Does holding a condo for more than 20 years mean higher gains?

We recently compiled the top 10 condo gains by the regions (CCR, RCR, OCR) based on condo transactions from Feb 1 to 7, 2023.

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Among the top 10 condo gainers across the three regions, one of the transactions that stood out was the $1.56m sale of a unit at Blue Horizon.

As the unit was bought for around $672,000 in 2002, it was held for 21 years, before making a gain of around $888,000 when it was sold recently.

So we wonder if selling a condo unit that was purchased more than 20 years ago can translate to a higher gain.

In this follow-up article, we're reviewing condo gains with a holding period of more than 20 years, based on transactions from Feb 1 to 10, 2023.

Condo name	Size (sq ft)	Bought for/ Date bought	Sold for/ Date sold	Capital gain	Years held	Return	Annalised return
International Plaza	1,507	$488,000 6 Jan 1999	$1.9m 9 Feb 2023	$1.41m	24	289 per cent	5.83 per cent
Jervois Lodge	1,238	$1.18m 16 Mar 1998	$2.33m 2 Feb 2023	$1.15m	25	97.5 per cent	2.76 per cent
Blue Horizon	1,216	$672,000 8 Jan 2002	$1.56m 3 Feb 2023	$888,000	21	132 per cent	4.09 per cent
Simei Green Condominium	1,249	$533,000 2 May 1997	$1.14m 8 Feb 2023	$605,000	26	114 per cent	2.96 per cent
The Warren	1,066	$490,000 16 Jan 2002	$1.07m 6 Feb 2023	$580,000	21	118 per cent	3.79 per cent
Orchid Park Condominium	1,249	$545,000 1 Oct 1998	$1.1m 3 Feb 2023	$555,000	25	102 per cent	2.85 per cent
Melville Park	1,044	$600,000 4 Jan 2000	$940,000 3 Feb 2023	$340,000	23	56.7 per cent	1.97 per cent

Among these seven transactions, five of them made a return of at least 100 per cent, with another transaction almost hitting a 100 per cent return.

Based on these transactions, it could be said that holding a condo unit for more than two decades can translate to a higher gain.

We also notice that for most of these transactions, the gains are more than the initial purchase prices when these units were bought more than 20 years ago.

But when we filter the data and look at the top 10 condo gains from Feb, 1 to 10, only two were held for over 20 years. Meanwhile, half of the top 10 condo gainers were held for 11 to 17 years.

Condo name	Size (sq ft)	Bought for/ Date bought	Sold for/ Date sold	Capital gain	Years held	Return	Annalised return
Ardmore II	2,024	$4.21m 19 Oct 2006	$6.28m 8 Feb 2023	$2.07m	17	49.1per cent	2.38per cent
Draycott Eight	4,015	$7.22m 17 Aug 2017	$8.68m 1 Feb 2023	$1.46m	6	20.2 per cent	3.11 per cent
International Plaza	1,507	$488,000 6 Jan 1999	$1.9m 9 Feb 2023	$1.41m	24	289 per cent	5.83 per cent
The Cosmopolitan	1,141	$1.46m 24 June 2009	$2.8m 10 Feb 2023	$1.34m	14	91.8 per cent	4.76 per cent
Signature Park	1,421	$980,000 29 May 2007	$2.28m 3 Feb 2023	$1.3m	16	132 per cent	5.42 per cent
Allsworth Park	1,959	$2.71m 22 Mar 2012	$4m 9 Feb 2023	$1.29m	11	47.6 per cent	3.60 per cent
Thomson 800	1,399	$1.42m 14 Aug 2009	$2.6m 1 Feb 2023	$1.18m	14	83.4 per cent	4.43 per cent
Jervois Lodge	1,238	$1.18m 16 Mar 1998	$2.33m 2 Feb 2023	$1.15m	25	97.5 per cent	2.76 per cent
Clementi Park	1,873	$1.94m 10 Jul 2017	$3.08m 3 Feb 2023	$1.14m	6	58.8 per cent	8.01 per cent
Grange Infinite	2,701	$6.05m 12 Dec 2016	$7.18m 7 Feb 2023	$1.13m	7	18.7 per cent	2.48 per cent

So a longer holding period (20 years as opposed to 15 years) doesn't necessarily translate to a higher absolute gain.

More importantly, we shouldn't just look at the absolute capital gain.

A more accurate way would be to look at the respective annualised returns, which takes into account the effect of compounding. This also allows you to compare the transactions better.

In the case of the top 10 condo gains above, the transaction with the highest annualised return is the $3.08 million sale for Clementi Park.

Interestingly, it has one of the shortest holding periods of six years.

Nevertheless, there's a combination of factors that affects the sale price, which in turn affects the capital gain and annualised returns.

This includes the location, size of the property and the state of the property market at the time of its sale and purchase.

ALSO READ: Should you rent or sell your new launch condo in 2023? Here's how you can decide

This article was first published in 99.co.