A big gap in price

Newton once commented that he can understand the laws of physics but never understand the insanity of mankind. I too did not understand the sellers and buyers who price their houses recently.

For example, see the table of recently transacted condominium ( source: URA website) below:

Project name address house type price transacted area sq feet unit price $psf date of option exercised
TREVISTA LORONG 3 TOA PAYOH Condominium 1,485,000 1,098 1,353 Sep-12
TREVISTA LORONG 3 TOA PAYOH Condominium 1,400,000 1,141 1,227 Sep-12
SUNGLADE SERANGOON AVENUE 2 Condominium 1,130,000 1,087 1,039 Aug-12
BISHAN 8 BISHAN STREET 21 Condominium 1,320,000 1,163 1,135 Aug-12

The condominium above share similar traits like 5-10 minute walk to MRT station, about 10-15 minute train ride to town area, near shopping mall, wet market, shops, coffeeshops, in mature estate, near schools and other amenities, size and transaction period.

However, there is a big difference in price of condominiums in Toa Payoh and Bishan and Serangoon. The transacted prices show that buyers are willing to pay $300,000 more for a unit in Trevista against a unit in Sunglade. This is where I find ridiculous because the main difference in two of them is that Trevista is a new condominium versus Sunglade which is nearly 10 year old. If the buyers want to renovate Sunglade, it surely will not cost more than $100,000. Furthermore, there is no shopping mall near Trevista like Sunglade has. Another point to note is the buyers are willing to pay $160,000 more for a smaller unit in Trevista against Bishan 8 larger unit.

Perhaps, the buyers in Toa Payoh have deeper pockets. Perhaps the buyers knew that there is gold buried inside the condominium. Many other reasons exist. A key question buyers need to ask themselves is this: is this a good buy compared to similar units around the area?

The market is never efficient. There is always someone doing something foolish. In this case, the buyers of Sunglade and Bishan 8 seemed to be more prudent than the buyers of Trevista.