Landed property market slows down due to cooling measures

Analysts said the sales activity in the landed property market has slowed in recent years as a result of the government’s many cooling measures.

Property agency HSR Property Consultants said the total number of transactions in the first half of this year was 737, a fall of nearly 49 per cent on-year as of June 14.

However, the proportion of buyers with HDB addresses has stayed fairly stable at around 20 per cent.

Landed properties account for about five per cent of total residential units in Singapore and analysts said the limited supply of such homes make them attractive to investors and home buyers.

While most of the units are bought by high net worth individuals, analysts said one in five buyers own public housing flats

Donald Han, special adviser at HSR Property Consultants, elaborated: “This year, we have a HDB addressee who bought a property located in Windsor Park, Upper Thomson. He spent about S$25 million and that transaction was done sometime in January this year.

“One of the second highest transactions from that base was Oei Tiong Ham Park. It was bought by another HDB buyer at a price of S$20 million in April this year.”

Still, HSR said about 90 per cent of buyers with HDB addresses bought landed homes priced between S$1 million and S$5 million.

Some analysts said buyers with HDB addresses only make up a small portion of buyers of expensive landed homes and it is also common for the investment to be shared among 10 to 20 people.

By and large, analysts said most HDB upgraders are expected to buy mass market condominiums as they offer more attractive yields compared to landed homes.

HSR said yields for landed homes can range from one to two per cent while that of non-landed private homes can hover at three to four per cent.

However, the rising prices of suburban homes could put off some buyers.

Alice Tan, associate director and head of consultancy and research at Knight Frank, explained: “Mass market private homes for the non-landed category have risen by 10 per cent for the past year. However, landed home prices have only risen by four per cent over the same period.

“Home buyers who have more cash on-hand after making profits from their earlier property investments would start to see landed homes as a better value proposition compared to non-landed homes.”

Ms Tan said the Jurong district is most popular with HDB upgraders. The district contributed to 57 per cent of total landed property transactions for the past year. This is followed by Yishun and Sembawang which accounted for 44 per cent of the transactions.

Overall, HSR said both transaction volume and sales value of landed homes have been declining in the past years.

The number of transactions in the first half of this year fell some 67 per cent to 737, compared to the same period in 2011.

Total sales have dropped over 70 per cent to nearly S$500 million.

Looking ahead, analysts said sales are likely to slow further following the introduction of new curbs on property loans on June 29.

Knight Frank expects the price increase in landed homes segment to stabilize with a one to two per cent on-year increase by year-end.

Source : Channel NewsAsia – 3 July 2013

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