playing field. But we know that’s not truly the case in reality as generally older resale condos are of a bigger size.
Case in point: