Your search results

Can You Still Make Money from Older Freehold Condos in Singapore

Posted by Jayson Ang on November 23, 2024

| All, Blog Posts, Buying Tips, Opinion, Reports

| 0

TLDR

While freehold condos might seem like a solid investment, the rise of new developments and aging buildings cast doubt on their long-term value. Data shows that younger freehold condos under 10 years old have a higher average price per square foot compared to older ones. Leasehold condos, while initially cheaper, close the price gap over time. The prime profit window for freehold condos is between 30 and 40 years, but profitability declines past this due to financing constraints. District-specific trends suggest better gains in upscale areas like Districts 9 and 10. Ultimately, the freehold premium may require decades to justify itself, and property management quality remains crucial. Deciding whether to buy, sell, or wait depends on individual circumstances and market conditions.

While freehold condos may seem like a foolproof investment on paper, doubts have begun to surface in recent times. One popular belief suggests that their lack of lease extension fees gives them a competitive edge in the en-bloc market. However, with the rise of neighboring new developments and the uncertainty surrounding the sustainability of aging condos, the question remains: can a decades-old freehold condo still hold its value? Curious, we delved into the topic further.

Average Prices of Freehold Condos According to Age: Unveiling the Trend:

Year/Age	Less Than 10 Years Old	Less Than 20 Years Old	Less Than 30 Years Old	Less Than 40 Years Old	40 Years Or More	Grand Total
2014	$1,609	$1,249	$1,212	$1,194	$1,003	$1,510
2015	$1,588	$1,222	$1,124	$1,148	$1,029	$1,441
2016	$1,663	$1,210	$1,100	$1,140	$1,051	$1,475
2017	$1,705	$1,235	$1,167	$1,180	$1,172	$1,505
2018	$1,821	$1,345	$1,238	$1,320	$1,264	$1,620
2019	$2,118	$1,444	$1,308	$1,342	$1,279	$1,804
2020	$1,963	$1,423	$1,290	$1,359	$1,169	$1,695
2021	$2,057	$1,621	$1,384	$1,445	$1,364	$1,816
2022	$2,280	$1,741	$1,507	$1,625	$1,622	$1,999
2023	$2,459	$1,846	$1,617	$1,671	$1,567	$2,117
2024	$2,427	$1,873	$1,702	$1,627	$1,592	$2,000
Grand Total	$1,944	$1,492	$1,346	$1,375	$1,381	$1,730

As the years pass, the average price per square foot of a freehold condo fluctuates, revealing its true worth with each passing decade. For those curious about how it stacks up against leasehold, the numbers tell a compelling story.

For the young and sprightly leasehold condos under 10 years old, the average price per square foot is a mere $1,410 – a significant 31.8% lower than their freehold counterparts. But as time wears on, the gap narrows; at 40+ years old, the average leasehold condo fetches around $997 psf, only 32.9% less than a freehold unit. Could it be that leasehold holds its value better than we give it credit for?

Interestingly, for those willing to overlook a few wrinkles and embrace a condo that’s 30+ years old, a spacious 1,000 sq. ft. (think three bedrooms) could be within reach for a quantum of $1.6 to $1.7 million. A mere fraction of what a similar freehold unit would cost.

So don’t let the numbers fool you – come 2024, a family-sized freehold condo may not be a distant dream for those looking to upgrade, even if it means venturing further from the city.

Exploring the Average Appreciation of Freehold Condos Based on Age

Year/Age	Less Than 10 Years Old	Less Than 20 Years Old	Less Than 30 Years Old	Less Than 40 Years Old	40 Years Or More
2014
2015	-1.33%	-2.12%	-7.27%	-3.85%	2.65%
2016	4.75%	-1.02%	-2.20%	-0.69%	2.17%
2017	2.50%	2.13%	6.14%	3.53%	11.47%
2018	6.84%	8.91%	6.11%	11.83%	7.83%
2019	16.32%	7.33%	5.65%	1.63%	1.19%
2020	-7.35%	-1.47%	-1.37%	1.29%	-8.61%
2021	4.81%	13.96%	7.26%	6.31%	16.69%
2022	10.84%	7.38%	8.89%	12.52%	18.89%
2023	7.84%	6.05%	7.27%	2.82%	-3.39%
2024	-1.31%	1.46%	5.28%	-2.66%	1.64%
Grand Total	4.39%	4.26%	3.58%	3.27%	5.05%
Total Volume	33277	14368	7136	2195	569

During its early years, the condominiums thrive, thanks to its youthful age that keeps it out of the “old” category. However, as it nears the 40-year milestone, a testament to its longevity begins to unfold, revealing the fruits of a patient and enduring ownership.

Unveiling the Average Percentage Profits and Losses in Transactions

Row Labels	Less Than 10 Years Old	Less Than 20 Years Old	Less Than 30 Years Old	Less Than 40 Years Old	More Than 40 Years Old	Grand Total
2014	7.8%	20.7%	26.4%	13.0%	31.3%	11.0%
2015	11.9%	24.6%	29.1%	31.7%	46.0%	16.4%
2016	14.6%	31.0%	31.3%	35.3%	21.5%	20.3%
2017	15.6%	29.1%	31.8%	34.4%	24.4%	21.0%
2018	11.7%	21.1%	23.8%	34.7%	28.9%	16.0%
2019	13.7%	26.4%	33.3%	33.1%	24.7%	19.5%
2020	18.4%	30.6%	34.5%	32.8%	34.2%	24.6%
2021	13.7%	24.0%	24.4%	7.5%	32.1%	18.9%
2022	8.1%	33.3%	12.4%	6.3%		15.0%
2023	1.5%	4.1%				2.5%
Grand Total	12.5%	25.9%	29.0%	31.8%	26.9%	17.5%

The prime window for optimal profit in the market appears to fall between the 30 and 40-year threshold, while surpassing it proves less lucrative. Just like their leasehold counterparts, returns tend to dwindle past the 40-year milestone, mainly due to constraints in financing. As banks scale back their maximum loan limits, buyers are forced to cough up more cash, consequently putting a damper on market prices.

Looking At Performance By District

Profitability

The unequal distribution of freehold properties is evident as they tend to congregate in certain districts while remaining scarce in others. In the upscale regions of Districts 9 and 10, such as the bustling Orchard and scenic Bukit Timah, it is not uncommon to come across aged freehold properties compared to their leasehold counterparts.

However, the reverse is true for District 25, nestled in the rustic Woodlands, where almost all properties are on a leasehold basis. Due to the low transaction volume in some districts, using the average gains as a measure may not accurately reflect the market trends and prices can fluctuate greatly.

As such, relying on the gains in well-established districts like 9 and 10 may offer a more precise depiction of the area. It is worth noting, however, that caution should be exercised when considering District 15, as it encompasses a myriad of boutique freehold condos that are known to experience dramatic price swings.

When Does Investing in Freehold Premium Make Financial Sense?

Generally speaking, the freehold premium, which typically ranges from 15 to 20 percent higher than a leasehold, may take quite some time to pay off. In the short term, say within a decade of purchasing, the freehold title may hold little significance. However, as the years pass and you approach the 30-year mark, the value of freehold ownership becomes evident without the looming threat of lease decay.

Nevertheless, with an extended holding period, one cannot help but wonder about the maintenance of the property. This concern is especially valid in sprawling developments with a multitude of amenities. Will the numerous swimming pools, manicured gardens, and BBQ pits retain their charm after decades of use? While freehold status may safeguard against lease decay, it cannot guarantee competent condo management.

Should You Buy, Sell or Wait?

If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?

It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.

I can bring you a wealth of on-the-ground experience and a data-driven approach to provide clarity and direction. From beginners to experienced investors, our top-down, objective approach will help you on your real estate journey.

I can help you by:

Offering Strategic Real Estate Advice – I can help create a comprehensive plan to guide you through your property journey.
Connecting Your Home with the Perfect Buyers – Through stunning visuals, an effective communication strategy, and an in-depth knowledge of the market, we’ll ensure your home is presented in the best possible way to fulfill your goals.

You May Also Like …

All Blog Posts Buying Tips

Learn the Essentials of Renting Property in Singapore as a Foreigner

Jayson Ang – May 26, 2023 –

TLDR Renting in Singapore offers various options for foreigners, such as HDBs, Condos, and even unique properties like heritage homes....

Mandarin Top 5

5 Tips : How To Invest In Singapore Property Without Losing Sleep Over It

Jayson Ang – June 18, 2024 –

Investing in Singapore's property market can be a lucrative venture, but it's important to approach it with caution and a...

Mandarin Top 5

Top 5 : Tips To Plan Your Retirement in Property Investments in Singapore

Jayson Ang – February 17, 2025 –

Planning for retirement is a crucial aspect of financial management, and property investment has emerged as a popular strategy for...

All Blog Posts Buying Tips Opinion

Methods to Beat ABSD and Own Multiple Properties in 2024 (Updated)

Jayson Ang – November 19, 2024 –

TLDR Navigating the Additional Buyers Stamp Duty (ABSD) in Singapore can be daunting for property investors. To save on ABSD...

Mandarin Top 5

Top 5 Factors to Consider When Choosing a Property in Singapore

Jayson Ang – May 15, 2023 –

The top 5 factors to consider when choosing a property in Singapore. Whether you're a seasoned investor or a first-time...

All Blog Posts Buying Tips

Will Your HDB Flat Provide For Your Retirement?

Jayson Ang – July 11, 2023 –

TLDR Singapore's property market presents challenges with high prices, particularly in private housing, while public housing remains relatively more affordable....

Mandarin Top 5

5 Things to Know About the Singapore Property Tax System

Jayson Ang – June 18, 2023 –

5 Things to Know About the Singapore Property Tax System Here are 5 things you need to know about the...

Mandarin Top 5

Top 5 Tips : How Investors Protect Themselves From Risk And Capitalize On Emerging Opportunities In Singapore’s Real Estate Landscape

Jayson Ang – December 31, 2024 –

The real estate landscape in Singapore has always been a lucrative investment opportunity for both local and international investors. However,...

All Buying Tips Opinion Selling Tips

Learning Hard Truths in Property Investment: Timing the Market Can Hurt

Jayson Ang – August 29, 2024 –

TLDR The blog post delves into the complexities of market timing in property investment, highlighting the risks and challenges associated...

Mandarin Top 5

Top 5 Romantic Date Spots in Singapore

Jayson Ang – March 18, 2024 –

Singapore, known for its stunning skyline and diverse culture, is a melting pot of romantic opportunities just waiting to be...

All Blog Posts Buying Tips

Avoid These 6 Terrible Property “Tips” in Singapore

Jayson Ang – May 1, 2023 –

TLDR When it comes to property advice, it's crucial to be cautious of common misconceptions. For instance, schemes like the...

All Blog Posts Buying Tips

Are You Worried About Overpaying On Your Property? Here’s The Secret To Finding Out Its Perfect Purchase Price!

Jayson Ang – March 14, 2023 –

TLDR Understanding property valuations and their impact on mortgage loans is crucial in the Singapore real estate market. By considering...

All Buying Tips Opinion

The Significance of Choosing the Right Condo: A Real-Life Tale of Two $1.8 Million Investments with Significantly Different Results.

Jayson Ang – August 13, 2024 –

TLDR When contemplating property investments in Singapore, consider various factors like rental performance, unit count, access to train lines, and...

Mandarin Top 5

Why Property Investing is the Key to Early Retirement in Singapore

Jayson Ang – April 28, 2024 –

Investing in property is a popular way to build wealth and achieve financial freedom in Singapore. With the right strategies...

All Buying Tips Opinion Selling Tips

The Importance of Caution Regarding Property Oversupply in Singapore

Jayson Ang – March 10, 2025 –

TLDR Recent challenges in China's real estate sector reveal valuable lessons for Singaporeans, emphasizing the importance of understanding governmental interventions...