Explore the Benefits and Drawbacks of Holding an Open House!
TLDR An open house is a valuable opportunity for sellers to showcase their home to potential buyers without pressure. It...
Read More
TLDR
Older leasehold condos in Singapore, particularly those built in the 1980s and 1990s, have shown annualised price growth exceeding 3%, sometimes outperforming newer developments. The COVID-19 pandemic increased demand for affordable, larger units suitable for Work From Home, boosting prices of older condos. While lease decay remains a long-term concern, these properties offer strong short- to medium-term appreciation, potential en bloc opportunities, and attractive rental yields due to their lower entry prices. However, ageing facilities and maintenance are immediate challenges. Location, size, and affordability often outweigh the age factor in value. Recent data disproves the belief that older leasehold condos always underperform. Buyers and investors should consider specific property characteristics and market context before deciding to buy, sell, or hold, leveraging strategic advice and thorough analysis for optimal decisions.
A common concern among Singaporean homebuyers regarding leasehold condos is the inevitable decline in value as the lease runs down – a phenomenon known as lease decay. The question is, at what point does this decay begin to significantly impact appreciation? Recent market trends, particularly in the aftermath of COVID-19, have added complexity to this question, with older condos showing unexpected price spikes and attracting investor interest. Let’s examine the data to see what it reveals about the performance of older leasehold properties.
Key Findings:
- Strong Growth in Older Condos: Older leasehold condos (built in the 1980s–1990s) have matched or even surpassed the annualised price growth of newer ones, exceeding 3% per annum.
- COVID-19 Impact: The pandemic, with its shift towards Work From Home (WFH) arrangements and a shortage of new housing supply, boosted demand for more affordable, larger units in good locations, benefiting older condos.
- Short- to Mid-Term Potential: While lease decay is a long-term reality, older leasehold condos continue to show strong short- to medium-term appreciation and some may even have en bloc potential.
Understanding the Dynamics: Pitfalls and Advantages
Beyond price appreciation, it’s important to consider the qualitative aspects of older condos. While price depreciation is a long-term concern, ageing facilities and maintenance issues can be immediate pitfalls. Conversely, the lower price point of an older unit can offer access to desirable locations or larger unit sizes that might otherwise be unaffordable. For landlords, the lower price can translate to higher rental yields. These qualitative factors are not always reflected in price data alone.
Annualised Growth Rates: A Closer Look
Analyzing the annualised growth rates of older leasehold condos (over 30 years old) compared to newer ones reveals interesting trends. Filtering for older condos with consistent transaction history since 1995 provides a clearer picture of their price appreciation.
Leasehold condos built in the 1980-1989 and 1990-1999 periods show consistent annualised growth rates of around 3.19% and 3.22% respectively. Condos built between 2000-2009 have slightly lower growth (3.08%), while those built between 2010-2019 have the lowest growth rate (1.15%).
The pandemic played a significant role in boosting the prices of older condos. The increased adoption of WFH and a shortage of new housing supply led buyers to consider older properties, especially those offering larger unit sizes. Coupled with their lower starting prices compared to newer developments, these older properties had more room for appreciation, driving up their percentage gains.
Challenging Assumptions
This analysis challenges the long-held assumption that older leasehold condos always perform worse. In fact, units from the 1980s and 1990s have shown comparable or better growth than newer ones over the past decade. While lease decay remains a long-term risk, factors like location, size, and affordability can outweigh age concerns in the short to medium term, especially in a market where new launches command premium pricing.
Other factors not captured in the data, such as the potential for en bloc sales in improving areas or the appeal of larger unit sizes in older projects, can also contribute to their performance.
Case Studies: Specific Examples
To further explore this phenomenon, future analysis will delve into case studies of specific older leasehold condos like Orchid Park, The Tanamera, Loyang Valley, and The Arcadia. These examples will provide more detailed insights into the factors driving their performance and offer valuable lessons for buyers and sellers of older leasehold properties.
Ultimately, while lease decay is a real consideration, the recent performance of older leasehold condos suggests that they can still offer attractive returns and should not be dismissed without a thorough analysis of their specific characteristics and market context.
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 …
When Should You Consider Lowering the Price of Your Property That Has Been on the Market for Months?
TLDR Selling a property can be challenging without the right price strategy. Adjust your asking price to attract more buyers...
Read More
Top 5 Places to Watch Fireworks in Singapore
Singapore is known for its stunning skyline and vibrant celebrations, especially during events like National Day and New Year's Eve....
Read More
Top 5 Tips : How Investors Protect Themselves From Risk And Capitalize On Emerging Opportunities In Singapore’s Real Estate Landscape
The real estate landscape in Singapore has always been a lucrative investment opportunity for both local and international investors. However,...
Read More
The Lease Buyback Scheme Is A Strategy That Could Help You Retire Comfortably In Your HDB Flat
TLDR The Lease Buyback Scheme (LBS) trend among older Singaporeans is slowly gaining momentum, despite initial reluctance. The scheme allows...
Read More
What Will Happen When Your 99-Year Housing Lease Expires?
TLDR We delve into the challenges faced by Singaporeans with expiring 99-year housing leases. It explores the types of leases...
Read More
Top 5 : Dangerous Ideas Singapore Property Investors Have
Investing in property, particularly in a thriving market like Singapore, can be an enticing prospect. However, it's not without its...
Read More
Uncovering Hidden Details: Key Questions to Ask at a New Launch Condo Show Flat
TLDR Show flats can be impressive but may hide important details. Buyers should ask about room sizes, furniture fit, balcony...
Read More
When Is the Right Time to Sell Your House?
TLDR When deciding to sell your house in Singapore's competitive real estate market, timing is crucial. Selling during a seller's...
Read More
Singapore Living: 5 Must-Know Factors for Choosing the Perfect Neighborhood
Singapore Living: 5 Must-Know Factors for Choosing the Perfect Neighborhood When it comes to purchasing a property in Singapore, the...
Read More
The Changing Faces of Orchard Road
Should You Buy, Sell or Wait? If you're reading this, you must be trying to figure out the best course...
Read More
HDB Owners Missing Out on the “Ultimate Upgrade” to Landed Living
TLDR Over the past two decades in Singapore, the trend of HDB residents upgrading to landed properties has fluctuated. While...
Read More
Top 5 Reasons : How Can A Reputable Real Estate Agent Help You When Investing In Singapore Property
Investing in Singapore property can be a lucrative venture, given the country's stable economy, strategic location, and high demand for...
Read More
Top 5 Historical Landmarks in Singapore
Singapore, a bustling cosmopolitan city-state, is known for its rich history and diverse cultural heritage. This small yet vibrant nation...
Read More
Building A World-Class Nation: Top 5 Facts About Singapore’s Developed Infrastructure
Building A World-Class Nation: Top 5 Facts About Singapore's Developed Infrastructure Singapore is known for its high standard of living,...
Read More
Top 5 Places to Watch the Sunset in Singapore
Singapore, a bustling city-state known for its modern architecture and vibrant culture, is also home to some of the most...
Read More
What Is The Cost Of Constructing A Landed Property In Singapore?
TLDR Building a landed property in Singapore can be a costly endeavor, with prices ranging from $300 to $500 per...
Read More
The Impact of a Real Estate Agent on Your Property’s Selling Price
TLDR In the world of real estate, the value of property agents lies in their ability to create competition among...
Read More
8 Untold “Savings” Hacks You Need To Know As Soon As Possible
TLDR Undervalued properties in Singapore are those priced at least 10% below market value, often due to urgent sellers, developer...
Read More
Top 5 Factors : Location More Important Than Freehold Status?
When it comes to purchasing a property, there are numerous factors that potential buyers need to consider. While the debate...
Read More
