Is Freehold Still Worth the Premium? What First-Time Singapore Home Buyers Need to Know
- Megan Soo
- Apr 22
- 3 min read
I touched on leasehold vs freehold properties briefly in my last post, but I thought it’d be helpful to dive a little deeper here—especially for those of you buying your first home and wondering what the difference really means.
As you embark on your home-buying journey in Singapore, you've likely encountered the age-old advice: "Always buy freehold if you can afford it." But recent market trends suggest this conventional wisdom may no longer hold true. Let me walk you through what's changing and why it matters for your first home purchase.
The Surprising Shift in Property Values
Recent research from ERA Singapore has uncovered a fascinating trend: leasehold condominiums are now achieving profits nearly on par with freehold units. In some areas, they're even outperforming them!
The numbers tell a compelling story:
The profit gap between freehold and leasehold condos has shrunk from $118,568 in 2019 to just $30,000 in 2024
In locations like Katong Park, Serangoon, and Potong Pasir, leasehold condos actually recorded higher median profits than freehold properties
Perhaps most surprisingly, the median price of leasehold condos in 2024 ($1,973 psf) now exceeds freehold prices ($1,903 psf) by 3.7%
What This Means for Your First Home Purchase
Location Now Trumps Tenure
The study analyzed thousands of transactions near MRT stations and found that proximity to public transport and urban amenities is now playing a bigger role in determining property value than whether a property is freehold or leasehold.
The MRT Factor
Properties near MRT stations command premium prices regardless of tenure. Projects like Treasure at Tampines (leasehold) recorded impressive median profits of $231,500 across 484 transactions. This suggests that as a first-time buyer, prioritizing location over tenure could be a smarter financial move.
Think About Your Investment Horizon
Ask yourself: Are you buying a "forever home" to pass down through generations, or is this a stepping stone property for the next 5-10 years?
Many mass-market buyers now approach property with a shorter investment horizon of around five years, focusing on resale potential rather than generational ownership. If that's your plan, a well-located leasehold property might offer better returns.
Where Freehold Still Matters
Despite these shifts, freehold properties still maintain advantages in certain scenarios:
Prime districts (9, 10, 11): High-net-worth buyers still strongly prefer freehold for legacy planning
Long-term value preservation: Freehold properties avoid the lease decay issues that eventually affect leasehold properties
Financing flexibility: As leasehold properties age, buyers face restrictions on loans and CPF usage, limiting the pool of potential future buyers
Making Your Decision: A Practical Approach
As a first-time buyer, consider these factors:
Calculate the premium: How much extra are you paying for freehold status? Is that premium worth it given your timeline?
Location quality: Is the leasehold property in a better location with superior amenities?
Transportation accessibility: Properties near MRT stations tend to hold value better regardless of tenure
Your investment timeline: If you're planning to upgrade within 5-10 years, the tenure may matter less than immediate capital appreciation potential
Financial comfort: Don't stretch your finances for freehold if it means compromising on location or size
The Bottom Line
The traditional "freehold is always better" rule no longer applies universally in Singapore's property market. For many first-time buyers, a well-located leasehold property near an MRT station may offer better value and stronger returns in the medium term.
While freehold will always have inherent advantages for very long-term holding, your decision should be based on your personal circumstances, investment horizon, and the specific properties you're considering.
Remember: Your first home is both a place to live and an investment. Balance both aspects, and you'll make a choice that serves you well in the years to come.
What has been your experience looking at freehold versus leasehold properties? I'd love to hear your thoughts in the comments below!
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