Price gap between freehold and leasehold shrinking?

Romesh NavaratnarajahApril 7, 2015

non-landed homes

Prices of freehold non-landed homes have suffered a sharper drop of more than four percent since Q3 2013 versus the one percent dip for leasehold units, according to media reports citing Cushman & Wakefield’s study of URA data.

As a result, the disparity between prices of non-landed freehold homes over its leasehold counterparts has shrunk, said the consultancy’s research director Christine Li.

“If you look at Newton 18, which is a freehold property as compared to its neighbour Amaryllis Ville, (which has a) 99-year lease – if you compared the price gap in the early days, say 2002-2003, the difference is actually about 35 percent or so. But in recent quarters, the gap has narrowed to 15 percent, which means that over time, leasehold projects might outperform freehold projects,” Li shared.

“In terms of outlook, if everything is status quo, if the Government does not loosen the cooling measures, Total Debt Servicing Ratio (TDSR) or stringent requirements for en bloc sales, we think leasehold properties could outperform freehold properties, given that attributes of some leasehold properties are better in terms of location and amenities,” she added.

However, experts cautioned that the statistics may have been distorted by the low transaction volumes.

The price performance between the two segments also depends on their potential to be sold via a collective sale. Usually, freehold properties fetch a higher price premium when the en bloc market is hot.

Meanwhile, a Knight Frank study of caveats showed a different trend whereby the price gap between freehold and leasehold non-landed homes in Singapore has increased further to 44 percent in 2014 from around 33 percent in the previous year.

Last year, average prices of freehold units rose 9.8 percent to $1,532 psf on an annual basis, while for leasehold it dipped 0.4 percent to S$1,045 psf.

“Going forward, in the next few years, as the Government gradually releases land sites which are all leasehold tenure, the availability of freehold properties is slated to remain stagnant or decline,” said Alice Tan, Knight Frank’s research head.

“Given that limited supply, I think buyers will still have freehold properties as their first choice,” she added.


Romesh Navaratnarajah, Singapore Editor at PropertyGuru, edited this story. To contact him about this or other stories email


You may also like these articles

7 facts about Sky Habitat

Three years after it was launched to home buyers, the 509-unit Sky Habitat condominium is nearing completion, revealed a PropertyGuru news report last week. Read more > Sky Habitat nears completion

Continue ReadingApril 6, 2015

"Encouraging" sales at Yishun condo

North Park Residences, part of the Northpoint City integrated development in Yishun, sold 313 of the 430 units initially released at its soft launch on Sunday. Sales were described as "encouraging"

Continue ReadingApril 7, 2015

Illegal use of private property on the rise

The number of private homeowners illegally converting their homes into workers’ dormitories or renting them out for short-term accommodation has increased during the last three years, said the Urban

Continue ReadingApril 7, 2015