As mentioned in last week's blog post, Areas Where We Saved for Our House Purchase
, we were looking for a condominium somewhere in between where our parents stay. The area that we looked at has only 99-year leasehold condos. Since leasehold properties have to be returned to the government after the lease expires, we wondered, out of curiosity, whether we could afford a 999-year leasehold or freehold condo which could retain value much better than a 99-year leasehold condo.
In recent years, there are very few new 999-year leasehold or freehold condos. We went to an area where there are a few older condos, aged around 10 years old, which is the age of the condo that we bought. Our condo is a 99-year leasehold starting from 2002 and completed in 2007. There, we found a condo which is a 956-year leasehold starting from 1928 (leaving it with 867 years more on the leasehold) and another condo which is a freehold. For all purpose and intent, the 956-year leasehold is almost like a 999-year leasehold. Continuing the convention used in last week's blog post
, we will call the above-mentioned 3 condos as Condo A (99-year leasehold), Condo E (999-year leasehold) and Condo F (freehold). The average transaction price (not price per square foot) of the condo units between Jan 2017 and Jan 2018, by no. of rooms and floor area respectively, are shown below.
|Rooms ||Condo A ||Condo E ||Condo F |
| ||99-year ||999-year ||Freehold |
|2 ||$953 ||$1,111 ||$1,007 |
|2+Study ||$979 ||- ||- |
|3 ||$1,182 ||$1,438 ||$1,255 |
|4 ||- ||$1,830 ||$1,680 |
|Penthouse ||- ||$2,450 ||$2,320 |
|Area ||Condo A ||Condo E ||Condo F |
| ||99-year ||999-year ||Freehold |
|801-900 ||$953 ||- ||- |
|901-1000 ||$979 ||$1,111 ||$1,007 |
|1001-1100 ||- ||- ||- |
|1101-1200 ||$1,182 ||- ||- |
|1201-1300 ||- ||$1,438 ||$1,255 |
|1301-1400 ||- ||- ||- |
|1401-1500 ||- ||- ||- |
|1501-1600 ||- ||$1,830 ||- |
|1601-1700 ||- ||- ||$1,680 |
Do note the limitations for the data above, which are described in last week's blog post
. On average, Condo A has 3.1 transactions per month, Condo E has 2.8 transactions while Condo F has 0.8 transactions.
Looking at the data above, the 999-year leasehold condo is more expensive than the freehold condo, likely due to the small no. of transactions for the freehold condo. I will assume that the prices for Condo F are anomalies and consider only the 999-year leasehold condo.
Comparing between Condo A and Condo E, the price difference is $158K for a 2-room unit and $256K for a 3-room unit. A 2-room unit in Condo E costs slightly less than a 3-room unit in Condo A and is still within our loan eligibility. However, the area where Condos E and F are located is far away from any amenities. It has no MRT station, shopping centre, market, hawker centre, not even a retail mom-and-pop stall. Even the bus stop along the main road is some distance away. To buy groceries, we would need to take a bus to the nearest town centre and cart them back. It would be difficult to commute to and fro daily. A car is necessary, which would add at least another $200K in future expenses. After considering these additional expenses, the 999-year leasehold or freehold condo is out of our reach.
In the final analysis, even though a 999-year leasehold or freehold condo would provide much better investment value, it is really inconvenient for us. A house should be a place where we seek comfort after a hard day of work, not a place where we have to labour to and fro everyday. For these reasons, we did not consider the 999-year leasehold or freehold condo.
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