Landed residential property prices in Singapore appreciated at the fastest pace in the past 10 years in 2021, surging 13.3 per cent year on year compared to a lacklustre 1.2 per cent expansion in 2020.

According to a report by ERA Realty Network on the Singapore landed housing market released on Wednesday (May 4), prices of landed housing from 2018 to 2021 also grew faster than prices of non-landed properties such as condominium units. During this 4-year period, capital values of landed residential properties increased by 28.8 per cent, while those of non-landed housing climbed 24.2 per cent.

Interestingly, it noted that the capital values of landed housing increased at a faster pace in the first 2 years of the pandemic compared to the 2 years before Covid-19, with landed home prices rising at a compound annual growth rate of 7.1 per cent on average in 2020 and 2021, compared to 6 per cent annually in 2018 and 2019.

In the first 3 months of 2022, the landed housing price index expanded by another 4.2 per cent quarter on quarter.

While the new round of property cooling measures in December 2021 brought a halt to the non-landed property price growth, the landed market segment emerged unscathed as the landed housing price index grew another 4.2 per cent quarter on quarter in the first 3 months of 2022.

ERA said that some 2,113 landed homes were sold in 2020, a 36.6 per cent rise compared to 1,547 units transacted in 2019. In 2021, landed property transaction volumes jumped a further 74 per cent to 3,676 units, due to the overall recovery in the residential property market.

With limited supply of landed housing in the primary market, more than 90 per cent of landed homes transacted were in the secondary market, with both segments seeing increases in the number of units sold in 2021. Year-on-year primary market sales volume of landed housing rose 157.6 per cent while secondary sales volume increased 71.6 per cent.

Among the 3 market segments in Singapore, the Core Central Region (CCR) saw the quickest rise in the number of landed homes transacted in 2021, followed by the Rest of Central Region and Outside Central Region, respectively.

“The growing transactions in the prime areas underpinned the growing appetite among landed housing buyers who can afford more expensive homes in prime locations,” said the report.

Meanwhile, changes in landed property rental rates in Singapore were more closely correlated to the economic climate and the job market. The landed rental index contracted from the first quarter of 2020 to the third quarter of 2020 when border restrictions were tightened and expatriate tenants left Singapore, leading to a decline in leasing demand.

When the vaccination programme was announced towards the end of 2020, market sentiment improved, with demand for bigger homes contributing to the stronger rental appetite for landed houses.

As a result, the landed housing rental index started to rise from the fourth quarter of 2020 and into 2021. By the end of 2021, rental rates of landed homes had increased 8.2 per cent year on year, compared to the 2.7 per cent contraction in 2020.

In Q1 2022, the landed housing rental index expanded a further 5.3 per cent quarter on quarter, the highest quarterly rate of growth among all the property market segments, noted ERA. This could be due to tenants’ strong preference for bigger-sized homes, especially with the widespread work-from-home practice, as well as the limited supply of rental landed units.  

ERA added that residential leasing demand from local residents also contributed to the rise in landed housing rental rates, as the completion of new residential developments was delayed due to supply-chain bottlenecks.

Looking ahead, ERA believes prices of landed homes will appreciate by an estimated 9 to 15 per cent in 2022, as demand rises along with further recovery in the Singapore economy, even as supply remains limited. This is because the stock of landed homes launched and available for sale by developers fell to a historical low with a total of 60 unsold units islandwide in Q1 2022, said ERA.

“There are an estimated 160 landed homes yet to be released,” noted the report. “The launch of these residential projects could occur in the next 2 years. The total stock of these 220 landed homes can easily be absorbed within 1 to 1.5 years. Replacing them could take longer in land-scarce Singapore.”

Among the landed residential projects that are yet to be launched, the 132-unit Pollen Collection at Nim Road is the largest, while Spring Waters Villas in Sembawang is the smallest with 6 units.

“A new landed housing development on the site of the former Caldecott Broadcast Centre is the only reported landed residential development in the CCR. Located in District 11, the site could be developed into 15 to as many as 26 Good Class Bungalows.”

With a limited supply of new landed homes in the next 2 years, ERA reckons about 95 per cent of transacted landed housing units will be resale homes.

Meanwhile, the easing of travel restrictions and the expected resumption of business activities to pre-pandemic levels would attract more expatriates with large housing rental budgets to Singapore, it said.  “This would increase the leasing demand for landed housing. As the stock of houses are limited in Singapore, the rental rates of landed homes could rise by 10 to 16 per cent this year.”

Credit: Business Times