TLDR: So you want to buy a 99-year lease terrace house? Here’s what you need to know

IF you’re in the market for a slightly bigger space than an HDB flat or a condominium can provide, landed property might be an option.

But freehold prices can get quite steep, so an alternative is the 99-year leasehold terrace house. While lease decay is generally said to contribute to falling values, median prices of 99-year terrace houses actually inflated 13.2 per cent between 2020 and 2021, and 15.3 per cent this year compared with the whole of last year.

And in case you think it’s a post-Covid return, the latest median price is still higher than the 2019 median price of S$1,007 psf.

Also, freehold and 999-year lease terrace house prices have been rising faster, and these are becoming significantly more expensive compared with 99-year terrace houses than around three or four years ago.

What’s good:

• You get more floor area than a condominium for the same price.
• There is potential for higher rental yield.

Things to consider:

• The length of the remaining lease on the house. If it’s too short (30-40 years) it may be more suitable for a retiree, so a younger family may want to look for a place with at least 60 years on its lease.
• If you intend to use your CPF savings to pay for the house fully, you need to ensure that its lease can last till the youngest owner turns 95. Proration applies if the lease isn’t long enough.
• To take out a bank loan, the property needs at least 30 years left on its lease after the loan tenure expires.
• En bloc sales are less likely to happen, as conditions for them to take place are more stringent.

To learn more about which areas see the most sales and locations with the highest price gains, as well as the outlook in the near future, click here to read this week’s Brunch.