Since the start of the pandemic and work-from-home culture, many people would prefer more spacious homes but landed housing cannot be afforded by everyone
The private housing statistics for the first quarter of 2021 released by the Urban Redevelopment Authority of Singapore (URA) showed that landed housing commanded a robust price growth.
ERA Singapore commenting on the price growth in this sector, said: “The robust price growth of landed housing was partly contributed by the growing demand for more spacious homes and the growing prices of non-landed housing. Since the start of the pandemic and work-from-home culture, many people would prefer more spacious homes but not everyone can afford to buy larger real estate.”
“Those who have the financial capabilities to do so had fuelled the increase in the transactions of landed housing. Furthermore, the rising prices of condominiums had also made landed housing appeared to be value for money, resulting in higher demand for the latter.
“Before the pandemic, a total of 1,542 private landed housing units were transacted in the primary and secondary markets islandwide in 2019. This translated to an average of 385 units in each quarter of 2019. In 3Q 2020, after the lifting of the Circuit Breaker, the transaction volume of landed houses tripled to 650 units from 213 units in the previous quarter.”
Number of landed housing units sold islandwide
|Total sales (landed units)||Total landed units sold (%qoq)||Total landed units sold (%yoy)|
In 1Q 2021, based on the number of caveats lodged, 785 landed houses were sold. The quarter-on-quarter dip in the transaction volume in 1Q 2021 was due to the lull period during the Lunar New Year. Since 3Q 2020, the number of transacted landed homes in each quarter remained above the quarterly average of 385 houses in the pre-COVID period of 2019.
Due to the strong demand, the price index for landed housing increase 6.7% qoq in 1Q 2021, faster than the 2.5% qoq rise in the price index of non-landed residential properties over the same period.
Landed housing are an excellent asset for wealth preservation. They also offer a copious amount of living space that is suitable for multi-generation families, and as such, provide a relatively higher quality of life. On top of that, landed homes with freehold/999-year leasehold tenure rarely depreciates in value when held for the long term and thus serves as an excellent asset for wealth preservation.
Landed housing seem to provide more bang for the buck on a $psf basis when compared to non-landed homes, the absolute quantum of $2 million and above for a freehold/ 999-year leasehold landed home of at least 1,500 sq ft poses a barrier to entry for most of the population. But for those who can afford, landed properties could be one option when considering to purchase a home.
Since there will no longer be any new freehold/999-year leasehold land distributed by the government, the existing stock of landed properties will become even more valuable. The restriction on the ownership of landed properties means that the market is dependent solely on local demand.
But even without foreign inflows, the market for landed property could still be sustained. As Singaporeans become more affluent, the desire to upgrade their homes is likely to increase. All of which resulting in the demand for freehold/ 999-year leasehold landed homes continuing to grow over time.
Mr Ho said that “as the sales proceeds start to come in from the en bloc sales completion, landed homes, especially the Inter-terrace segment will hot up.” This Mr Ho believes is because en bloc sales homeowners who are flush with cash, will resort to value hunting instead of choosing smaller condominiums which are beginning to sell at unbelievable prices.
Mr Ho said that given the land scarcity in Singapore, demand for landed homes in Singapore will continue to rise over the long term. He pointed out that Singapore continues to be a global financial centre and a trade hub with high livability scores – all of which attracts high net worth investors to the Republic. All these factors will inevitably fuel demand for landed property in Singapore he added.
Mr Ho believes that value buys in the property market right now are are landed inter-terrace houses which’s per square feet price on the built-up area is usually less than $1,000. But Mr Ho cautioned that the bigger challenge for buyers of landed property is securing the best home loans.
“With the right loan, the buyer can save thousands, if not tens of thousands of dollars,” he said. Adding, “which is why they would have to work with established mortgage brokers who can provide them free service.”