Buying a condominium: Breaking down the freehold vs leasehold debate
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Buying a condominium: Breaking downwardly the freehold vs leasehold argue
It may seem a no-brainer to opt for freehold, but the choice isn't always straightforward. Appreciation rates for leasehold condos, for example, accept been college.
(Photo: Pexels)
The argue on freehold versus leasehold volition never terminate. Only for the most function, the bulk of Singaporeans are on the side of freehold units. We see the appeal, simply consider the following before you buy.
APPRECIATION RATES
In full general, leasehold condominiums have appreciated by an impressive 86.vii per cent over the past decade. Meanwhile, freehold condominiums are lagging behind, at around sixty.viii per cent. This could exist because freehold condominiums are typically sold at a premium of ten to 15 per cent, so information technology tin exist harder for them to outperform their leasehold counterparts.
Also, this demonstrates how the whole "freehold versus leasehold" debate is something of an brainchild. Factors like nearby amenities, quality of facilities, and rental yields are more than significant than whether a condominium is freehold or leasehold.
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DOES EN-BLOC FEVER HELP?
In theory, a freehold unit shows its ultimate quality during an en-bloc sale. These units are supposed to fetch higher prices during collective sales, as there's no lease to run out on and owners are less compelled to sell.
Consider the en-bloc craze over the by decade; its height was in 2017 when Chinese developers flooded the market. It has since slowed down when the government imposed a steep 30 per cent Additional Buyers Postage Duty (ABSD) on housing developers as part of the cooling measures on July 5, 2018.
To see if freehold properties actually smoothen during an en-bloc, nosotros looked at freehold versus leasehold appreciation at the time of the en-bloc fever. We can see that for 2017, freehold condominiums narrowed the gap a little with leasehold counterparts. Leasehold units simply appreciated past effectually 12.2 per cent more than freehold for the flow of 2017. The gap was wider at 13.6 per cent the year before, and effectually 15.4 per cent the twelvemonth after.
So, theredoes seem to exist more than appreciation for freehold units when en-bloc sales are roaring, but mayhap not every bit much as many investors hoped.
COMPARISONS Within LOCATIONS
Every bit mentioned, factors like facilities and civilities thing more than than the lease. For a fairer comparing, let'south await at leasehold versus freehold specifically in the Orchard (District 9) area.
We're using this location because it's a relatively small area, and most of the condominiums – freehold or leasehold – share the same amenities (the retail wonders and central location of Orchard Route). Too, many of the condominiums in this surface area are built to the same high standards.
Over the past decade, leasehold units in District nine appreciated more than freehold counterparts. Leasehold units saw a ascension of almost fourscore per cent in per square human foot price, while freehold counterparts only rose around 66.2 per cent.
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Hither'southward another look, this fourth dimension, in a non-fundamental location: District 15 (East Coast). We've picked this area as it is specially inundated with condominiums. In addition, they share the same full general amenities beyond the entire surface area (embankment and foodie havens).
The results mirror what we saw in District nine – leasehold properties saw a college appreciation in toll per square foot compared to freehold counterparts. The divergence is around 15 percentage points, also very shut to the gap we saw in District 9 condominiums.
APPLIES TO Dwelling BUYERS, Likewise
Even for habitation buyers, who are less interested in price appreciation, freehold should not exist your default choice. Remember that the 10 to 15 per cent premium you're paying can bear on affordability. Also, domicile owners should not assume that they will be staying in the condominium their unabridged lives.
READ: 5 common mistakes Singaporeans brand when upgrading to a condominium
In fact, our experience suggests it's quite the reverse. Many abode owners sell and move out long before the 99-year lease becomes an upshot, such as when the children have left and they make up one's mind on a smaller place. In such a situation, they may take paid more than for a freehold unit for no real reason.
This commodity first appeared on 99.co.
Source: https://cnalifestyle.channelnewsasia.com/entertainment/buying-a-condominium-should-you-go-for-freehold-or-leasehold-235141
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