“If you pay for a freehold property that has no end date, its value will always increase. A leasehold property will lose its value over time.” You’re right.
Conventional wisdom is making its rounds again. The claim that freehold properties are always better than leasehold properties originate from quick (but incomplete) thinking.
Freehold properties will generally increase in value, just like any other property. But there are other factors—future demand—which play a bigger role in property growth rates which are applicable to both freehold and leasehold properties.
If you choose the wrong freehold property, you would simply be parking cash into a property when it should be kept on hand for emergencies, or other investments and expenses.
Your ideal property might eventually be a freehold.
But before you go scouring the market for freehold properties, consider the possibility that a leasehold property might get you the same profit—due to the same property growth—and with less money down all together. We’re talking about 5 to 6-digits of cash-on-hand; in numbers, S$10,000 to $999,999 cash on hand for a rainy day.
Simply considering your leasehold opportunities with your willing property agent will open your alternatives up for optimal profits while saving cash-on-hand.