Prices of freehold homes have proven more resilient in the past few months compared to those of 99-year leasehold properties, according to a new report.
Credo Real Estate found that price gains for freehold terraced homes and condominiums have exceeded those for similar homes with 99-year leases since Q3 2010.
While prices of leasehold condos rose by less than one percent each quarter in the 15 months to 30 September 2011, freehold condos’ average quarterly price increases stood at 2.2 percent.
Credo added that while leasehold condos have recorded a price appreciation of 48 percent in the past 10 years, freehold condo prices have shot up by 62 percent.
For landed homes, prices of leasehold terraced properties fell 0.1 percent for the three months to 30 September 2011, while prices of freehold terraced homes grew 4.9 percent.
In the past 10 years, prices of freehold terraced homes have increased 97 percent, compared to only 52 percent for leasehold terraces.
“Freehold or 999-year leasehold are the preferred tenure for many property buyers as many are concerned that the value of 99-year leasehold properties may not appreciate well when the duration of the leasehold reduces,” the report said.
Meanwhile, Ong Teck Hui, Head of Research and Consultancy at Credo noted that leaseholds “still have a price advantage over freehold equivalents and many 99-year leasehold projects are located near amenities and transportation nodes.”
“These are crucial factors, especially for upgraders, for whom affordability and convenience rank high on their priorities. Such attributes can be found in sites in or near HDB estates which the government puts out for tender on a regular basis under its land sales programme.”
Source : PropertyGuru – 11 Nov 2011