Average psf prices of landed homes at ‘all-time high’

By EdgeProp Singapore

/ EdgeProp Singapore |

October 7, 2021 2:30 PM SGT

The landed property webinar was jointly conducted by PropNex and EdgeProp Singapore on Oct 3

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SINGAPORE (EDGEPROP) - Landed homes in Singapore have been well sought after. After the pandemic hit, the average psf prices across different landed property types have in fact increased further, and are currently at an “all-time high”, notes Ismail Gafoor, CEO of PropNex.

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While significant, Covid was not the only factor contributing to the price escalation, says Gafoor.

The landed property price index had risen by 6.3% in 2018, and by 5.7% in 2019. In light of the price jump so far, Gafoor is expecting “a double-digit growth of more than 10% this year”. Gafoor was a panellist at the landed property webinar jointly conducted by PropNex and EdgeProp Singapore on Oct 3.

In the first nine months of this year, 2,615 landed property transactions had already taken place. Gafoor is expecting the year to end with “about 3,500 units sold”. This will be comparable to the last peak in 2010 where 4,407 landed property were sold. This was followed by 3,381 transactions in 2011, and 3,121 transactions in 2012. Transaction volume dwindled from 2013 till 2014, due to the wave of cooling measures implemented by the Singapore government. These included a higher additional buyer’s stamp duty and tightened loan-to-value limits, which kept the property market reined in then. After that, transaction volume hovered between 1,000 and 2,000 houses a year.

Even though there are ups and downs in the short term, the price trend for landed property is always upwards over time, points out Kelvin Fong, executive director of PropNex.

Tight supply, high demand

In fact, landed homes are in low supply in the city-state. In 2Q2021, the pipeline of unsold and uncompleted houses that had yet to be launched amounted to just 246 units. Only three completed houses remain unsold, according to URA data.

Gafoor further highlights that new supply of landed property is unlikely to come from the government land sales (GLS) programmes — in which land sites are released by the URA to developers through a public tender.

Developers will therefore have to purchase from private land owners. Still, the supply on the market is insufficient to meet the demand from both Singaporeans and newly minted citizens, Gafoor notes. Boutique landed property developers are therefore looking to purchase land parcels large enough for them to sub-divide to build a number of houses on the site, notes Gafoor. For instance, they can redevelop a bungalow site into a pair of semi-detached houses or several terraced houses. The new properties will therefore be sitting on even smaller sites, he adds.

As people have been largely homebound due to travel restrictions and on-again, off-again work-from-home mandates, a need for larger living spaces has arisen. “More and more people desire to have a bigger piece of land, a bigger house and more space,” says Fong. “That’s why demand has been partly fuelled by upgraders.”

Consider location, construction of homes

Location is certainly a key consideration when purchasing landed property. Some districts are more sought-after than others, and it could be due to the fact that there are more established landed estates in those districts, Gafoor explains.

The top three landed districts are District 19 (Serangoon Garden, Hougang and Punggol), followed by District 15 (Katong, Joo Chiat and Amber Road) and District 10 (Bukit Timah, Holland Road and Tanglin). In the first nine months of the year, there were 364 transactions in District 19, with a transaction value of $1.3 billion. In District 15, 268 transactions were recorded with a value of $1.4 billion. In prime District 10, 191 transactions raked in a value of $2.7 billion.

“In the areas where there are more transactions… when you want to sell your property, you [will enjoy higher demand] as more buyers will be looking at these areas,” says Gafoor. “In contrast, if you buy a landed property where there is generally less demand, the danger is that your property valuation would be based on the last transaction, which could have been some time ago, when property prices were lower. That, in turn, could affect your selling price.”

Gafoor adds: “When you buy a property in a neighbourhood that’s sought after, and where there are many transactions, chances are that property prices will be much higher.”

For those deciding between tearing down an existing home and building it from scratch, versus purchasing a ready-built one, Gafoor says: “If you are busy with work and don’t have time to oversee a project, buying a dilapidated house or an empty plot of land to build a house could be a nightmare.”

The pandemic has also created a fluid situation where construction costs — from labour to materials — have become difficult to lock in. This could result in delays in project completion from six to 12 months and cost overruns, he adds.

For those who are looking to minimise construction work on their property, “you must make sure the main structure is in sound condition, and that you only need to do minor additions and alterations to suit your requirements”, says Gafoor.

Check out the latest listings near District 19, District 15, District 10

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