What happens when a 99y leasehold property reaches the end of its lease?

[DC33_2008]

A FH terrace house cost only $10000 in 1968. A 10,000sqft FH industrial land in city fringe cost only $16000 in 1960.

My parent in law bought clementi HDB in 1978 for 13K only...now huat ah almost 31X fold liao.. as their neighbour just sold at 410k recently !

For long term, HDB flat prices sure move higher and higher... !

[irisng]

My parent in law bought clementi HDB in 1978 for 13K only...now huat ah almost 31X fold liao.. as their neighbour just sold at 410k recently !

For long term, HDB flat prices sure move higher and higher... !

Last Sunday, met a lady at the hawker centre near the Geylang Serai. We were sitting on the same table having our lunch, somehow didn't know why end up discussing about the property. She told me that 30 yrs ago, the HDB around that area was only $11k, now it was priced at $400k.

[price]

Last Sunday, met a lady at the hawker centre near the Geylang Serai. We were sitting on the same table having our lunch, somehow didn't know why end up discussing about the property. She told me that 30 yrs ago, the HDB around that area was only $11k, now it was priced at $400k.

my grandma's flat at bukit merah was bought at 9k

[Eastboy]

i think i can summarize this thread: 30 years later, property will be more expensive than today. DUH.

[cnud]

My parent in law bought clementi HDB in 1978 for 13K only...now huat ah almost 31X fold liao.. as their neighbour just sold at 410k recently !

For long term, HDB flat prices sure move higher and higher... !

So in 30 years time. The HDB will cost >$10m??

[Eastboy]

So in 30 years time. The HDB will cost >$10m??

really depends on a lot of factors, based on our development trajectory, we will be experiencing slower growth than other newly industrializing economies, so naturally the rate of property growth for the next 30 years will not be as amazing as the past 30 years from Third World to First.

[cnud]

What goes up must come down. Just a matter of TIMING. Location is less important, especially in tiny SG.

[maisonjai]

So in 30 years time. The HDB will cost >$10m??

Then median household income would be 90k/mth, 1mil/yr.
Maybe Spore extinct liao as what the wise man predicted.

[fclim]

The chart has no mistake. Its your interpretation that is a mistake. It is the value of an equivalent freehold at that point in time. So assuming Laguna is 40 years old at the time of enbloc. The valuer will ask himself, what is the value of Laguna had it been freehold? Say the value is $1.8 million. Based on the formula above, it means 80% of the value, i.e. 80% of $1.8 million = $1.4 milliom. $1.4 million goes to the Laguna owner (or lessee). The rest of the $400k goes to SLA for lease topup. Had it been freehold, the entire $1.8m will go to the owner. The formula merely allocates the value between the lessee and SLA. And as Laguna ages, the proportion that goes to the lessee gets less and less, until when the lease is only 1 year left, the lessee only gets 3.8% of an equivalent freehold. Hope that clarifies.

I was NOT referring to the SLA table which is used to calculate the lease top up required for the purpose of working out the DC. I was referring to the blue table by smartPropertybuyer who tried to be smart by doing up an example using $1M value to 'show' how a 99LH depreciates. It is misleading and totally wrong. Notice SLA never mentioned anything about depreciation at all.

[fclim]

Those who plan to invest in old leasehold properties should be aware that the prices of these properties cannot appreciate forever and will hit a saturation point sometime in the future where its value will then fall lower and lower and eventually drop to zero at the end of its lease.
Those property bulls who shout that they guarantee prices will be higher in 2030 compared to now are probably morons with vested interests. Nobody knows what will happen in the future and prices of old leasehold properties will not rise forever.
In 1996 at its peak, leasehold HUDC apartments like Farrer Court or Pine Grove can fetch a million each. In 1998 at the low, units sells for 400k.
Now the HUDC apartments are older but more expensive. Will prices go up further or fall 50% like it did back in 1996? I don't know but I would not risk 1.5 million to find out.

1998 everything low lah. U could get a FH landed in D19 for $700K.

[lajia]

What goes up must come down. Just a matter of TIMING. Location is less important, especially in tiny SG.

What goes up must come down...This s a general law in reality, but, can you buy a bowl of noodle with 80cents? Taking inflation away, I would say sure, why not, but maybe not 80cents, at $1.5??...but with inflation, the general law might not be so applicable. So take a look at the price appreciation from another angle and we might learn something new.

History does provide a ref point but will history repeats, nobody knows. If a hdb flat can cost u 800k in 1996 with 2mil+ ppl, what makes you think that it will not cost more than 1mil today with inflation and double population...

However, I still think that location is one of the most impt factor irregardless of situations.

[irisng]

my grandma's flat at bukit merah was bought at 9k

Ya, my mother-in-law's house at Bukit Ho Swee was bought at 6.5k 50 yrs ago, then there was an upgrading project about 10 yrs ago and she had to foot out about 10k.

[CondoWE]

1998 everything low lah. U could get a FH landed in D19 for $700K.

Yap true. My brother bought his FH, Westvale less than 900k n recently just en-blocked...and the return capital appreciation was more than 3x !

[kane]

I was NOT referring to the SLA table which is used to calculate the lease top up required for the purpose of working out the DC. I was referring to the blue table by smartPropertybuyer who tried to be smart by doing up an example using $1M value to 'show' how a 99LH depreciates. It is misleading and totally wrong. Notice SLA never mentioned anything about depreciation at all.

What the fella couldn't factor in is asset inflation which although affects both times but depending on the rate of growth, the maths could look very different.

[PN]

Putting Hdb aside. Let's focus on PC.

For 99yrs PC with 60 or less unexpired lease left, banks may not be willing to give loan right?

With inflation and demand, a PC value will goes up for the first 30+ years. But when it's nearer to 60 yrs lease left, it's value should goes down if buyers cannot get bank loan. I don't think buyers want to pay in cash for these old PC.

Anyone bro tried getting bank loan for such old PC before? Successful?

The owners got to find ways to sell their PC to realize their profits. One way is en-bloc. But there are also old folks who may not want to en-bloc that's why got battle between parties when comes to en-bloc.

[cnud]

What goes up must come down...This s a general law in reality, but, can you buy a bowl of noodle with 80cents? Taking inflation away, I would say sure, why not, but maybe not 80cents, at $1.5??...but with inflation, the general law might not be so applicable. So take a look at the price appreciation from another angle and we might learn something new.

History does provide a ref point but will history repeats, nobody knows. If a hdb flat can cost u 800k in 1996 with 2mil+ ppl, what makes you think that it will not cost more than 1mil today with inflation and double population...

However, I still think that location is one of the most impt factor irregardless of situations.

In SG, looking at location = looking at who is heading the GRC.

[fclim]

In SG, looking at location = looking at who is heading the GRC.

Really meh? Then you should look out for cheap FH landed at Serangoon Gardens liao...

[Vincegoh]

Really meh? Then you should look out for cheap FH landed at Serangoon Gardens liao...

sylvia lim won 60% of the votes there against Lim hwee hua.. lidat serangoon gardens buay huat for the next 4 years liao lar.

[cnud]

Really meh? Then you should look out for cheap FH landed at Serangoon Gardens liao...

It was a wrong bet by the ruling party to demarcate Serangoon Garden in Aljunied.

Look at D9, 10, 11 - belong to who?
Look at Marine Parade, Tampines, Jurong Lake, Bishan, AMK, TPY - belong to who?

[jwong71]

Putting Hdb aside. Let's focus on PC.

For 99yrs PC with 60 or less unexpired lease left, banks may not be willing to give loan right?

With inflation and demand, a PC value will goes up for the first 30+ years. But when it's nearer to 60 yrs lease left, it's value should goes down if buyers cannot get bank loan. I don't think buyers want to pay in cash for these old PC.

Anyone bro tried getting bank loan for such old PC before? Successful?

The owners got to find ways to sell their PC to realize their profits. One way is en-bloc. But there are also old folks who may not want to en-bloc that's why got battle between parties when comes to en-bloc.

yes I tried a bank loan for a unit at the plaza.

loan tenure was shorten to around 15yrs-20yrs max if remembered well
cpf is capped at % for withdrawal.

it's a troublesome purchase to go through and at much higher mortgages with shorten loan years

[CP5211]

are you sure?? can you quote some eg? that would be worth a buy if thats the case...

Kovan melody is cheaper than kovan residence which TOP not long ago in terms of psf.