When should buyers avoid leasehold properties in Singapore due to lease decay

Do not buy leasehold properties in Singapore when the remaining lease is below 60 years, as this triggers major restrictions on financing, CPF usage, and buyer demand, accelerating value loss due to lease decay.

Lease decay causes non-linear depreciation, often modeled by Bala’s Curve, which shows value holding steady in early phases but dropping sharply in later stages—especially under 30 years—due to reduced resale potential, rental yields, and bank loan eligibility.

Key scenarios to avoid purchasing:

- Under 60 years remaining: Banks limit loan tenures to match the lease, and HDB flats block CPF payments, shrinking the buyer pool significantly.
- Under 30 years remaining: Depreciation intensifies per Bala’s Curve phase, with minimal financing options, low tenant interest, and high risk of the property reverting to the state without extension.
- High decay risk without en bloc potential: Older leasehold condos (e.g., over 50 years old) in non-prime areas face steeper value drops unless redevelopment via collective sale offers a lease top-up to 99 years.

Shorter leases like 30-year or 60-year tenures depreciate faster than standard 99-year ones. Prime locations or well-maintained properties may slow decay slightly, but financing hurdles persist. Check EdgeProp Singapore for current leasehold condo listings to assess remaining tenure before viewing.