by Han Huan Mei / Cheong Choon Ghee
The census of population in 2020 showed that Singapore’s home ownership stood at 88%, which is one of the highest in the world. By housing types, about 79% of the resident population live in public housing and 21% live in private homes. The total housing stock consists of around 1.07 mil public flats and 379,462 private homes in Q2 2021. Private homes can be further split into 306,199 non-landed homes (apartments/condominiums) and 73,263 landed homes (detached, semi-detached and terrace houses). By proportion, landed homes made up 19.3% of the private housing stock or just about 5% of the total housing stock. The limited stock and enduring charm of landed homes made them a coveted asset among all the housing types.
Landed Property Market Activity
For the period from 2018 to July 2021, the landed market showed varied performance as it was impacted by geopolitical and economic factors as well as government interventions (Figure 1), similar to the wider residential market. The performance in 2019 was weaker because Singapore’s export-oriented economy was hit hard by the drawn-out trade war between the US and China. Furthermore, the government raised the additional buyer’s stamp duty (ABSD) by five-percentage points in July 2018. Since then, local investors have to pay an ABSD of 12% to buy a second property and 15% to buy the third and subsequent properties. Sales were also hampered by the high price expectations of sellers which potential buyers were unable to match.
Figure 1: Landed Sales Volume and Median Price ($psf)
When the Covid-19 pandemic struck in 2020, the increased amount of time spent at home in order to prevent the spread of the virus nudged home buyers towards landed properties. The need for a bigger living space for adults working from home, students who were moved to home-based learning and family recreation made landed homes more appealing. The total sales volume of landed homes rose 38% from 1,304 in 2019 to 1,805 in 2020. The strong sales momentum continued in 2021 so that in seven months, 1,779 landed homes were sold. The number of detached and semi-detached houses sold has already exceeded the number sold in 2020. At this rate, we can expect more than 2,000 landed homes to be sold by year-end, the highest since 2012, signaling a renaissance for the landed property market.
Using the price per square foot ($ psf) on land area as a yardstick for price movement, the three types of landed homes have been charting an uptrend from 2018 to July 2021. Prices of semi-detached houses saw the biggest gain of 10.5% to $1,281 psf followed by the prices of terrace and detached houses which grew by 9.7% to $1,448 psf and by 9.6% $1,427 psf respectively.
However, the performance of every district differs, depending on location, price, preference and other factors.
Based on the transaction data of landed homes from 2018 to July 2021, the six districts which saw the highest sales volumes were districts 19, 15, 28, 16, 10 and 20 (Figure 2). The sales volume of 4,158 homes made up 61% of the total of 6,797 transactions in this period. Not surprisingly, these six districts are also the districts with the highest concentration of landed homes.
Supported by robust sales, prices of landed homes in these districts showed a healthy compound annual growth rate (CAGR) or average yearly growth rate in the 2018-2021July period. District 20 led the pack with a CAGR of 3.1%, followed closely by Districts 19, 15 and 10. Prices in District 16 grew by a smaller 1.0% probably because this location is furthest away from the city relative to the other districts. As for District 28, landed home prices remained stable with an average yearly growth of 0.1%.
Figure 2: Ranking of Districts by Sales volume (2018 to 2021 July)
Another reason for the popularity of these districts is that they are established housing estates equipped with amenities such as premier primary schools, shopping malls, entertainment and lifestyle options. Except for Districts 15 and 28, the other four districts are well served by Circle, East-West, North-South, North East and Downtown mass rapid transit (MRT) lines, enhancing their connectivity to the rest of Singapore.
As these districts are either within or surrounded by HDB estates, there is a constant pool of families who would upgrade to the landed homes in the same neighbourhood. Some demand could be contributed by the beneficiaries of successful en bloc sales in 2017-2018. Owners who had to wait for more than one year before the proceeds were paid probably bought their replacement homes in 2019 or 2020.
Our analysis also shows that the six least transacted districts with less than 100 units each in the 2018-2021July period were 08, 12, 09, 04, 25 and 18. There were only 283 transactions in this period, which made up 4% of the total of 6,798. The low sales volume was inevitably a function of the low stock of 2,623 landed homes in these districts.
The negative CAGR of 16.1% for District 08 was an anomaly caused by only two terrace houses sold each in 2018 at a high median price of $2,176 psf against a low $1,158 psf in 2021. The limited availability of landed homes for sale in District 12 was probably the reason for the strong CAGR of 4.5%. As for District 04, the steady average yearly growth of 2.2% was supported mainly by the sale of high-end villas in Sentosa Cove.
Transactions in Districts 25 and 18 were rather low as home buyers tend to be put off by their distance from the city centre. Price-wise, District 25 showed a stronger CAGR of 2.5% while D18 showed some weakness with an average yearly decline of 0.4%. Nevertheless, their low base of below $1,000 psf allows room for future growth.
The conservation houses at Emerald Hill and Cairnhill made up nearly half of the 40 transactions in District 09. The premium that home buyers were willing to pay for such rare and prized possession contributed to the strong CAGR of 8.9%.
Potential Landed Hotspots
Stage 2 of the Thomson-East Coast Line (TEL) would begin operation from 28 August 2021. The six stations in this stretch are Springleaf, Lentor, Mayflower, Bright Hill, Upper Thomson and Caldecott. The line will be connected to Circle Line at Caldecott and in future, to the Cross Island Line at Bright Hill. The enhanced connectivity of the landed estates at Sembawang, Upper Thomson, Lentor, Ang Mo Kio and Thomson to the rest of Singapore will draw buyers.
The remaining three stages of TEL – 23 stations from Mount Pleasant to Sungei Bedok passing through Districts 10 and 9, Downtown, Districts 15 and 16 – are scheduled to be opened between 2022 and 2025. Potential buyers will be keen on the landed homes in these locations.
To supplement the limited supply of government land sales, developers are looking for development sites from private sources too. There were a few successful collective sales of smaller residential developments since the beginning of the year such as Lew Mansion (District 10), Surrey Point (District 11), Ji Liang Gardens and Woo Mon Chew Court (both in District 15) which affected less than 50 households. If larger sites in D10, D15, D19 and D20 are sold en bloc, it will release a significant number of households looking for landed homes in the same neighbourhood. These districts could become potential hot spots for landed sales and price growth.
Amidst the current upcycle of the property market, new projects could bring the prices of landed homes to a higher level. On the cards are Belgravia Ace (104 semi-detached and 3 terrace houses) by Tong Eng Group and Pollen Collection (4 semi-detached and 128 terrace houses) by Bukit Sembawang Estates. Both projects are located in District 28 and could be launched before end-2021. These new terrace and semi-detached houses are likely to be priced higher than recent sales at Luxus Hills where new terrace houses were sold between $3.2 mil and $3.5 mil and semi-detached houses were sold around $4.2 mil. Another new project on the site of Mediacorp’s former Broadcast Centre at Andrew Road – within Caldecott Good Class Bungalow Area – will set the price level of new bungalows in this district.
With the perennial interest in landed homes and the likelihood of Covid-19 becoming endemic, bigger households and multi-generational families will look to upgrade from apartments to landed homes while the more affluent will look for bigger landed homes. Given that the future supply of landed homes will remain limited, they will have a lasting appeal for those who can afford them.