Do Leasehold Properties Appreciate More Than Freehold Ones?

This blog article serves to follow up on the previous post on the effects of prices versus the reducing tenure of the property. So, does leasehold properties appreciate more in a 20-year time frame compared to freehold ones? If that is the case, does it make more sense to buy leasehold ones if you intend to hold on for just 20 years? Let’s find out.

Source URA: Property Price Index

Due to the enormous variation in prices of benchmark A, the comparison will be using the increment from 2003 to the peak at 2013 as well as the increase from 2003 to 2018. These prices are a better reflection of market value and will hence paint a better picture.

Pricing Comparison Between Freehold And Leasehold From 2003 to 2013

Price Increment Of Leasehold Properties From 2003 to 2013

Price Increment Of Freehold Properties From 2003 to 2013

1. The percentage increment for the leasehold properties from the lowest point in 2003 to the highest in 2013 were all triple digit growths. The increase was also somewhat consistent across the leasehold properties. This consistency same cannot be said for freehold properties. Avalon, Chelsea Garden, Jewel of Balmoral and Parc Stevens only registered double-digit growth.

2. Although it seems that in general leasehold properties gain more than freehold ones, there was some freehold that appreciated much more than the leasehold. These include Ewe Boon Regent, Langston Ville and Jansen 28.

Pricing Comparison Between Freehold And Leasehold From 2003 to 2018

Price Increment Of Leasehold Properties From 2003 to 2018

Price Increment Of Freehold Properties From 2003 to 2018

1. Due to the effects of the cooling measures, certain properties were more affected than the others. Particularly the leasehold ones. None of them registered a gain of over 140%. There were, however, eight freehold properties which recorded an increase of 140% even after the measures.

2. However, some freehold properties did not perform as well as the leasehold ones. These include Jewel Of Balmoral, Chelsea gardens, The Armadale and Parc Stevens which were all located in the core central region.

Conclusion: So, which one is better then? 

It seems that leasehold properties generally have the potential to gain more than their freehold counterparts. However, this gain may be susceptible to external shock factors, like the effects of the cooling measures. So going forward, what should you do? Should you purchase an older freehold property because it is more resistant to price drops? Or should you start thinking of selling your current leasehold property? Whatever the reason, feel free to contact us for a free consultation on how certain factors affect prices before deciding on what to do.

Article contributed by Jerry Wong

Jerry Wong is a realtor with Propnex Realty. He loves coffee, cookies and condos. Most importantly, he loves connecting people to properties and gets enormous satisfaction when they acquire their dream home or make that capital upside in just a matter of months. Buy Jerry a coffee, and he will meet up with you on a 1 to 1 session to share the following

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  3. Or just prepare the toughest question you have on your mind! If it is interesting enough, the answer will be in a blog post and shared with everyone!

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