Freehold or leasehold property

When Singapore properties are concerned, generally, there are 3 types of tenure. 99 year leasehold, 999 year leasehold and Estate in Fee Simple (freehold) developments. A 999 year leasehold development is generally considered a freehold development when it comes to bank valuation as banks do not place a limit on developments that covers a few hundred years.

There are many types of advantages that freehold properties have over leasehold developments which includes a slower rate of depreciation, higher enbloc potential and no restrictions on using CPF to finance the property purchase

However, despite many of the advantages that freehold developments have over leasehold developments, many of the property transactions in Singapore are dominated by leasehold developments. This situation now is totally different from the situations in 2006, 2007 when freehold accounted for more than 70% of new home sales.

The decline in freehold sales could be due to the fact that developments owners find it harder to find a willing developer to enbloc their condominium and the recent ramping up of Government Land Sales.

Many analysts have pointed to the fact that Freehold developments will definitely appreciate more than leasehold developments over the course of the lease as Freehold tenure remain freehold wherelse the years of 99 year leasehold developments approaches zero.

Despite this fact, analysis of freehold and leasehold price indices show that freehold prices only outperform during Q3 2006 and Q2 2008. So this points to the fact is leasehold or freehold better?

Angencies in Singapore has advised that the answer depends on which property the buyers are buying. If they are buying freehold landed property, it tends to outperform more. If the buyers are buying a condo, leasehold property tend to outperform more.

Maybe buyers of The Hillford Condo can really look at a 60 year lease for more appreciation potential as it is leasehold development and it is priced 20% cheaper compared to other condos in Jalan Jurong Kechil

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