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Risks of Buying an Under-Construction Condo in Singapore
New launch condos are exciting — lower prices, shiny showflats, developer discounts. But you’re buying something that doesn’t exist yet. Here are the real risks, what protections you have, and how to decide.
Answer: The main risks of buying an under-construction condo are developer delays (3–6 months common), defects at handover (cosmetic to structural), progressive payment burden (paying mortgage on a unit you can’t live in), market changes (prices may drop during 3–5 year wait), and layout disappointment (actual unit differs from showflat). Key protection: the Housing Developers Act mandates project accounts, liquidated damages for delays, and a 12-month defect liability period.
Key Risks at a Glance
| Risk | Severity | Likelihood | Your Protection |
|---|---|---|---|
| Developer delay | Medium | Common (3–6 mo) | Liquidated damages (10% p.a.) |
| Construction defects | Medium–High | Very common | 12-month DLP, developer must fix |
| Market price decline | High | Moderate | None — market risk is yours |
| Progressive payment burden | Medium | Certain | Payments spread over 3–5 years |
| Layout differs from showflat | Low–Medium | Common | S&P floor plans are legal document |
| Developer insolvency | Very High | Very rare | Project account protects funds |
Progressive Payment Schedule
Example: $1,500,000 condo, 75% LTV ($375,000 down payment)
| Stage | % of Price | Amount | Typical Timeline |
|---|---|---|---|
| Booking fee | 5% | $75,000 | Day 1 |
| S&P signing (+ stamp duty) | 15% | $225,000 | Within 8 weeks |
| Foundation | 10% | $150,000 | ~6 months |
| Reinforced concrete | 10% | $150,000 | ~12 months |
| Brick wall | 5% | $75,000 | ~18 months |
| Ceiling/roofing | 5% | $75,000 | ~24 months |
| Electrical wiring | 5% | $75,000 | ~27 months |
| Car park/roads | 5% | $75,000 | ~30 months |
| TOP (Temporary Occupation Permit) | 25% | $375,000 | ~36 months |
| CSC (Certificate of Statutory Completion) | 15% | $225,000 | ~42 months |
| Total | 100% | $1,500,000 | 3–4 years |
First 20% (booking + S&P) comes from your down payment. Remaining 80% is released from your bank loan as construction progresses. You pay interest on the loan amount drawn down.
What You’re Paying During Construction
This is the part most buyers don’t think about until the bills arrive. During construction, you’re paying:
| Cost | Estimated Amount | Notes |
|---|---|---|
| Loan interest (progressive) | $800–$3,500/mo | Increases as more loan is drawn down |
| Stamp duty (BSD) | $44,600 | Paid within 14 days of S&P |
| ABSD (if applicable) | $0–$900,000 | Cash only, within 14 days |
| Legal fees | $3,000–$5,000 | S&P + mortgage documentation |
| Current housing costs | $2,000–$4,000/mo | You still need somewhere to live |
On a $1,500,000 condo at 3.5% interest, progressive loan interest starts at ~$800/mo and rises to ~$3,500/mo by TOP — while you’re also paying rent or mortgage on your current home.
Construction Defects — What to Expect
Common defects at handover
Paint chips, uneven tiling, scratched surfaces, misaligned doors, plumbing leaks, faulty switches, poor grouting, aircon drainage issues. These are cosmetic to minor functional defects that the developer must fix during the 12-month Defect Liability Period (DLP).
Serious defects (less common)
Water seepage through walls/ceilings, cracks in structural elements, balcony waterproofing failure, facade defects. These require formal reporting and may need multiple rounds of repair. If the developer is unresponsive, BCA can intervene.
Your protection
The 12-month DLP starts from key collection. Hire a professional defect inspector ($250–$500) to document everything. Submit defects to the developer in writing. The developer is legally required to rectify defects at their cost. After DLP, you’re on your own for non-structural issues.
Market Risk — What if Prices Drop?
| Scenario | Impact on $1,500,000 Purchase |
|---|---|
| Market drops 5% during construction | Unit now worth $1,425,000 — $75,000 paper loss |
| Market drops 10% | Unit now worth $1,350,000 — $150,000 paper loss |
| Market rises 10% | Unit now worth $1,650,000 — $150,000 paper gain |
| Interest rates rise 1% during wait | Monthly payment up ~$600/mo at TOP |
You’re committed to the purchase price regardless of market movement. This is the biggest risk of buying under construction — and there’s no protection against it.
Housing Developers Act — Your Legal Protections
| Protection | What It Does |
|---|---|
| Licensed developers only | Only URA-licensed developers can sell uncompleted units. Reduces fly-by-night risk. |
| Project account | Your payments go into a regulated account, not the developer’s pocket. Funds released only when architect certifies construction stage completion. |
| Liquidated damages | Developer pays you 10% p.a. of purchase price (calculated daily) for delays beyond the contractual completion date. |
| 12-month DLP | Developer must fix all defects reported within 12 months of key collection, at their cost. |
| 5-day cooling off | After signing S&P, you have 5 days to cancel (forfeit 25% of booking fee = 1.25% of price). |
| Standard S&P | The Sale & Purchase Agreement follows a standard prescribed format — developers can’t insert unfair clauses. |
The Housing Developers (Control and Licensing) Act protects buyers of uncompleted private residential properties. It’s one of the strongest buyer protection frameworks in the region.
Thinking about a new launch? Run the numbers first.
Calculate your progressive payment schedule, stamp duty, and total cash needed before committing.
FAQ
What happens if the developer delays the condo?
Under the Housing Developers Act, developers must deliver vacant possession within the timeline stated in the Sale & Purchase Agreement (typically 36 months for standard construction, 42 months for unique designs). If they miss the deadline, you’re entitled to liquidated damages — usually 10% p.a. of the purchase price, calculated daily. In practice, delays of 3–6 months are not uncommon.
Can I back out after booking a new launch condo?
You have a 5-day cooling-off period after signing the Sale & Purchase Agreement. If you cancel, you forfeit 25% of the booking fee (which is 5% of purchase price — so you lose 1.25% of the price). After the cooling-off period, walking away means forfeiting the full 5% booking fee and potentially facing legal action.
What is the progressive payment scheme?
You pay in stages as construction progresses: 5% at booking, 15% at S&P signing (20% total = your down payment), then increments at foundation, reinforced concrete, brick wall, ceiling/roofing, electrical, and finally car park/roads. The last 15% is paid at TOP and CSC. This spreads your payments over 3–5 years.
What if the condo layout is different from the showflat?
Showflats can include optional components (like kitchen islands, upgraded finishes) that aren’t standard. The S&P Agreement and floor plans are the legal documents — not the showflat. Always check the approved floor plan for exact dimensions. Minor variations (±3%) in unit size are allowed.
What protections exist for new launch buyers?
The Housing Developers Act requires: licensed developers only, project accounts (your money is held in a regulated account and released only upon construction milestones), 12-month defect liability period, and liquidated damages for delays. Developer must also provide a certificate of statutory completion. URA also regulates the sales process.
Should I buy under construction or wait for TOP?
Under construction is cheaper (developer’s early-bird pricing, progressive payment reduces upfront cost). But you bear construction risk, wait 3–5 years, and can’t inspect the actual unit. Sub-sale (buying from someone who bought earlier) gives you a closer timeline but at market price. Resale gives you what-you-see-is-what-you-get. It depends on your risk tolerance and timeline.
Related
Last updated Feb 2026. Protections per Housing Developers (Control and Licensing) Act. Progressive payment percentages are standard schedule prescribed by law. This is informational, not legal or financial advice.