We Own A 5-Room HDB In Punggol: If We Want To Keep Our Property As A Trust For Our Kids, Should We Buy A Freehold Or New Leasehold Condo?

9 min read

Hi Ryan,

I’m not sure if you have the time- I live in a resale 5rm HDB in Punggol since 2009 when I got married. Young and not financially savvy, we took a HDB loan and just let it run. Life’s been kind and we are more secure on the financial front.

Unfortunately I’ve not grown wiser or savvier and I would appreciate help to think about my next move. My income means I don’t qualify for BTO or EC, but I have 8yo twins, one of whom has special needs (ASD) and I am actively putting a trust fund in place to protect his well-being when my journey with him is done.

I’m hoping my next property is an asset (HDB flat is marginal negative asset due to interest but buffered by current high mkt prices) that I can leave as legacy in addition to other financial instruments.

Between a new LH99 launch or a resale FH (we are looking at D19), which will you choose if you were in my shoes?

Editor’s Note: Some financial information about the homeowners is not shown for privacy reasons.

Thank you kindly,

 – L

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Hi there,

Thanks for writing in and sharing about your situation. Firstly, it sounds like you’ve been doing your best for your family, and it’s really great to hear that you’re looking ahead to ensure a secure future for your twins, especially with the unique considerations for your child with special needs.

Purchasing an HDB is often the initial choice for many home buyers and can serve as an excellent starting point for property ownership. However, when considering legacy planning, buying a property with stronger value retention potential, especially for long-term investment becomes a more attractive prospect.

To tackle this question in an objective manner, we’ll consider the following:

1. Performance of new 99-year leasehold condos bought 20 years ago versus resale freehold options available at that time.
2. Why looking at these options isn’t so straightforward
3. The growth potential in District 19
4. What you should do

Let’s start off with the performance between 99-year new launches and resale freehold properties in District 19.

Performance of 99y new launch vs freehold resale in D19

The performance comparison between leasehold and freehold condos is a topic that often stirs up debate. For a deeper dive into the subject, we’ve detailed the differences in a separate article, which you can find here.

To distil our findings, over the short term, leasehold condos have historically outperformed their freehold counterparts.

However, considering your inclination towards properties in District 19 and your long-term intent—especially with the aim to bequeath the property to your children—we should tailor our analysis accordingly. Given that you’re in your early 40s and your children are 8, we can assume a holding period of at least 20 years.

With this in mind, let’s focus on the performance of new launches in D19 over the past two decades. In your decision between a new 99-year leasehold and a resale freehold, it’s crucial to examine the price trends for both from 2002 to 2022.

In our analysis, we’ve specifically pinpointed leasehold new launches and resale freehold condos that were sold between 2002 and 2003. We then monitored the price progression of these condos up to 2023.

Projects tracked

Project	Tenure	Built Year
RIO VISTA	99 yrs from 02/01/2001	2004
RIVERVALE CREST	99 yrs from 06/12/1997	2002
SUNGLADE	99 yrs from 09/10/2000	2003
CENTRAL VIEW	99 yrs from 20/03/1998	2002
KJ MANSION	999 yrs	2003
BREEZY MANSIONS	999 yrs from 01/01/1886	2002
PALM HAVEN	999 yrs from 01/09/1876	2002
JANSEN SPRING	999 yrs from 02/12/1878	2001
KOVAN 81	999 yrs from 02/12/1878	2001
PALM GROVE CONDOMINIUM	999 yrs from 02/12/1878	2002
AMARANDA GARDENS	Freehold	2004
CHOON KIM HOUSE	Freehold	2000
GOLDEN HEIGHTS	Freehold	2003
GRAND REGALIA	Freehold	2004
SUNSHINE GROVE	Freehold	2003
THE MORNING GLORY	Freehold	2003
THE OLD HOUSE	Freehold	2003
THE SUNSHINE	Freehold	2003
THE YARDLEY	Freehold	2005
VINA LODGE	Freehold	2002

Performance

Year	99 yr D19 New	FH D19
2002	$463	$593
2003	$447	$555
2004	$463	$495
2005	$436	$432
2006	$410	$486
2007	$501	$634
2008	$578	$649
2009	$564	$689
2010	$689	$803
2011	$833	$897
2012	$870	$1,014
2013	$941	$1,124
2014	$894	$1,062
2015	$818	$1,068
2016	$824	$930
2017	$835	$1,067
2018	$834	$1,068
2019	$851	$1,046
2020	$825	$1,125
2021	$925	$1,263
2022	$1,013	$1,345
Annualised	3.99%	4.18%

Over 20 years, prices of freehold properties had a slight advantage with an annualised growth rate of 4.18% as compared to new launches which grew by almost 4% in the same time period.

This translates to a gain of 119% and 127% respectively. So what would you have made if you bought these 2 types of property back then?

In 2002, a new 3-bedroom unit at the leasehold Sunglade was sold for $580,710 (1,141 sq ft). In the same year, a resale 3-bedroom unit in a 999-year condo Breezy Mansions went for $580,000 (1,055 sq ft).

For simplicity, we’ll round both prices to $580,000. At this price, the 99-year leasehold new launch bought then would be worth $1,270,200 while a freehold resale property would be worth $1,316,600 – a difference of $46,600.

This difference isn’t very significant to the point where making sacrifices to lifestyle or personal preferences comes into play.

However, this average annualised performance only provides a broad oversight on how prices behave.

Let’s drill down to a specific example to demonstrate just how picking the right property could make a huge difference to you.

Let’s say you’re looking out for a property with good facilities and convenience. Sunglade was shortlisted as it meets these criteria. It has a good amount of facilities that are ideal for families – something that would be valuable for both your children:

At that time, Serangoon MRT was only 1 year from its completion. Knowing this, you would’ve appreciated how easy it would be for both you and your kids when it comes to travelling. It takes about 5 minutes to reach the MRT:

On the other hand, you may have been introduced to Breezy Mansions – a newly TOP 999-year condo at that time. It has a similar size to Sunglade for the same price, but it’s got no facilities and it’s situated in a landed enclave which is relatively inconvenient.

It takes about 15 minutes to walk to Kovan MRT.

How have both developments fared today?

Here’s a comparison of what prices look like in both developments:

Sunglade:

Last recorded 1,141 sq ft transaction went for $1.51 million.

Breezy Mansions:

Breezy Mansions is a boutique development, so there are fewer transactions and the last recorded was about $1,000,000 back in 2020. It should be much higher today – perhaps $1,300,000 if we give it a 30% appreciation. Even then, it’s still less than the $1.51 million paid for Sunglade.

From this simple comparison, you can see how just looking at leasehold vs freehold, or old vs resale isn’t enough to decide.

Important factors like location, layout, size, personal preferences, growth potential, facilities, competition with other developments etc. play a huge part!

Of course, these are very specific examples and it does stray from our overall annualised returns where freehold outperformed leasehold over 20 years. But we wanted to highlight that it isn’t so straightforward as just freehold vs leasehold.

What if you bought both sequentially?

Alternatively, you might consider purchasing a 99-year leasehold new launch for short-term gains with the hope of accruing additional capital before transitioning to a freehold property for long-term retention.

This method incurs greater transaction costs but allows you to take advantage of choice units that are priced reasonably well (some element of luck could be in play here by getting a good ballot number).

For a more comprehensive overview, we will broaden our perspective to encompass price trends across the entire island in recent years, rather than solely focusing on District 19 where project options are limited. We will track the price movements of new sales that were done in 2015.

Year	99y leasehold new sales done in 2015	YoY	Resale freehold	YoY
2015	$1,211	–	$1,366	–
2016	$1,330	9.81%	$1,393	2.01%
2017	$1,390	4.54%	$1,461	4.89%
2018	$1,332	-4.20%	$1,524	4.29%
2019	$1,384	3.93%	$1,572	3.13%
2020	$1,415	2.18%	$1,488	-5.34%
2021	$1,491	5.43%	$1,586	6.58%
2022	$1,597	7.06%	$1,747	10.20%
Annualised	–	4.03%	–	3.58%

It’s evident that over the short term, 99-year leasehold new launches have marginally outperformed freehold resale properties. However, again, it’s important to note that individual project performance can vary, and this assessment is a broad overview.

Now let’s look at the growth potential of District 19. 

District 19 growth potential

Since you asked about district 19’s growth potential, we thought it’d be useful to highlight the main drivers of transformation here.

Punggol Digital District (PDD)

Source: JTC

The Punggol Digital District (PDD) is a pioneering development focusing on technology, innovation, and sustainability. It combines workspaces, education, and recreation to create a vibrant tech-centric community. 

It will host Singapore Institute of Technology’s (SIT) new campus, JTC’s business park and will also be home to UOB’s new global technology and innovation centre.

The initial phase of the project is scheduled for completion and will open in 2024, with the entire development anticipated to be finished by 2026.

Cross Island Line (CRL)

Source: LTA

The CRL will offer a more direct and efficient transportation link, reducing travel times and alleviating congestion on existing routes. It brings the promise of a smoother daily commute for thousands of people in these neighbourhoods.

The transformation of the Hougang MRT station into an integrated transport hub is a pivotal aspect of this project. It’s not just about trains; it’s about creating a seamless transit experience. With the intersection of the CRL and the existing North East Line (NEL), commuters will have a convenient interchange, simplifying transfers between different modes of public transport. This integrated hub will serve as a central node for transportation, providing easy access to buses and trains, further facilitating mobility and connectivity.

Both the Serangoon North and Hougang CRL stations are slated to complete in 2030.

Defu and Lorong Halus Industrial Parks

Source: URA

The imminent emergence of these major developments within District 19 signals substantial growth prospects in the future. This growth encompasses not only the potential appreciation of property values but also an improved quality of life for the district’s residents.

Given the number of new HDB flats there are too in District 19, that represents a healthy pool of potential HDB upgraders in the future that could be a good price support. 

So what should you do?

Frankly, this was a hard one to answer given beyond the ultimate aim of leaving behind an asset, we didn’t really know why the choice involved buying a new leasehold property in District 19. 

This is because you have to look for temporary accommodation in the meantime, and spend extra on rent. 

So unless the decision was just based on wanting to stay in a more modern development with better facilities (perhaps you could also consider purchasing a new leasehold condo that has obtained its TOP such as Riverfront Residences to avoid having to pay for rent and move twice), then it’s hard to look past the freehold tenure given you have such a long holding period. 

In fact, you could also still look at older leasehold developments, as they may be more affordable and palatable at this point. While they do carry a greater risk in terms of the lease decay, there is still the possibility of an en bloc further down the road – which may be a better exit for you. 

So ultimately, there’s no straightforward answer on whether to buy a new launch leasehold or a freehold, or both sequentially.

However, given we know that freehold properties in the very long run would be able to sustain its value better due to the lack of land depreciation, we think the following framework is optimal for you:

First, focus on finding a freehold property in the area that meets your lifestyle needs too. This is ideal since you’ll not have to move multiple times and can rest easy knowing you’ve found a condo that won’t face any land depreciation many years down.

However, if you can’t find one that’s suitable or within your budget, then we’d move on to the next step. There’s little point in sacrificing the great number of years ahead where your family can truly enjoy the condo just for the sake of buying a freehold property.

If you can’t find one, consider purchasing a young leasehold condo for now that meets your lifestyle needs, then moving to a freehold condo later on when your needs shift towards prioritising legacy planning.

In the end, what really matters is drilling down the individual condos pros and cons while sifting out those that meet your affordability. To do this, we recommend speaking to a good buyer agent who can assist you on this. If you’d like, Stacked provides such consultations which you can find out more about here.