Does age affect property prices in Singapore?

Is it true that older property has no value as they age?

Does age affect property prices? What is an en-bloc strategy?

The Bala’s Table

To understand how does age affect property prices, we need to know Bala. Bala works for the land office during the British colonial times. He invented the Bala table, which is a powerful guide used by the Singapore Government. It plots the value of leasehold land relative to freehold. HDB uses this to calculate the value in the Lease Buyback Scheme. It also impacts what developers have to pay to top up the lease in an en-bloc case.

The essence of the Bala table is that leasehold value decreases more sharply after the property crosses 40 years mark. This is in line with the policy of banks and HDB, which do not approve full loan amounts for properties with less than a 60-year lease.

age affect property prices balas table
Graph of leasehold values of land as a percentage of its freehold value, based on SLA’s Leasehold
Table (‘Bala’s Table’). Image credit: Juan Velasco, Centre for Liveable Cities

Government Announcements on En-Bloc

In 2017, Minister Lawrence Wong warned that not all old HDB flats would be offered en-bloc or Selective En-Block Relation Scheme (SERS). This created much commotion that affected older HDB prices.

In 2019, the Government allowed max CPF usage and HDB loan if the remaining lease can cover the youngest buyer till age 95. This shows that age does affect the value of old properties, mainly because of financing limitations.

age affect property prices

However, there are exceptions.

En-bloc defy Bala’s rule. In Singapore, it is rare for private land to be returned to the Government because of lease expiry. Most ageing condos would have been put up for en-bloc when they hit 30 or 40 years. Some savvy investors monitor old condominiums with en-bloc potential.

Tips for En-Bloc Investors

The plan is simple. Buy cheap apartment units on a low floor and in original condition. They spend $10,000 to $20,000 to touch up and rent out the unit, then wait.

We have heard of people who made windfalls from successful en-bloc sales, but bear in mind there is always a risk that en-bloc is not guaranteed. For such en-bloc investors, the key is, “you must be ready to hold for long-term”.

To conclude, age affect property prices, especially when the development crosses 40 years. The exception is when there is en-bloc, especially older private condominiums.

Like this Article or Video?

Check out more Condo Tips here

References:
A Closer Look at Bala’s Table – Centre for Liveable Cities Singapore

Posted in

Looking for new properties?

Talk to our experts from Homeseller to get more insights regarding the cash flow and capital gain of your property investments!

Dennis Lim

Dennis has more than a decade of experience investing in real estate. Like many fellow Singaporeans, he grew up in a HDB flat with dreams to live in a condominium. Through careful financial planning & hardwork, this became a reality when he was 30. He now owns 3 private properties in Singapore and has helped hundreds of Singaporeans to achieve their goal of upgrading their homes in land-scarce Singapore.

Insight Topics

Connect With Us

Recent
Investor Insights

Condo Buying Guide

Condo Buying Guide: How to Choose the Right Condo?

7 May 2023

Condo Buying Guide! We’ll discuss various scenarios and provide expert recommendations based on factors like Property Type, Ownership Duration, Quantum

Read More

Does it have to be Freehold?

27 February 2023

“Does it have to be freehold?” This is a common question buyers frequently ask. Find out the answer from Dennis & his team from Property Den.

Read More
when is leasehold 99 better Freeho

When is Leasehold 99 Better than Freehold?

2 February 2023

Freehold is always perceived to be better than Leasehold 99. So, when is leasehold 99 better than freehold? Find out more at Property Den.

Read More

Worst Mistake When Buying Condo

28 January 2023

What is the worst mistake when buying a condo? Avoid making this costly mistake by checking out this article when buying for investment.

Read More

How to Select the Best Condo Unit | Avoid Low Floor?

19 January 2023

Planning to buy a condo? how to select the best condo unit? Should you avoid low floor and units with no views? Is 1 bedroom or 2 bedroom better?

Read More

Testimonials

testimonial-01a

"Dennis came with strong recommendations from a dear friend. He helped me with the purchase of my first property. He was very patient and never once tried to hard sell me to buy a property. Dennis is a trustworthy and knowledgeable professional who I highly recommend with confidence to everyone I know!"

HaoTing

Buyer

Rivervale-Cresta

"Dennis was very helpful and has guided us throughout on the process. He managed to get good number of clients for viewing of our unit. He is very responsive and always readily available when needed. He has excellent negotiation skills as well when required for the deal"

Tarun

Seller