Freehold still 'the preferred choice'

FREEHOLD home prices have proved more resilient in recent months than those of 99-year leasehold properties, according to a new report.

Price gains for freehold condominiums and terraced homes have outpaced those for similar homes with 99-year leases since the third quarter of last year - a period marked by cooling measures and economic uncertainty.

For example, while prices of leasehold condos inched up by less than 1 per cent each quarter in the 15 months to Sept 30, freehold condos averaged quarterly rises of 2.2 per cent.

Freehold condo prices have rocketed 62 per cent in the past 10 years while leasehold condos appreciated 48 per cent in the same period.

It is a similar story with landed homes.

While prices of leasehold terraced properties dipped 0.1 per cent in the three months to Sept 30 - the first contraction in at least 15 months - freehold terraced prices shot up 4.9 per cent. 

Prices have soared 97 per cent for freehold terraces in the past 10 years compared with 52 per cent for leaseholds, the firm noted.

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.

But transaction volumes and price increases for all home segments have taken a hit since July last year as the market coped with two additional rounds of cooling measures following similar moves in September 2009 and February last year.

More recently, the financial market turmoil and uncertainties surrounding the euro zone crisis have further dampened home buying sentiments.

While buyers should go for freehold properties from a purely investment point of view, 99-year leasehold homes will still be in demand.

They 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: The Straits Times – 10 November 2011