Does an optimal holding period exist for residential property investments?
There is a common belief that it may not be financially wise to hold on to a residential property for too long. When a property hits about 20 years old, the value may start to decline as it ages, potentially leading to financial losses.
The analysis shows that many property owners sold their units within the first 10 years of ownership. Landed property owners usually hold on to their properties longer. A significant 43 per cent resold their properties only after 10 years, while another 7.5 per cent kept their properties for a minimum of 20 years.Selling a property quickly does not always guarantee high profits.
Generally, those who held their properties for 20 years or longer earned an average gross profit of around $665,000, while those who held them for 15 years to less than 20 years earned slightly lower at around $600,000, and for 10 years to less than 15 years, the average gross profit dips to about $320,000.
Therefore, leasehold condos in Singapore can be profitable and demonstrate increasing value over time despite their finite leases. On the other hand, freehold condos outperform their leasehold counterparts in terms of long-term profitability.Intriguingly, a high proportion of executive condominium owners opted to sell their properties relatively quickly.
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