Are landed homes becoming a wealth preservation asset?

Oct 10, 2022

2021 was a sterling year for the landed homes market as it recorded the highest sales volume since 2010 with more than 3,000 transactions. The sales momentum was mainly driven by the pandemic, which drove the need for bigger living spaces.

The 6 districts with the highest sales volume were Districts 10 (Bukit Timah, Holland Road), 15 (Katong, Siglap), 16 (Bedok, Upper Changi), 19 (Hougang, Serangoon Garden), 20 (Ang Mo Kio, Upper Thomson) and 28 (Seletar, Yio Chu Kang).

Fast forward to the first half of 2022. Has there been any shift in buying behaviour as Singapore seeks to return to pre-Covid living in the midst of a changing economic environment?

Report card in H1 2022

Transaction data from the Urban Redevelopment Authority’s (URA) Realis database showed that transaction volume for both landed and non-landed homes declined in the first half of 2022, compared to 2021. For the landed homes segment, as new supply is very limited, resale transactions accounted for over 90 per cent of the sales volume. The 880 resale transactions in H1 2022 were much lower than both the 1,536 transactions in H1 2021 (-43 per cent) and 1,459 transactions in H2 2021 (-39 per cent).

The reduction in sales volume was mirrored in the non-landed segment. H1 2022 saw 6,456 resale non-landed transactions, compared to 7,971 units in the same period (-19 per cent) last year, and much lower than the 8,401 units sold in H2 2021 (-23 per cent).

The fall in residential sales volume in 2022 was partly due to higher asking prices by sellers and fewer properties put out in the market for sale. More recently, market sentiment turned cautious as major economies were impacted by the fallout of the prolonged war in Ukraine and the persistent rise in consumer inflation, which led to hikes in interest rates.





Interestingly, despite declining sales volume, prices of both landed and non-landed homes continued to rise in H1 2022. The median price of resale landed homes climbed from S$1,378 per square foot (psf) in H1 2021 to S$1,582 psf in H1 2022, a gain of 14.8 per cent which far exceeded the 8.4 per cent gain in the corresponding median price of resale non-landed homes over the same period, from S$1,296 psf to S$1,405 psf.

While the price of landed homes is indeed based on land area, and that of non-landed homes is based on strata area, the strong lift in resale landed home prices – whether renovated or in original condition – was very likely a function of limited supply and healthy demand.

Districts with highest number of transactions

The districts with the highest number of landed transactions in H1 2022 remained unchanged: Districts 10 (Bukit Timah, Holland Road), 15 (Katong, Siglap), 16 (Bedok, Upper Changi), 19 (Hougang, Serangoon Garden), 20 (Ang Mo Kio, Upper Thomson) and 28 (Seletar, Yio Chu Kang). This came on the back of the large stock of landed homes found in these locations, along with occasional new launches which also contributed to the sales volume.

Zooming in on the six districts that chalked up the highest sales volume in the five-and-a-half-year period spanning 2017 to H1 2022, there was a significant drop in the sales volume in these six districts owing to the change in market conditions. However, they remained the best performing districts.

Among them, Districts 10, 20 and 19 were the three locations which registered the strongest increase in prices from 2021.



District 10 remains the priciest district by virtue of its large stock of Good Class Bungalows (GCBs) and detached houses, and is the most-desired location for well-heeled Singaporeans for the prestige it offers, and the premier schools situated there. For the first time, the median price of landed properties crossed the S$2,000 psf threshold, having risen 13 per cent in H1 2022.

Despite the smaller sales volume of 65 homes, 60 per cent of the transactions were sold above S$2,000 psf, compared to a smaller proportion of 35 per cent of the sales volume in 2021 sold in this price band. It is worth noting that a semi-detached house at Jalan Arnap was sold at S$3,862 psf, a new record for a landed property in District 10 that is not a bungalow in the Good Class Bungalow Area. A caveat was lodged for this S$12.19 million property on Jul 5, 2022. Located on the same street, brand new semi-detached houses at One Tree Hill Collection have been selling at S$3,100 to S$3,600 psf since 2021.

District 20 turned in the second-highest rise (10.2 per cent) in its median price to S$1,716 psf in H1 2022. Nestled within this district are the housing estates in Bishan and along Thomson Road. But the real action in H1 2022 took place in the estates around the new Mass Rapid Transit (MRT) stations of the Thomson East Coast Line.

Following the opening of six stations in Stage Two from Springleaf to Caldecott in August 2021, there was a noticeable increase in home sales. In particular, near Upper Thomson MRT station, brand new semi-detached houses at Bright Hill Residences were sold at S$2,800 to S$2,900 psf, or around S$6.4 million each. A new record high was achieved by one of these semi-detached houses in March 2022, at S$2,937 psf which works out to S$6.45 million.

We also observed a significant surge of 19.3 per cent in the median price of landed homes in District 26, which covers Upper Thomson, Lentor and Springleaf areas. Despite its modest sales volume of 40 transactions in H1 2022, 57 per cent of landed homes were sold at S$1,500 psf and above, compared to 32 per cent that achieved prices in this range in 2021. At the median price of S$1,578 psf, it has outperformed Districts 16, 19 and 28 – evidence that home buyers were willing to pay more for properties that are close to MRT stations.

Nevertheless, District 19 registered the highest volume of 140 transactions in H1 2022 among the six districts. Transactions in the popular Serangoon Gardens alone accounted for 45 per cent of the sales volume. In H1 2022, the median price of landed homes in this district rose by 9.6 per cent to S$1,492 psf from S$1,361 psf in 2021. Some 48 per cent of the transactions were priced at S$1,500 psf and above, compared to 36 per cent in 2021. Based on caveat data, the highest price (in psf terms) of S$3,248 went to a terrace house at How Sun Road, translating to a quantum of S$4.15 million.

Long-term value appreciation

The landed property market is likely to continue at the current pace for the rest of 2022 as global geopolitical uncertainties persist. Total demand for landed homes could reach around 2,000 units and the URA price index for landed homes could gain some 10 per cent for the whole year, having already risen 7.3 per cent in H1 2022. That said, we expect the new measures announced on Sep 30, 2022 to have some impact on sales volumes and price increases because the tighter limits on property loans would shrink homebuyers’ purchasing power.

There were 73,216 landed homes at end June, which is 19 per cent of the private housing stock. This number includes freehold/999-year leasehold homes, 99-year leasehold homes, homes with shorter leases, as well as strata landed homes. This means that the stock of freehold/999-year landed homes – where the land belongs to the homeowner – is much lower than 73,000 units.

In the long run, while the stock of 99-year leasehold landed and strata landed homes could be increased through government land sales programmes to satisfy housing needs, there will not be any new development sites for freehold/999-year landed homes.

Depletion of the stock of freehold/999-year landed homes also takes place in locations where the government allows low-rise, non-landed housing, such as Telok Kurau and Kovan. Since the early days of en bloc sales in the 1990s, developers have been buying up older landed homes for amalgamation to redevelop into apartments and condominiums.

The limited landed stock will enable prices to continue rising in the long term. As the price gap between freehold/999-year and 99-year leasehold landed homes widens, home buyers who have a functional reason to buy landed homes, such as a large family requiring four to five bedrooms, would be increasingly priced out of the freehold/999-year landed home market. By then, 99-year landed homes could be the next best option, based on availability and affordability.

Will there come a day when freehold/999-year landed homes become like rare art pieces and collectibles, similar to GCBs and conservation shophouses, for wealthy Singaporeans? The day may come sooner than we think.

Han Huan Mei is research director and Cheong Choon Ghee is senior associate vice-president at List Sotheby’s International Realty.

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