Landed homes: a grounded investment in high-rise Singapore

Landed homes can only become more sought after as affluence increases in land-scarce Singapore.

Feb 23, 2023

Nicholas Keong and Koh Kai Jie

THE landed home category has for a while now been the dark horse of private residences in modern post-pandemic Singapore. Apart from private land projects, the last time there was a Government Land Sale (GLS) site for the development of landed homes was more than five years ago in 2017. That was for homes at Lorong 1 Realty Park, where 53 units of the Parkwood Collection were recently completed.

With limited land for development in Singapore among various competing uses, high-rise homes will dominate the residential landscape in the form of private condominiums and Housing and Development Board (HDB) blocks. With sites made available for landed home development from the GLS programme few and far between, any increase in landed homes in Singapore would mainly be from developers who buy large, older plots of land, demolish the existing homes and replace them with a greater number of smaller landed houses.

It is thus no wonder that the stock of landed homes in Singapore rose by a mere 4.1 per cent in the last 10 years from the fourth quarter of 2012 to Q4 2022, while their private non-landed counterparts grew a hefty 53.4 per cent in the same period. Over the last two decades, less than 7,000 new landed houses were added to the private home inventory. At the same time, new private non-landed homes grew exponentially, with almost 180,000 new units. As at end-2022, there were 73,295 landed homes, with this total unlikely to increase significantly any time soon.

Landed preferred

The benefits of a landed home came to the fore with the advent of Covid-19. While new condominium launches captured headlines with fast-paced sales in the last three years, landed home prices also rose significantly. The Urban Redevelopment Authority (URA) property price index (PPI) for landed homes rose 25.7 per cent in the pandemic years from Q4 2019 to Q4 2022, outpacing both the non-landed residential PPI which grew 21.7 per cent and the all-private residential PPI, which expanded by 22.8 per cent in the same period. In fact, it was the non-landed counterparts playing catch-up to the landed sector, as landed home prices increased 9.6 per cent year on year in 2022, outpacing the non-landed price gain of 8.1 per cent.



The price growth was supported by burgeoning transactions of 1,824 landed home sales in 2020 and an even higher 3,099 transactions in 2021. The imposition of the circuit breaker between April and June 2020 and subsequent repeated reimposition of activity restrictions and social distancing measures compelled many to live, dine, work and play under one roof. These restrictions fuelled the desire for larger living spaces and aspirations to upgrade to bigger homes with outdoor areas.

In Knight Frank’s Global Buyer Survey of 2021, conducted during the pandemic, Singapore homebuyers expressed an innate need to search for more space, both indoors and outdoors. Among respondents, 27 per cent indicated that more outdoor space played a key role in their home-buying decisions amid a pandemic where social and human activities were regularly disrupted by restrictions. Many high-net-worth individuals (HNWIs) who became Singapore citizens remain a key driver of the landed housing market, as these homes offer flexible private space and proximity to amenities such as parks and good schools.

Additionally, some 18 per cent of respondents also cited more indoor space as well as access to better amenities such as schools, gyms and parks as reasons for moving during the pandemic. As homes become the focal point for more human activities, given the work-from-home phenomenon and movement controls in public areas, the type of space that landed homes offered facilitated these changes in living, working and recreational patterns.

All these factors led to a build-up in demand that ignited the highest annual transaction volume in terms of units sold as well as transaction value in 2021. Landed residential sales totalled S$17 billion in 2021, the highest since such data became available in 1995. Among the three landed housing types in Singapore, terrace homes were the most proliferate in sales as they are the most numerous landed home type islandwide.

In addition, terrace houses tend to be smaller than semi-detached and detached houses, translating to a more palatable entry price quantum for homebuyers with landed housing aspirations.

A total of 1,641 terrace, 993 semi-detached, and 465 detached houses were sold in 2021, with District 19 being the most popular location, accounting for 539 landed transactions. Another popular location was District 15 where 419 houses changed hands.

A more subdued 2023

However, such an accelerated momentum cannot be sustained over too many consecutive years, and it slowed down in 2022. Landed home transactions shrank to 1,644 units in 2022, with sales totalling S$9.3 billion, a 45.3 per cent drop from the previous year. The fall in transactions was due to a myriad of economic challenges that included growing inflationary pressures, recessionary worries and accelerating interest rates that shifted some buyers to the sidelines.

And even though some buyers were willing to offer huge price premiums to incentivise landed homeowners to sell, many sellers grew increasingly circumspect, anxious over the lack of replaceable homes. Some were deterred by the 15-month wait-out period for downgraders looking to purchase HDB flats.

Currently, unless there are compelling reasons for selling, many landed homeowners tend to hold onto their homes not just for their investment value, but also as an investment in a lifestyle. The larger floor areas allow for recreational and social activities. Going forward, with the Singapore government’s push towards the use of electric vehicles, these homes afford owners an exclusive charging point right at their doorstep.

With the increasingly pessimistic economic outlook, rising construction costs, escalating buyer’s stamp duty (announced on Feb 14) and the time and expenses needed to refurbish or develop landed homes, transaction activity is likely to be more subdued in 2023. Also, the limited saleable landed inventory would continue to crimp sales activity as landed homeowners hold back on their decision to sell while considering the lack of replacement homes.

Nonetheless, the steady rise in affluence in a stable Singapore would contribute to the organic growth of the local wealthy population. Together with new high-net-worth citizens, these homebuyers will move the landed market upwards in a pertinacious fashion over the medium- to long-term.



Nicholas Keong is head of private office; Koh Kai Jie is analyst at Knight Frank Singapore