13 Yr Old 99 Yr Leasehold Inter-terrace - Need Advice On Future Valuation And Loan

[initialB 0]

Hi, I am considering whether to buy a 13 yr old interterrace that's on 99 yr leasehold. It is the only housing in my choice location that meets my criteria for school, size, and budget of $1.3-1.4M.

I have 2 questions that require advice :

1. Will the value of such 99yr leasehold terrace hold? Say in 10-15 years time when property prices next peak? And if not, is it expected to decrease in value as opposed to FH terraces?

2. If I take on a bank loan based on prevailing valuation, and should property prices drop, say in 2-5 years time, and the valuation reduces significantly, will the bank require me to top up the different? Or can I carry on paying the mortgage based on the original loan terms?

[therat 18]

Q1. only god know

Q2. only bank know

[kardtoon 0]

99 yr old leasehold property tends to follow the market trend pricing direction with a discount over freehold property. The discount amount depends on how "hot" the market is. You probably know that when there is a feverish market, leasehold pricing can be very close to freehold. During softer times, the discount seems to be greater. At some point though, when the property gets old or when it becomes difficult to get loans, the discount may be significant.

That said, given that the SG market has been on the uptrend over the past decades, I suspect that most 99 year landed property owners may still be able to sell their property today for more than what they paid for. Even the ones that has say 5 years left on it's lease. I'll give an example, my neighbour bought his 2500 sf house for $19k 30 years ago. Today he has an offer for $3.2M. That house is 999 yr lease but even if it only has 3 years left on it's lease, it is likely that he will sell it more than 19k because renting a place like this for 3 years will cost much more than that in rental. I suspect that this the case for many properties in Singapore. However for this to continue, the market has to keep climbing on and on and who knows if this can and will be sustained.

On your bank question, the bank can technically do that. However in practice, they normally won't disturb if you have been regularly paying your mortgage payments.

[initialB 0]

99 yr old leasehold property tends to follow the market trend pricing direction with a discount over freehold property. The discount amount depends on how "hot" the market is. You probably know that when there is a feverish market, leasehold pricing can be very close to freehold. During softer times, the discount seems to be greater. At some point though, when the property gets old or when it becomes difficult to get loans, the discount may be significant.

That said, given that the SG market has been on the uptrend over the past decades, I suspect that most 99 year landed property owners may still be able to sell their property today for more than what they paid for. Even the ones that has say 5 years left on it's lease. I'll give an example, my neighbour bought his 2500 sf house for $19k 30 years ago. Today he has an offer for $3.2M. That house is 999 yr lease but even if it only has 3 years left on it's lease, it is likely that he will sell it more than 19k because renting a place like this for 3 years will cost much more than that in rental. I suspect that this the case for many properties in Singapore. However for this to continue, the market has to keep climbing on and on and who knows if this can and will be sustained.

On your bank question, the bank can technically do that. However in practice, they normally won't disturb if you have been regularly paying your mortgage payments.

Thx so much for ya advice

Cheers.

[pantieileen 2]

.

Edited October 12, 2011 by pantieileen

[MetalTab 3]

My parents used to own a 99yr interterrace in a popular D16 estate, we bought it in 1998 (when i was in JC1) for 900k. I think the land size was slightly over 3400sqft. Super long garden that we could park 6cars. Think 1998 market was weak. But in 1993 or so, i think that's why it start to TOP coz when we bought it, the house was a showroom and it was already 5yr old. Our neighbors with smaller garden (park 1car) bought theirs are 1.2-1.4M each. So i guess our 900k was steal.

SARS came when i graduated from uni, i remembered market drop, alot of units on auction some were even sold for 550-600k and my parents were super duper worried. Then again i thought if they were worried then what about our neighbors who bought for over a million???

In 2005, market still soft, our dog got lost and while looking for her, we drove around and realised the estate across our estate were 999yr and there were bungalows, semiDs and terrace house. We found a unit (small land, fewer rooms but BIGGER ROOMS!!! my favorite) for 850k. Sold the 99yr at 800k (took us 6months even after we moved into the 999yr house) bought for 999yr at 850k. Both units were same age. Dog still lost though. Our current neighbors told us that they bought they unit first hand for 1.4M-1.6M

Today, the 99yr estate could fetch about 1.2M each finally, guess the first owners all can start to break even, 2nd owners who bought at 500-700k make good profit.

Our current 999yr unit currently fetches 1.7M at least thats what a neighbor just sold it for.

As owners, my parents felt no sense of security staying in 99yr property coz if we need to liquidate for business purpose then it'll be market dependent. They were always worried when neighboring units went on auction. Imagine, go to work stress, come home see auction units and start to wonder if we would be next. Guess if bullish market its ok, 99yr or 999yr but comes to recession then it takes months or even years to let go your 99yr unit if you need cash.

Some of my old neighbors are still living happily in their 99yr house. Most are old, kids move out or kids move in (and rent out their hdb) coz 99yr houses tend to have MORE ROOMS. But we noticed alot of more malay families moving in with big families and many cars per house (equals to traffic congestion in the entire estate)

To summarise on my case study

99yr interterrace

1993 : 1.2 -1.4M

1998 : 0.8 - 0.9M

2005 : 0.6 - 0.9M

2010 : 1.1 - 1.2M

999yr interterrace

1993 : 1.4 - 1.6M

1998 : ?

2005 : 0.8 - 1M

2010 : 1.6 - 1.7M

Guess end of the day depends on which point of the cycle u buy and which area. If you are in Bukit Timah then don't need to worry lah. Even in recession still got people want your place. If you are civil servant then i guess anytime can buy.

may I know what is the land and built-in for your 999? Seems 'reasonable' in the current market.

[yoongf 11]

Hi, I am considering whether to buy a 13 yr old interterrace that's on 99 yr leasehold. It is the only housing in my choice location that meets my criteria for school, size, and budget of $1.3-1.4M.

I have 2 questions that require advice :

1. Will the value of such 99yr leasehold terrace hold? Say in 10-15 years time when property prices next peak? And if not, is it expected to decrease in value as opposed to FH terraces?

2. If I take on a bank loan based on prevailing valuation, and should property prices drop, say in 2-5 years time, and the valuation reduces significantly, will the bank require me to top up the different? Or can I carry on paying the mortgage based on the original loan terms?

99 vs FH prices moves in tamdem during property cycles.

Even if valuation drop, as long as can cover the installments, banks generally do not insist on top ups. They will be reasonable to maintain their market share. Therefore, it wise to choose a bank that values market share.

Honestly, if this potential house is the only option, then there is no value in making comparisons with non existent options right?

[initialB 0]

99 vs FH prices moves in tamdem during property cycles.

Even if valuation drop, as long as can cover the installments, banks generally do not insist on top ups. They will be reasonable to maintain their market share. Therefore, it wise to choose a bank that values market share.

Honestly, if this potential house is the only option, then there is no value in making comparisons with non existent options right?

Thx again for all the comments and advice.

There are actually some other options that came up - FH ones even, but somewhat the space, layout and location are not as good.

Was feeling abit nervy about committing such a significnt sum of money without fully appreciation of the potential pitfalls.

But after hearing all your views, I feel much more certain now, and i do not forsee a situation that i would need to cash in on the house for liquidity since i do not run any businesses.

I have just another question for discussion. Does the Plot Ratio Utilisation affect the chances of resale and perhaps, enbloc for that whole site? Anyone knows where I can dig up info on Plot Ratio Utilisation for the specific site?

[therat 18]

try this

http://www.ura.gov.sg/mp08/map.jsf?goToRegion=SIN

[watchthewaves 0]

I have just another question for discussion. Does the Plot Ratio Utilisation affect the chances of resale and perhaps, enbloc for that whole site? Anyone knows where I can dig up info on Plot Ratio Utilisation for the specific site?

If you are thinking about how the potential for building bigger can give some upside to the resale value, this potential for residential landed property is not controlled in terms of plot ratio, but controlled by height restriction and setbacks from the boundary line.

[initialB 0]

If you are thinking about how the potential for building bigger can give some upside to the resale value, this potential for residential landed property is not controlled in terms of plot ratio, but controlled by height restriction and setbacks from the boundary line.

Thx....i was wondering whether there's any chance of enbloc for such property...from other forums, seems that its mainly for condos.

[kalimantan 6]

is there any house that left 10 years and see how much it fetch ?

[kardtoon 0]

Thx....i was wondering whether there's any chance of enbloc for such property...from other forums, seems that its mainly for condos.

sure it's possible but all your neighbours must agree to sell. It's not strata title so 100% must agree to sell, hence landed enbloc not common. However you can combine with your neighbours to rebuild into condo and each of you take one unit and sell the rest.. :-)

[kardtoon 0]

Thx again for all the comments and advice.

There are actually some other options that came up - FH ones even, but somewhat the space, layout and location are not as good.

Was feeling abit nervy about committing such a significnt sum of money without fully appreciation of the potential pitfalls.

But after hearing all your views, I feel much more certain now, and i do not forsee a situation that i would need to cash in on the house for liquidity since i do not run any businesses.

I have just another question for discussion. Does the Plot Ratio Utilisation affect the chances of resale and perhaps, enbloc for that whole site? Anyone knows where I can dig up info on Plot Ratio Utilisation for the specific site?

I would focus on the location. Layout and space can be better optimized through renovation, A&A or rebuild. Location cannot run away and in the longer term is better protection for the value of your property. Buildings will age over time and lose value.

[GMC 12]

be it 99 or 999 or FH.

just buy one that we can afford or even able to service any mortgage during bad times.