Many Singaporeans aspire towards real estate ownership. High-rise living, whether in private condominiums or HDB estates, is the norm in Singapore, with more than 90 per cent of people housed in this manner. Residents may enjoy better views and ventilation. For those living in condominiums, they may also enjoy the benefit of common facilities and security.
On the other hand, many diehards value landed ownership over strata space. They appreciate the things that come with landed living – opening the door to your own garden, the convenience of the car in your own porch, having space for the children to run around, greater ease of keeping pets, more privacy in having guests over for a barbeque or not having to wait for the lifts.
While the lifestyle considerations driving demand for landed properties is fairly well understood, their investment considerations may be worth reviewing. How limited is the supply of landed housing and how have their prices performed, especially in recent times?
Notwithstanding economic downturns and periods of sluggishness, the residential property market continues to grow, meeting the aspirations of property buyers. Therefore, more housing units are being completed and added to total stock. Over the last 10 years, more than 60,000 non-landed (condominium/apartment) units were completed, an increase of 48.5 per cent. On the other hand, barely 4,000 units were added to landed stock for the same period, an increase of only 5.8 per cent. If we were to dissect the different landed categories, we will find only a 2.2 per cent increase in the supply of detached houses. Semi-detached and terrace houses grew 5.1 per cent and 7.3 per cent, respectively, over that 10-year period. Landed housing as a proportion of total private residential stock has dropped significantly over the last 10 years, from 35 per cent in mid-2000 to 27 per cent in mid-2010.
The growing scarcity of landed properties is also reflected by the declining proportion of landed housing under construction. Ten years ago, landed properties accounted for 12.4 per cent of the total under construction (landed and non-landed). But in the second quarter of this year, that proportion had dropped to 4.4 per cent. This trend is set to continue because in land-scarce Singapore, sites designated for residential use are predominantly for high-density development.
During the recent market upturn, landed property prices have generally outperformed non-landed prices. From the second quarter of last year to the second quarter of this year, the URA residential property price index (PPI) for landed properties rose 43.2 per cent, while that for non-landed lagged at 37 per cent. Among landed housing, detached properties registered the largest increase of 46.1 per cent, while semi-detached and terrace prices rose 39.1 per cent and 42.8 per cent respectively. Contrary to expectations, the highest increases were not all in the central region, which includes prime district properties.
Detached houses in the north-east region saw prices soaring 58.4 per cent in that one-year period, while semi-detached houses in the east recorded a 43-per-cent increase. The demand for landed residential properties has pushed their prices to new highs. Unlike condominiums, there is limited supply of landed housing from new sale launches and many buyers find themselves scouring the secondary market for their homes.
In the terrace housing segment, freehold units in the suburban secondary market generally command prices of $800 psf (on land area) and above with new units in the $1,200 psf to $1,400 psf range. For example, recently marketed suburban terrace houses with a minimum plot size of 1,615 sq ft have fetched prices of $2 million ($1,238 psf). In prime locations, transactions at above $1,700 psf have been registered, with unit prices of around $3 million and higher.
Semi-detached plot sizes are typically in the 3,000 sq ft to 4,000 sq ft range. The prices of older units in suburban locations are generally below $3.5 million or in the $700 to $900 psf bracket. Transactions of prime district semi-detached houses have typically been in the order of $1,200 to $1,700 psf with typical absolute prices of $4 million to $6 million. At the top of the housing pyramid are detached houses or bungalows. Prices vary from $4 million to $5 million ($800 to $1,000 psf) for small suburban bungalows and to $15 million and above (upwards of $1,300 psf) for higher end ones in the prime districts (including good class bungalows) and on Sentosa.
Each new upswing in the property market has brought landed property prices to new levels, leaving existing owners delighted about their investments while potential buyers gripe at the prospect of paying so much more to realise their dream of a landed home. However, with growing affluence, there have been more buyers in the landed property market and the rising prices is an indication of their ability to pay for their home of choice. The quest for landed housing ownership has picked up with the current buoyant market. This trend is expected to continue into the longer term.