Does Progressive Payment make new condo prices more expensive?
Does Progressive Payment make new condo prices more expensive?
The Business Times says it might. I think it’s an interesting theory… but I’m not fully convinced.
According to Leslie Yee from The Business Times,
buyers of new launches only pay progressively during construction.
Because the initial cash outflow is much smaller than buying a resale property,
buyers may feel more confident about their ability to finance the purchase…
and therefore become more willing to commit to a higher-priced property.
I think that’s a reasonable behavioural argument.
But I’m not convinced it’s a major reason why new launch prices are so high.
Here’s why.
Most private condo buyers are either first-time buyers…
or upgraders who already sold their existing home or decouple to avoid paying 20% ABSD.
So while Progressive Payment may make the cash flow feel easier,
buyers are still constrained by loan limits, down payments and affordability.
In my opinion,
the bigger drivers of new launch prices are still:
✅ Higher land costs
✅ Rising construction costs
✅ Limited supply
✅ Strong demand
If we’re talking about payment schemes influencing buyer behaviour,
I’d actually argue the old EC Deferred Payment Scheme had a much bigger impact than Progressive Payment.
What do you think?
Does paying in smaller instalments make people more willing to spend more…
or are new launch prices mainly driven by market fundamentals?
#SingaporeProperty #PropertyMarket #NewLaunch #NewLaunchCondo #jonathankong
Having been involved in property transactions and observing market trends closely, I find the notion that progressive payment schemes directly inflate new condo prices worth exploring but not conclusive. Paying progressively during construction does lighten initial cash flow, potentially encouraging purchasers to consider higher-priced properties since they don’t need full payment upfront. This psychological effect can make buyers feel more confident about their financing capability. However, from personal experience and discussions within the Singapore real estate community, buyers remain heavily influenced by factors such as loan restrictions, mandatory down payments, and overall affordability. These constraints often limit the actual spending power regardless of payment schemes. Moreover, when examining price escalations over recent years, the roles of rising land acquisition costs, surging construction expenses, and tight supply due to limited available land parcels emerge as more significant. Strong demand driven by population growth and investor interest further presses prices upward, making it clear that fundamental supply-demand dynamics largely govern new launch condo pricing. I have also noticed that older payment structures, like the EC Deferred Payment Scheme, had a more pronounced effect by allowing even more delayed payments, hence affecting buyer behavior more deeply than the current progressive schemes. In practical terms, while progressive payment might ease cash flow management for buyers, most remain calculated and cautious due to regulatory measures and financial prudence. Thus, it is reasonable to conclude that progressive payment contributes marginally, if at all, to price inflation compared to core market fundamentals. Buyers and investors should focus on these broader economic and policy factors when assessing new launch condo prices rather than attributing price rises mainly to payment schemes.