Analysis Freehold vs Leasehold: 3 Tests To Determine Which Is Better (Part 2)

  • March 20, 2020
  • 8 min read
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Sean

Sean has a writing experience of 3 years and is currently with Stacked Homes focused on general property research, helping to pen articles focused on condos. In his free time, he enjoys photography and coffee tasting.

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Patricia Tan
Patricia Tan

Leasehold would do well in the shortrun in terms of appreciation and rental, but long run (10 – 20 yrs) freehold wins.

Stacked Homes
Stacked Homes

That makes sense given leasehold properties depreciate over the years, but once in a while we’ve seen some old leasehold condos outperform their freehold peers in certain years. We’ll do a more thorough analysis on this.

Robin
Robin

Hi, any take on leasehold (balance about 75-79 years) landed terrace or semi-d houses as compare to freehold ones?

Stacked Homes
Stacked Homes

Hey Robin, it’s actually hard for us to backtest this with data given that data prior to 1995 isn’t readily available. That being said, if we look at transactions between 1995 to 2020, with regards to leasehold properties for the first 20 years, freehold performed slightly better in appreciation. However, we aren’t entirely sure how landed will perform from 70 years down as most condos stagnate from 21 years.

Jay
Jay

Perhaps it would be helpful in the first test to draw the best fit line for both types, then compare their respective slopes and growth rate, rather than simply comparing two months, since that wouldn’t account for seasonalities

Stacked Homes
Stacked Homes

Thank you for your feedback Jay! We’ll see how we can fit this for our future studies.

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