Lease Decay Impact
Analysis Date: 2026-02-04
Data Period: 2017-2026
Property Type: HDB resale
Key Takeaways
The clearest finding
Lease decay is non-linear. The steepest market discount does not appear only in the oldest flats; it concentrates around the 70-80 year lease band, where prices are about 21.9% below the 90+ year baseline.
Why this matters
- Buyers can find meaningful value in the 60-70 year band, which combines deep discounts with the highest transaction volume.
- Sellers of 90+ year flats benefit from the market’s strongest pricing preference.
- Investors should not rely on straight-line depreciation assumptions for hold-period planning.
Core Findings
1. The market discounts lease bands unevenly
| Lease Band | Avg Remaining Years | Median Price | Median PSF | Discount vs 90+ yrs | Transactions |
|---|---|---|---|---|---|
| 90+ years | 93.5 years | $558,000 | $6,205 | baseline | 50,912 |
| 80-90 years | 84.6 years | $520,000 | $5,389 | -13.2% | 29,562 |
| 70-80 years | 75.4 years | $548,000 | $4,845 | -21.9% | 47,044 |
| 60-70 years | 64.6 years | $446,000 | $4,730 | -23.8% | 54,521 |
| <60 years | 54.5 years | $390,000 | $5,274 | -15.0% | 41,595 |
What stands out
- The 70-80 year band has the sharpest market penalty.
- The 60-70 year band is the market’s main value bucket: heavily discounted, but still liquid.
- The <60 year group is not the cheapest on a PSF basis, which suggests location mix still matters a lot.
2. The 60-70 year band is the main trade-off zone
This is the band where price relief and market liquidity overlap most clearly.
| Metric | Value | Why it matters |
|---|---|---|
| Discount vs 90+ years | -23.8% | Large entry-price reduction |
| Share of transactions | 24.4% | Resale market remains active |
| Pure lease effect | +$54.75 PSF per extra year | Lease still has measurable pricing power |
Impact
- For owner-occupiers with a long but finite holding period, this band can offer better value than near-new stock.
- For investors, liquidity is better than many buyers expect, but financing rules still matter.
3. Lease decay interacts with location
The same lease gap can price very differently across towns.
| Town | Short Lease (PSM) | Fresh Lease (PSM) | Discount % |
|---|---|---|---|
| CLEMENTI | $5,224 | $8,796 | 40.6% |
| TOA PAYOH | $4,939 | $8,182 | 39.6% |
| QUEENSTOWN | $5,526 | $9,048 | 38.9% |
| WOODLANDS | $4,262 | $4,544 | 6.2% |
| JURONG WEST | $4,496 | $4,516 | 0.4% |
| PASIR RIS | $5,621 | $4,676 | -20.2% |
Impact
- In mature central towns, shorter leases are usually penalized heavily.
- In some suburban towns, location and town-level desirability can offset or even outweigh lease penalties.
- Buyers should compare lease discounts within the same town, not only across Singapore-wide averages.
Decision Guide
For first-time buyers
- Do not rule out 60-70 year flats automatically.
- Check CPF and financing constraints early.
- Compare the discount you are getting against the actual years of lease you are giving up.
For investors
- Prioritize discounted lease bands only where liquidity is proven and town-level demand is stable.
- Avoid assuming older lease automatically means underpriced.
For upgraders
- Selling a 90+ year flat can crystallize the market’s strongest lease premium.
- Buying into a shorter lease can be rational if it unlocks a better location without a full central premium.
Technical Appendix
Data Used
- Primary input:
data/parquets/L1/housing_hdb_transaction.parquet - Sample: 223,634 HDB transactions, 2017-2026, lease range 30-99 years
- Advanced input:
data/parquets/L3/housing_unified.parquetfor multivariate hedonic regression
Methodology
- Lease bands: bins [0, 60, 70, 80, 90, 100], labels [<60, 60-70, 70-80, 80-90, 90+]
- Remaining lease years:
remaining_lease_months / 12 - Price statistics: median
resale_priceandprice_per_sqmby band - Discount to 90+ baseline:
(baseline_psm - band_psm) / baseline_psm × 100 - Annual decay rate: linear approximation from discount vs years elapsed
- Town-level comparison: short lease (<70 yr) vs fresh lease (90+ yr) median PSM within same town
- Hedonic regression (advanced):
Price = β₀ + β₁(Lease) + β₂(FloorLevel) + β₃(DistToMRT) + β₄(Town) + ε - Policy threshold analysis: Mann-Whitney U tests at 60-yr and 30-yr marks
- Bala’s curve validation: empirical vs theoretical depreciation, ≥5% deviation flagged
Technical Findings
- 90+ year band: 50,912 transactions, median 6,205
- 70-80 yr band: 47,044 transactions, -21.9% discount (steepest penalty)
- 60-70 yr band: 54,521 transactions, -23.8% discount (deepest, highest volume)
- Pure lease effect: +$54.75 PSF per extra year (after controlling for town, floor level, MRT distance)
- Town variation: Clementi -40.6%, Toa Payoh -39.6%, Woodlands -6.2%, Pasir Ris +20.2% (inverted)
- 60-yr policy threshold: measurable “liquidity tax” between 61-yr and 59-yr leases (CPF restriction)
- Spline-based arbitrage: identifies BUY/SELL/HOLD signals at lease years where market deviates ≥5% from theoretical Bala curve
Conclusion
The data confirms non-linear lease decay. The 70-80 yr band shows the steepest penalty (not the oldest flats), while the 60-70 yr band offers the deepest absolute discount with strong liquidity. The pure lease effect of +$54.75 PSF/year is robust after multivariate controls. Town-level heterogeneity is extreme: central mature towns penalize short leases heavily (Clementi -40.6%), while some suburban towns show minimal or even inverted discounts, likely due to location desirability offsetting lease age. Key limitations: renovation condition, HIP timing, and block-level maintenance are not fully captured; financing rules shrink the buyer pool for shorter leases.
Scripts
scripts/analytics/analysis/market/analyze_lease_decay.py— Lease banding, price statistics, decay ratesscripts/analytics/analysis/market/analyze_lease_decay_advanced.py— Hedonic regression, Bala curve validation, spline arbitrage, policy thresholds