Which Is Better For You: A 99-Year Leasehold Or Freehold Property Tenure?
TLDR When it comes to the choice between leasehold and freehold properties in Singapore, several factors must be considered. Leasehold...
Read More
TLDR
In Singapore’s property market (2014-2024), leasehold condos often outperform freehold in short-term holding (around 10 years) due to lower prices and stronger gains. Freehold properties show better returns mainly over longer periods, especially for older buildings. Newer freeholds are more volatile and don’t guarantee quick profits. Leasehold leads in new-to-resale sales, while older freeholds do better in resale-to-resale deals. The belief that freehold is always better is outdated; choice depends on holding period, price, and market cycle. For short-term gains, leasehold is usually better; for long-term value, freehold may win. Expert advice is recommended for personalized strategies.
The conventional wisdom in Singapore’s property market dictates that “freehold is superior.” However, this adage often overlooks the crucial element of time. A 99-year lease is a substantial duration, and the perceived benefits of freehold status may take many decades to materialize. For those who plan to sell their property within a relatively short timeframe, such as the first ten years, the freehold premium might even become a disadvantage. This analysis examines ten years of data (2014-2024) to determine at what point freehold properties begin to outperform their leasehold counterparts and when leasehold still holds the advantage.
Comparative Performance: Freehold vs. Leasehold (2014-2024)
Analyzing the price growth of freehold (including 999-year leasehold) and 99-year leasehold condos reveals nuanced trends. Properties built from 2015 were excluded to avoid skewing the data, as newer developments are predominantly leasehold due to government land sales policies.
Over the past decade, the price per square foot (psf) gap between freehold and leasehold properties has widened slightly. However, in terms of annualized percentage growth, leasehold properties appear to have a marginal edge. This can be attributed to the freehold premium, which typically translates to a 15-20% higher initial cost for freehold properties. This higher starting point allows leasehold properties more room for appreciation.
Leasehold condos experienced their most significant gains during the post-pandemic period (2022-2023), with annualized growth nearing or exceeding 10%. Freehold/999-year condos saw slightly lower gains during this period. The price surge in leasehold properties was likely driven by a housing supply shortage, making them a more accessible option for buyers.
In 2016, leasehold properties saw an exceptional 13.99% price growth compared to a mere 0.98% for freehold properties.
Interestingly, the price difference in psf between leasehold and freehold condos in 2024 (20.47%) is almost identical to the level seen in 2016 (19.15%).
Key Observations from the Data:
Age Matters: Freehold status becomes more advantageous as properties age. Analyzing cohorts by building age (2010-2014, 2000-2009, 1990-1999, 1980-1989) shows that the performance gap between freehold and leasehold widens significantly for older properties. However, it takes a considerable amount of time for freehold to demonstrate a real difference in performance. Considering that many condos don’t surpass 30 years of age, the value of the freehold premium for shorter holding periods is questionable.
Resale-to-Resale Transactions: Examining properties bought and sold between 2014/15 and 2019 onwards (excluding distress sales) reinforces the age factor. Older freehold properties consistently show higher annualized returns compared to their leasehold counterparts. This is particularly evident in the 1990s cohort, where the gain difference was around 12%.
Volatility in Newer Freehold Properties: Newer freehold condos (2010-2019) have exhibited more volatility in their earlier years, mirroring the performance of 99-year leasehold condos from the same era. This suggests that freehold status doesn’t guarantee strong short-term gains and can even be riskier due to higher launch prices.
Absolute Dollar Gains: Despite percentage growth variations, older freehold properties often outperform in absolute dollar terms.
New-to-Resale Transactions: Leasehold Takes the Lead
Analyzing properties bought as new launches in 2014/15 and sold from 2019 onwards reveals a different trend. Leasehold condos consistently showed higher average returns and quantum gains every year compared to their freehold equivalents.
Conclusion: It Depends on Your Strategy
The data challenges the notion that “freehold is always better,” particularly for shorter holding periods. While freehold properties offer perceived long-term security, leasehold condos, especially new launches, have consistently delivered stronger short-term gains, sometimes by over 20%. This outperformance is particularly evident during market upturns when affordability drives demand.
A data-driven approach that considers entry price, market cycle, and holding period is crucial for identifying profitable opportunities, regardless of tenure.
For those seeking a deeper understanding of market dynamics and counter-intuitive strategies, consulting with real estate professionals who leverage data is highly recommended.
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 …
Is 2024 the Perfect Moment to Refinance Your Home Loan? Discover What Homeowners Should Consider!
TLDR The article covers the shift to SORA for home loan rates, urging consideration of refinancing options amidst rising rates....
Read More
5 Tips : How To Buy A Property In Singapore As A Foreigner
Singapore's property market is a popular choice for both locals and foreigners looking to invest in real estate. However,...
Read More
5 Most Common Property Investment Scams To Watch Out For In Singapore
Property investment scams are unfortunately prevalent in Singapore, and unsuspecting investors can fall victim to these scams, leading to significant...
Read More
Top 5 Benefits Of Singapore’s Cooling Measures For Home Buyers
Singapore's real estate market has experienced rapid growth in recent years, leading to concerns about affordability and sustainability. In response,...
Read More
Love Across Borders: Navigating Singapore’s Housing Choices for Mixed-Nationality Couples
TLDR Marriages between Singaporeans and foreigners now make up about 20% of all marriages, but housing options for these couples...
Read More
Integrated Developments and Condo Values: A Look at Sengkang Grand Residences
TLDR The impact of the new integrated development, Sengkang Grand Residences, on nearby condo prices was studied by comparing it...
Read More
Dual-Key Condo: Analysing The Pros And Cons
TLDR for "Dual-Key Condo: Analysing The Pros And Cons" When considering dual-key condo units, it's important to weigh the advantages...
Read More
Top 5 : Best Street Art Murals in Singapore
Singapore, a vibrant and multicultural city-state, is not only known for its iconic landmarks and delicious cuisine but also for...
Read More
6 Essential Factors HDB Upgraders Should Be Aware Of Before Purchasing a Condo in 2023
TLDR When upgrading your property, consider factors like rental rates, Buyer's Stamp Duty adjustments, higher interest rates for bank loans,...
Read More
From Overseas to Singapore Property: 5 Steps Guide to Remitting Funds
From Overseas to Singapore Property: 5 Steps Guide to Remitting Funds 1. The first step in remitting money to Singapore...
Read More
Multiple Property Ownership in Singapore: A Different Landscape in 2025
TLDR Owning multiple properties in Singapore in 2025 is tougher due to higher Additional Buyer’s Stamp Duty (ABSD), stricter Loan-to-Value...
Read More
Top 5 Reasons : Why Singapore’s Property Market Is the Best Place to Invest for Long-Term Growth – Expert Analysis!
TLDR Singapore’s property market stands out for long-term investment due to its strong economy, stable government policies, high rental demand,...
Read More
Can You Skip the 15-Month Wait When Selling Private and Buying Resale HDB?
TLDR The 15-month wait-out rule requires private homeowners to sell their property and wait 15 months before buying a resale...
Read More
Exploring the Resale Condo Market? Here’s What to Watch Out For!
TLDR The impact of COVID-19 on Singapore's real estate market has been significant, leading to a surge in demand for...
Read More
Top 5 : Greatest Challenges That Investors Face In Singapore’s Real Estate Market
Singapore's real estate market is a dynamic and attractive investment landscape for both local and international investors. Known for its...
Read More
5 Singapore Property Trends to Watch in 2023: Expert Weigh In
5 Singapore Property Trends to Watch in 2023: Expert Weigh In Top 5 Singapore Property Trends to Watch in 2023...
Read More
Top 5 Parks and Nature Reserves to Visit in Singapore
Singapore, often referred to as the "Garden City," is a vibrant and diverse nation that has made significant strides in...
Read More
Why Can’t Everyone Have Homes In Good Locations?
TLDR In a nutshell, the Singapore property market is undergoing significant changes, with the introduction of a new housing classification...
Read More
Mega Developments vs. Regular Condos in Singapore: A Data-Driven Comparison
TLDR Mega-developments (1,000+ units) in Singapore, once seen as chaotic, now offer competitive pricing and extensive facilities, making them attractive...
Read More
