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Can Condo Investments Beat CPF Returns? Here’s What 25 Years Of Data Really Says

By October 13, 2020No Comments

So you’ve probably heard that buying a condo in Singapore is a good investment. And based on private property price trends alone over the last 25 years, it’s easy to be convinced: 

Price Indices of Non-Landed Properties Since 1995 (above)
Price Indices of Non-Landed Properties Since 1995 (above)

With the high prices of private properties in Singapore, it’s not surprising that the combined value of condos in Singapore is $600 billion, higher than HDBs and landed properties. 

Combined Value of All Residential Properties in 2020

But is it really true that condos are a good form of investment? 

To uncover the truth, we dove deep into the data, analysing 470,000 condo property transactions spanning the past 25 years. It’s the biggest study of its kind – and what we found was so significant that it’s even been covered by Bloomberg.

The data shows that 50% of condo owners will likely receive annualised capital returns of less than 2.2% p.a. on their property.

That’s less than the CPF Ordinary Account interest rate, which has stood at 2.5% p.a. since 1999!

But before we go into detail about our findings, here are some terms you’ll need to understand

Annualised Returns

When looking at the profits from any investment, there are two main metrics: cumulative returns and annualised returns. 

Cumulative Returns = Selling Price – Buying Price

Cumulative returns do not take into account the amount of time you’ve committed to the investment. 

Annualised returns do. It’s a calculation of your investment’s average rate of return per year. 

Annualised Returns = (1 + Cumulative Returns)365/No. of days held – 1

We chose to focus on annualised returns over cumulative returns because it helps to normalise the time effect of varying holding periods of investments.  

Illustration of Annualised Returns

Take for example a condo unit that was purchased for $1 million on 1 Jan 2010 (illustrated above). 

If the owner were to sell the unit for $2 million on 1 Jan 2015 (5 years later), he would have a cumulative return of $1 million and an annualised return of 14.9% p.a.

If the owner were to sell the unit for $3 million on 1 Jan 2020 (10 years later), he would have a higher cumulative return of $2 million, but a lower annualised return of 11.6% p.a. 

Buy-Sell Pairs

Most analysis done by other property sites tend to cite the average transaction price for the year and use that to calculate returns. 

For example, if the average transaction price of a two-bedroom condo is $1 million in 2010 and $1.3 million in 2020, then they would say that the return is 3% p.a. over the last 10 years.  

We found this method to be unsatisfactory. Instead, we analysed 470,000 condo transactions from 1995-2019 as buy-sell pairs. 

This means that instead of simply looking at all the buying and selling prices and finding an average rate of return, we sorted our data into transactions based on individual condo units. 

This gives us a more accurate picture of annualised returns. 

What resulted after we refined the data from 470,000 individual transactions was 160,000 buy-sell pairs over 100,000 unique condo units in Singapore. 

Capital Gains/Losses and “Base-Case Scenario”

We’re sure you’re about to ask, “What about returns based on rental income?”

That’s a great question, which will be addressed in a later article. What we’re looking at today is gains and losses based on capital, not income. 

Also to keep things simple, we’ve analysed capital gains/losses on a “base-case scenario”, meaning we’ve excluded certain factors (like inflation) and transaction-related costs (like stamp duties, legal fees, agent commissions, and taxes). 

Now that we’ve gotten that out of the way, what does data from the past 25 years actually say about the returns of investing in a condo? 

17% of condo owners sold their property at a loss 

From our analysis of the 160,000 buy-sell pairs, we found that 17% of condo owners actually transacted at a loss, receiving negative annualised returns upon the sale of their property. 

83% were able to break even or turn a profit. 

And while there are some cases of owners turning a profit of over 20% p.a., there are also cases of owners losing as much as 20% p.a. on their property. 

Coupled with a 17% chance that you might lose capital, this indicates that condos are a pretty high-risk investment in Singapore. 

Most condo owners realised annualised returns of 1.5% p.a. 

In statistics speak, the mode is the most commonly occurring result in a data set, and the median is the value that separates the top half from the bottom half of all sample values. 

The mode and median annualised returns over the past 25 years is 1.5% p.a. and 2.2% p.a. respectively. 

In real-life speak, this means that the most common rate of return amongst condo owners over the last 25 years is 1.5% p.a. 

It also means that half of the condo owners in Singapore who sold their property in the last 25 years did so at an annualised return of less than 2.2% p.a. 

So is buying a condo in Singapore a good investment?

If you want to invest in something that has inherent risk, you’ll want to ensure that there’s a good chance you’ll be able to get a healthy return on your investment.  

In the case of buying a condo, simply having a return of more than 0% p.a. is not good enough. 

Instead, we’re proposing the use of a “risk-free rate” of return as a benchmark to determine whether condos are a good investment. 

We believe that the closest approximation of a risk-free rate in Singapore is the CPF Ordinary Account, which has been pegged at 2.5% p.a. since 1999. In fact, the CPF Special Account interest rate is even higher at 4% p.a.!

Sure, these rates may be subject to change, but for now, it’s the closest thing Singaporeans have to a “guaranteed” rate of return on their cash. 

Using 2.5% p.a. as a benchmark, we found that while 83% of condo owners are sitting on capital gains, only 63% are expected to enjoy annualised returns greater than 2.5% p.a., with most of the owners in this category having purchased their units before 2008. 

So when determining if a condo is a good investment, the important thing is to be strategic about which condo you decide to invest in. 

Different factors like district, amenities, and more will affect if and when you’ll be able to get a healthy capital return on your property. 

A side note about using your CPF monies to purchase property

Most Singaporeans rely heavily on their CPF Ordinary Accounts to pay off their mortgage, but they usually forget two crucial things. 

One, the more you take out from your CPF Ordinary Account, the less in monthly payouts you’ll receive in your retirement. 

Two, once you sell your property, you’ll need to pay back the amount you borrowed from your CPF Ordinary Account, plus the 2.5% p.a. interest you would have accrued if you hadn’t taken out that amount. 

This means that if you’re using your CPF monies to purchase your condo, all the more you should ensure that your investment yields a capital gain of at least 2.5% p.a.! 


Once again, we’d like to reiterate that our study considers only the base-case scenario and that focus was placed on capital gains/losses, not revenue income. We also recognise that this is a non-conclusive study and acknowledge that the market is always changing. 

But what we are trying to say is that investing in property is a multi-faceted issue – as the data has shown, it’s not as straightforward as looking at an upward trend in condo prices and concluding that condos are a good investment. 

Are you curious to know what your property is worth right now? Generate your free home report at UrbanZoom or reach out one of our highly insightful UrbanAgents for a consultation. 

And if you’re still keen on purchasing a new launch condo, you can check out properties around Singapore from the comfort of your own home via immersive, true-to-life 3D renderings at UrbanLaunches.

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