The local property market has been red hot in 2022, with private property prices climbing and 95 per cent of resale transactions making money.

Statistics from property platform Stacked Homes show that of the 13,971 non-landed private resale or sub-sale transactions last year, only 5.25 per cent lost money and 0.2 per cent remained flat, while nearly 95 per cent of the remaining transactions were profitable, with one of the most profitable being a $8.61 million deal.

However, analysts also cautioned that profit and loss in real estate investment depends largely on the market cycle of entry and exit, and the ability to hold on is important.

In an interview with the Lianhe Zaobao, Sun Yanqing, director of OrangeEasy's Industrial Research and Consulting Department, said; "Last year, private property prices hit a record high, so many homeowners made a lot of money. The lack of supply of private homes was also a big factor, with far fewer new private home projects launched last year, leading more buyers to turn to the resale market. The increased demand has pushed up resale prices and sellers have made more money as a result."

The latest figures released by the Urban Renewal Authority on Friday (27 January) show that local private property prices rose by 8.6 per cent last year, down from 10.6 per cent the year before, but the sixth consecutive year of increases.

Among the most profitable resale transactions last year was the sale of a penthouse in Regency Park for $14.1 million. The owner bought the unit in 1998 for $5.5 million, which means he made $8.61 million from the transaction, an annualised gain of 3.9 per cent over the 24 years he held the property.

The second largest gainer was a four-bedroom flat in Ardmore Park, which sold for $12.5 million. The owner bought the flat in 2000 for $4.75 million and held on to it for 22 years, making an annualised gain of $7.75 million, or 4.5%.

The fastest earner was a homeowner at Reflections at Keppel Bay. He bought a flat in September 2021 for $11 million and sold it last September for $17.63 million, making a profit of $6.63 million or 60% in just one year. Although the owner kept the property for less than three years and had to pay a significant amount of seller's stamp duty (SSD), it was still a big profit.

However, the greater the return on a property investment, the greater the risk. Last year's biggest resale gains came mainly from high-end private residential properties in Districts 9 to 11, District 1 and District 4, and the biggest losses were also seen in these areas. Of these, two of the top five loss-making transactions came from Keppel Bay Waterfront.

The largest resale transaction last year came from The Marq on Paterson Hill, where a homeowner bought a four-bedroom flat for $20.54 million in 2011 and sold it for $13.38 million last year after holding on to it for nearly 11 years, a loss of $7.16 million.

Another owner also bought a five-bedroom flat in Paterson Suites in 2011 for $20 million and sold it last year for $13.8 million, a loss of $6.2 million.

In an interview, Dr Naijia Li, head of PropertyGuru's Real Estate Intelligence division, said that in order to make a profit from a property investment, apart from considering the proximity to good schools or MRT stations, etc., one must also calculate the right time to enter and exit the property.

Homeowners need to have a strong ability to hold on to their properties to ride out cyclical downturns and not panic and sell for fear of a market downturn," he said. That said, it can be a challenge to restrain yourself when the market outlook is full of uncertainty. "

ERA's Head of Industrial Research and Consultancy, John Mak, agrees. He points out that last year, when the property market was in full swing, there were still 5.25 per cent of transactions that incurred a loss. "This shows that homeowners bought their properties at too high a price in the first place, and even though prices have risen significantly over the past few years, they are still selling at a loss."

As for the next resale transaction market, Mr Mak believes that macroeconomic conditions are uncertain this year and private home price increases are expected to slow down, but our job market remains strong and can continue to support the resale market, with profitable resale transactions estimated to remain at 95 per cent or even higher.

Sidney Lee, Senior Head of Research at Hopedorn Group, also believes that profitable resale transactions will remain at last year's level this year, because on the one hand, private property prices are expected to rise by 5% this year, meaning that more homeowners will be able to make gains on their resale transactions. On the other hand, the re-opening of China will drive more affluent buyers back into the local property market, benefiting owners of high-end private homes.

The greater the return on property investment, the greater the risk. The largest resale transactions last year were mainly for high-end private properties in Zones 9 to 11, Zone 1 and Zone 4, while the largest losses were also seen in these areas.