The landed home market performed admirably in 2021, recording the highest sales volume since 2010 with over 3,000 transactions. The pandemic, which drove the need for larger living spaces, drove the sales momentum.

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) had the highest sales volume.

Now that we’re in 2022, is there a shift in purchasing behaviour as Singapore attempts to revert to pre-Covid living in the face of a changing economic environment?

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H1 2022 Report Card

Transaction data from the Urban Redevelopment Authority's (URA) Realis database revealed that transaction volume for both landed and non-landed homes decreased in the first half of 2022 when compared to the same period in 2021. Because new supply is extremely limited in the landed home segment, resale transactions accounted for more than 90% of total sales volume. The 880 resale transactions in H1 2022 were significantly lower than the 1,536 transactions (-43%) in H1 2021 and the 1,459 transactions in H2 2021. (-39 per cent).

The decrease in sales volume can also be seen in the non-landed segment. H1 2022 saw 6,456 resale non-landed transactions, down from 7,971 units in the same period last year (-19%) and significantly lower than the 8,401 units sold in H2 2021. (-23 per cent).

Higher asking prices by sellers and fewer properties put on the market for sale contributed to the drop in residential sales volume in 2022. More recently, market sentiment has turned cautious as major economies have been impacted by the fallout from the war in Ukraine and the persistent rise in consumer inflation, which has resulted in interest rate hikes.

Interestingly, despite lower sales volume, prices for both landed and non-landed homes rose in H1 2022. The median price of resale landed homes increased by 14.8% from S$1,378 per square foot (psf) in H1 2021 to S$1,582 psf in H1 2022, far outpacing the 8.4% increase 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 based on land area, and the price of non-landed homes is based on strata area, the significant increase in resale landed home prices - whether renovated or in original condition - was most likely due to limited supply and healthy demand.

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The Districts With The Most Transactions

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) had the highest number of landed transactions in H1 2022. This was due to the large stock of landed homes in these areas, as well as occasional new launches, which also contributed to the sales volume.

Looking at the six districts with the highest sales volume over a five-and-a-half-year period of 2017 to H1 2022, there was a significant drop in sales volume in these six districts due to market conditions changing. Nonetheless, they were still the top-performing districts.

Districts 10, 20, and 19 were the three locations with the greatest price increases beginning in 2021.

District 10 remains the most expensive district due to its large stock of Good Class Bungalows (GCBs) and detached houses. They are the most sought-after property location for well-to-do Singaporeans due to the prestige it offers and the premier schools located nearby. The median price of landed properties has surpassed S$2,000 per square foot for the first time in history, rising by 13% in H1 2022.

Despite the lower sales volume of 65 homes, 60% of transactions were sold above S$2,000 psf, compared to a lower proportion of 35% of sales volume in 2021 sold in this price band. A semi-detached house on Jalan Arnap was sold for 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. On July 5, 2022, a caveat was filed for this S$12.19 million property. Since 2021, brand new semi-detached houses at One Tree Hill Collection on the same street have been selling at S$3,100 to S$3,600 psf.

District 20 saw the second-highest increase (10.2%) in median price to S$1,716 psf in H1 2022. The housing estates in Bishan and along Thomson Road are located within this district. The real action in H1 2022, however, took place in the estates surrounding the Thomson East Coast Line's new MRT stations.

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

There is also a 19.3 percent increase in the median price of landed homes in District 26, which includes Upper Thomson, Lentor, and Springleaf. Despite a low sales volume of 40 transactions in H1 2022, 57% of landed homes were sold at S$1,500 psf or higher, compared to 32% in 2021. It outperformed Districts 16, 19, and 28 with a median price of S$1,578 psf, indicating that home buyers were willing to pay more for properties near MRT stations.

Nonetheless, District 19 had the highest volume of transactions in H1 2022, with 140 transactions. The popular Serangoon Gardens alone accounted for 45 percent of the total sales volume. The median price of landed homes in this district increased by 9.6 percent in H1 2022, to S$1,492 psf from S$1,361 psf in 2021. Approximately 48% of transactions were priced at S$1,500 psf or higher, compared to 36% in 2021. According to caveat data, the highest price (in psf terms) of S$3,248 was paid for a terrace house on How Sun Road, equating to S$4.15 million.

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Value Appreciation Over Time

As global geopolitical uncertainties persist, the landed property market is likely to maintain its current pace for the remainder of 2022. Total demand for landed homes could reach 2,000 units, and the URA price index for landed homes could rise by 10% for the year, after rising by 7.3% in H1 2022. Having said that, we expect the new measures announced on September 30, 2022 to have an impact on sales volumes and price increases because tighter loan limits would reduce home buyers' purchasing power.

At the end of June, there were 73,216 landed homes, accounting for 19% of the private housing stock. This figure includes freehold/999-year leasehold homes, 99-year leasehold homes, shorter leasehold homes, and strata landed homes. This means that the stock of freehold/999-year landed homes - where the homeowner owns the land - is significantly lower than 73,000 units.

In the long run, while government land sales programmes may increase the stock of 99-year leasehold landed and strata landed homes to meet housing demand, there will be no new development sites for freehold/999-year landed homes.

The supply of freehold/999-year landed homes is also depleted in areas where the government permits low-rise, non-landed housing, such as Telok Kurau and Kovan. Developers have been buying up older landed homes for amalgamation to redevelop into apartments and condominiums since the early days of en bloc sales in the 1990s.

Prices will continue to rise in the long run due to the limited landed stock. As the price difference between freehold/999-year and 99-year leasehold landed homes grows, home buyers with a functional reason to buy landed homes, such as a large family needing four to five bedrooms, will be priced out of the freehold/999-year landed home market. Based on availability and affordability, 99-year landed homes may be the next best option by then.

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

Credit: Business Times