comparing property prices

Most of us know that “doing our homework” is a vital step of the property buying process, and this includes comparing property prices. Whether you’re a home owner or pure investor, property is a big-ticket item; one where even a difference of half a percentage point can mean saving tens of thousands of dollars in the long term. However, many property buyers also compare prices incorrectly; and this can lead to unexpected levels of risk or disappointment.

In this article, we’ll address the most common mistakes to avoid:

Mistake 1: Comparing Property Prices Using Listing Prices Instead of Transaction Prices

You would have heard by now that you should compare prices of surrounding properties when buying a home. However, it’s a common mistake to visit property portals and compare listing prices to the property you’re interested in. This erroneous comparison will give you a misleading impression.

For example, you might see that your seller is asking for $1.4 million, but the list prices of comparable properties are all $1.5 million; this may lead you to believe you’re looking at a bargain. But this is a misperception because the listing price is rarely the actual market value of the property (a seller can ask for any price they like, but it doesn’t mean they will succeed at getting it).

Most listing prices have room for negotiation; the actual transaction prices of comparable properties tend to be lower than the listings suggest. This is not to say there aren’t any case when the listings maybe under-value properties.

A more accurate way would be to check the transaction prices by looking at the caveats lodged with URA. Even then, by merely looking at the transaction prices, it still may not paint the whole picture. Data from the URA website don’t show the unit numbers. The actual level and facing of the units will have a bearing in the disparity in prices. For example, you need to take into consideration the difference between quiet facing and road facing, with and without direct west sun, and with blocked and unblocked view.

For more comprehensive data and comparative analysis, drop me a message, and I can help you to check.

don't compare listing prices
Always compare using actual transaction prices, not just by browsing listing prices

Mistake 2: Relying on Transaction Data When The Volume Is Too Low

Even if you have access to real transaction prices, you need to factor in the volume. This is a common problem for boutique developments with very few units and transactions (e.g. Urban Edge @ Holland V, Edge @ Cairnhill), or very old projects where there have only been one of two transactions in the past five years. 

In these cases, the average prices can be misleading, as one unusually high or low transaction will skew the figures. For example, if the last unit sold in a 60-unit development happens to be a penthouse or a ground floor unit, the low $PSF price will significantly skew the prices downwards.

And if the last transaction was three years ago, the price will not give an accurate reflection of the current market condition. It is not unusual that the bank’s valuation may not match the current market price because it still relies on outdated transaction prices.

Mistake 3: Forgetting To Include Maintenance Costs When Comparing Condos

Two developments can have broadly similar facilities but have a big difference in maintenance costs.

There are a few factors that can affect the cost of maintenance:

  • The size of the development: Generally, bigger projects have a lower maintenance fee because the cost is spread over more units. Conversely, the maintenance fee is relatively higher for projects with fewer units.
  • The age of the development: Older projects are more costly to maintain with more repair and renovation works involved. There is usually a sinking fund component which goes to major works, such as overhauling of lifts, upgrading of facilities, and improvements of the grounds.
  • Size of the unit: The exact amount of maintenance fee will depend on the share value of each unit, which is determined by the size of the unit.
  • Ratio of the number of lifts to units: The cost of maintaining the lifts is relatively higher than other facilities, such as pool and gym. So, you can expect a higher maintenance fee for low-rise condos and those with private lifts.
  • The quality of the management council and its property manager can also affect the cost of maintenance.

Many home buyers often overlook maintenance fee when working out potential yield and return between different developments. So be sure to find out.

comparing maintenance fees
Maintenance fees can be higher, even if the given condo doesn’t have exceptional facilities

Mistake 4: Forgetting To Factor In The Tenure When Comparing Property Prices

When comparing prices between units, don’t forget to check whether you’re comparing condos with similar tenure i.e. freehold vs freehold and leasehold vs leasehold.

This is to ensure an apple-to-apple comparison, as freehold units typically cost about 15 to 20 per cent more than their leasehold counterparts. Hence, don’t expect freehold properties to give as much or higher rental yield than leasehold properties, all other things being equal. Typically, freehold condos give around 2 to 2.5 per cent yield (sometimes even lesser); whereas leasehold condos more than 3 per cent.

If you are planning to buy leasehold properties, don’t forget to factor in lease decay. A property may appear much cheaper despite having similar location and facilities due to the lower remaining lease and the more apparent signs of ageing.

Mistake 5: Ignoring Qualitative Factors or Your Original Intent

Don’t compare property prices so much that you forget your original intent.

For example, if you’re buying for pure home ownership, then you should better focus on non-financial factors such as:

  • Proximity to the workplace or choice school for your children
  • Closeness to parents (especially if you need their help to look after your child)
  • Healthcare needs (is there a hospital, dialysis centre, clinic, etc. nearby?)
  • Amenities that matter to you (e.g. MRT station, market, malls and park. Or you may prefer quiet enclaves even if there’s no MRT station)

If you are buying for investment, an important consideration would be whether it is easy to find a tenant. Rentability and prices usually go hand in hand. An old walk-up apartment may be cheap but is run down, inconvenient, and unattractive to many tenants. Or potential tenants might be put off due to inaccessibility by public transport or lack of nearby amenities.

rentability is important when buying a property
A property may be cheap but can be challenging to get a tenant

Mistake 6: Only Comparing Price-Per-Square-Foot

Generally, home buyers tend to focus on the price-per-square-foot.

Typically, older condos are lower in price-per-square-foot when comparing to the new launches. The same applies to bigger condos versus smaller condos.

By purely looking at the price-per-square-foot to compare property prices may not be the best guide.

In my other article, “Why Do People Still Buy When The Price PSF Is So High?”, I pointed out that there are other factors to consider:

  • Projected rental yield: A smaller new apartment may be much higher than a bigger older apartment in terms of price-per-square-foot, but the rental yield is higher. If you are buying for investment, rental yield and ease of renting out are more important than size and lower price-per-square-foot. On the other hand, for an own-stay property, your consideration would be different. However, buying for own stay doesn’t mean you should not put on the hat of an investor. Read my article on: “Home Buyers versus Investors: Do You Need A Different Mindset?”.
  • Lower quantum versus higher price-per-square-foot: Investors are more concerned about affordability (which also means easy to enter and exit) than price-per-square-foot. A bigger condo may have a lower price-per-square-foot, but because of the size, the price may be out of reach.
  • The difference in the layout: When comparing prices, do take a closer look if there are any oversize balcony and air-con ledge, double-volume ceiling, open roof terrace and bay window. These unusable or impractical spaces make the apartment looks spacious on paper (hence lower price-per-square-foot), but you are not getting what you are paying for.
  • Facing, level and view: These factors can have a significant bearing on the price, as pointed out in the first point above. For example, the price difference for every level can be between $3,000 to $5,000. When comparing prices, just be sure to use the right criteria as a basis for comparison.
factors to consider when comparing property prices
Merely comparing price-per-square-foot is not the best guide because there are many other factors affecting the price of a property

Mistake 7: Confusing The Average With The Median

Some buyers are confused when they see “conflicting” reports, where one report is giving the average unit price, and the other is giving the median. They may also make the mistake of comparing the average price of a property to the median prices of surrounding properties, or vice versa.

To be clear, median and average are not interchangeable terms. The median is the middle price in a range of units, whereas the average adds all the unit prices and then divides them between the units. For example:

Say we have five units in a small block:

  • Property A – $1.5 million
  • Property B – $1.55 million
  • Property C – $1.65 million (Median)
  • Property D – $2.2 million
  • Property E – $7.6 million

The median is simply the one in the middle (property C), so the median price in this block is $1.65 million.

The average requires us to add up all the costs ($14.5 million) and divide them between all five units, resulting in an average price of $2.9 million.

(If the average price seems high, it’s because property E costs so much more. This is why some reports use the median, when there’s a risk that exceptionally high or low-cost outliers will skew the results too much).

When you are comparing property prices, be sure that you are clear about these two terms.

Finally, do remember to look beyond price when comparing properties.

You also need to consider some currently intangible factors, such as upcoming future developments, or the specific state of the individual unit (in HDB flats, loan shark activity can make one specific unit very cheap!)

For a second opinion or a more holistic look at a unit, drop me a message and I’d be glad to help. Or you can book me via the calendar below for a zoom meeting.

danny han pwp

Danny Han has always been in the people’s business, having spent 23 years as a church pastor, five years as an insurance agent, and the last 16 years as a property consultant.


Danny has a genuine interest in people and firmly believes in personal integrity. While helping homeowners with their property needs, their interest always takes precedence over his personal gains. Hence, Danny has consistently earned his clients’ complete trust and loyalty. Many of them have become his personal friends.


Danny received his Diploma in Mechanical Engineering from Singapore Polytechnics and Bachelor of Science from Oklahoma Christian University of Science and Arts in Bible & Psychology.


Besides keeping abreast of the property market trend and constantly equipping himself to better serve his clients, Danny is a passionate foodie, a weekend cyclist, and an avid hiker. 

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