Case Study 3 – How Couple got Stuck with Property


It’s not always so easy to make money, as the previous case studies suggested.

Slightly more than 10 years ago, a young couple bought something that almost ruined their lives financially.

It was the middle of 1996, a boom time for the stock market as well as the property market.

The couple – working professionals – were earning salaries that disqualify them for subsidised HDB housing.

Just married, they were yearning for a nice place to stay in.

They set their eyes on a 1,300 square foot condominium just north of Ang Mo Kio. The location is not very central, but the asking price was a crazy $1 million.

It was a stretch for the couple. Without huge savings, they could only afford the initial 20% downpayment and had to borrow the rest for the progress payments.

But given the rosy economy then, and the fact that they were holding well-paying jobs (making a combined $150k a year), they went ahead and bought the condo.

We all know what happened next.

The economy tanked. Asia went into financial crisis. Jobs were lost. Stock and property prices fell. Drastically.

Salaries were cut.

The couple also saw their income go down. Yet, they still had to make the mortgage repayments.

A big part of their earnings went to the bank.

They were slaves to the mortgage loan. (It’s still the case now. So they don’t save a lot.)

Worse, the condo’s value went down, almost to negative equity level, i.e. owing the bank more than the property’s worth.

Even now, when property prices are at peak levels (and maybe on the way down), the couple’s condo is still a loss-making investment. Why? Their condo is a leasehold property.

So, this unfortunate couple is “stuck” with a still-sizable bank loan, a condo that’s depreciating in value, and low savings. And they are considered high income earners…

A wrong move, and they are hit financially for a long time…

See other case studies.


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  1. Hi,

    Other than the difference of owning and renting the land between freehold and leasehold, what other significant difference are there between the 2 in terms of money?

    Why is it a leasehold property will most likely to depreciate compare to freehold?


  2. A very good lesson is to never spend more than what you can afford (in fact, the lesser the better). Singaporeans have a SEVERE face problem; we are SO concerned with how the others see us. And therefore we pay top dollar for glamorous things when it takes up 90% of our take home pay.
    This is so sad compared to values of people in other countries. I have a friend who’s a multi-millionaire in Australia, and he’s still driving a 15 yr old Volvo station-wagon all these years….

  3. First off, I like your blog and enjoy reading every entry.

    Although I agree that leasehold intrinsic value will drop over time due to decay. But I disagree that freehold is always better. There are also cases where leasehold can be a better investment. You have to remember that a freehold property can cost from 10%-40% more, so would you rather buy a leasehold property in a more central location or a freehold in an outlying area for about the same price?

    For a reference, see this article:

    Also, my opinion is that timing is very important. In a bear market, even freehold property prices will plunge, especially when the prices are inflated like bubbles. So don’t overpay for the property. In the crash of 97, the property price index dropped 45% over 3 years.

    From the way stock markets are behaving lately, it looks like we are in for a bear market.

  4. SmartTrader, your points are valid. Still, personally I would prefer a freehold property in a central location for investment. If I can’t afford it, I’d rather take my time to save up than buy a leasehold or a even a freehold elsewhere. My reason is simple: freehold properties are getting more rare, and their value is very unlikely to go down, whereas leasehold properties all have expiry dates – the older they are they cheaper they get.

  5. This condo likely to be Seasons Park or Castle Green. Knew someone who bought 3 units, 1 mil each. But fortunately was rich and finish paying within a few years…. But still significant loss…at trough, only worth 500+ k each.

  6. In 1998, we bought our 99yr leashold condo throgh sub-sale from a couple who sold it at S$200k+ loss.We were puzzled that so many people earlie on have paid so sky-high prices for 99-yr leasehold property.Now, it seems that the same thing is happening again.

  7. I see lots of recent graduates who have zero experience and ask for the moon.

    Youngsters these days are out of touch with reality and I think this recession, hopefully a long and deep one, will discipline them

    The youth these days are soft, borrow heavily, gamble heavily and have no sense of discipline. Too much Western influence and start behaving like Americans who always spend beyond their means

    In the 1985 recession, graduates could not get jobs and had to take $400 a month salary and this was when there was only one NUS

    Now everybody has degree. A long and deep recession is good for the well being of the country

  8. Assuming the case study couple lost $400K in home depreciation over the past 12 years. In retrospect, has anyone thought about the amount of money Singaporeans lose from car ownership.

    Generally, most singaporeans change cars every 3 years, so in 12 yrs, they would have gone thru 4 car ownerships. For a 3 yr depreciation on cars (Jap and Conti), it can range from $30K to $100K per yr, so go figure how much money can be lost in 12 years, just having a set of wheels..

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  11. Hi everone! I’m curious to know that if leasehold properties depreciate in value year after year.How come HDB flats which are very old gets pricier year after year! For instance,alot of people are staying in their parent’s HDB flats which were purchased for tens of thousand years ago but now still worth at least 500k!I’ve never seen a leasehold property being possessed when the lease expired as normally they get enbloc right?

  12. propertyagent on

    Hi Shaun W

    Property price is more affected by supply and demand.
    As a result of our leaders foresight in building the integrated resorts and foreign talent policy, there is a great deal of demand for Singapore properties resulting in a huge property boom.

    If PAP can continued its enlightened policy of importing more foreign talents, the property boom can still continue for years to come.

    However, there is a fear that ungrateful S’poreans will pressure pap to moderate the foreign talent policy to moderate the property market. This is already taking place.

    In summary, property prices will continue to go up if PAP can be voted to stay in power.
    Otherwise, I will be out of a job and looking to migration instead.

    Hope this helps explain why the property market is booming. Obviously if there is no demand, there wont be enbloc and enbloc only applies to condo I think.

    Property agent

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