First and foremost, the point of this post is not to answer the debate on “Should I buy a freehold or leasehold condo?” No winner will emerge at the end of this post.
The main purpose is to debunk the old sweeping statement of how one should not buy leasehold properties because they will start losing value as they age.
People often think a certain way based on their own perceptions and personal preferences rather than what is really going on in the market.
What if you are closing off many good options just because you are mistakenly fixated on the tenure?
You May Be Missing Out For The Wrong Reasons.
The one-liner spoiler from the results of our research is this:
Project attributes matter more than tenure.
We are able to find strong capital appreciation in good leasehold condos despite their age, even outperforming newer freehold counterparts.
As always, HausLife would like to encourage you not to allow yourself to believe in unjustified or general sentiments not backed by any data.
We pulled out 3 sets of examples here, each containing price trends of a leasehold and a freehold condo in the same area.
Things to note:
- Leasehold condos selected in these examples are those that we have already identified as GOOD condos according to the HausLife Investment Framework (not elaborated in this post).
- The freehold condos selected are what we consider to have attributes that pale in comparison to the leasehold counterparts to show that attributes matter more than tenure.
- The condos selected are old enough for us to have enough data on the price trends.
This is a good time to remind you again that this post isn’t about whether you should buy a freehold or leasehold condo.
The point is that there are many other factors to look at such as land size, facilities, layouts, maintenance fees, and even your investment objective, to name a few.
If all attributes are equal between a leasehold and freehold condo, and your budget is flexible enough to choose either, a freehold can be a better choice for you.
If your budget and size requirements leave you with having to choose between good leasehold condos or freehold condos that have lousier attributes, is it still wise to go for the latter just for the tenure?
That is a bigger conversation to be had, rather than just following the sentiment of sweeping statements.
Speak to us if you’d like a non-obligatory free consult!