A recent research by List Sotheby’s International Realty (List SIR) said that landed homes are an excellent asset for wealth preservation. The report pointed out that landed homes offer a copious amount of living space that is suitable for multi-generation families, and as such, provide a relatively higher quality of life.
“On top of that, landed homes with freehold/999-year leasehold tenure rarely depreciates in value when held for the long term and thus serves as an excellent asset for wealth preservation.”
The report added that though landed homes seem to provide more bang for the buck on a $psf basis when compared to non-landed homes, the absolute quantum of $2 million and above for a freehold/ 999-year leasehold landed home of at least 1,500 sq ft poses a barrier to entry for most of the population. But for those who can afford, landed properties could be one option when considering to purchase a home.
The report said that since there will no longer be any new freehold/999-year leasehold land distributed by the government, the existing stock of landed properties will become even more valuable.
The restriction on the ownership of landed properties means that the market is dependent solely on local demand. But even without foreign inflows, the market for landed property could still be sustained. As Singaporeans become more affluent, the desire to upgrade their homes is likely to increase.
All of which resulting in the demand for freehold/ 999-year leasehold landed homes continuing to grow over time.
An OCBC Investment Research report from last year said that unlike non-landed properties which rebounded 1.3 per cent in 2017, landed properties fell by 0.5 percent in the same period. But this is set to change according to iCompareLoan‘s chief mortgage consultant Paul Ho.
Mr Ho said that “as the sales proceeds start to come in from the en bloc sales completion, landed homes, especially the Inter-terrace segment will hot up.” This Mr Ho believes is because en bloc sales homeowners who are flush with cash, will resort to value hunting instead of choosing smaller condominiums which are beginning to sell at unbelievable prices.
Dr Lee Nai Jia, Senior Director and Head of Research at Knight Frank Singapore said in an op-ed in Business Times that “now is the right time to buy landed property.”
“The supply of landed homes has been limited. From Q4 2008 to Q2 2018, the total stock of landed homes rose 6.4 per cent, from 68,761 units to 73,150 units. Yet, the total stock of non-landed homes went up by about 70 per cent from 172,443 units to 293,593 units over the same period."
With a lack of a strong supply of landed homes, it appears that prices of landed homes tend to trend up more than prices of non-landed homes during an upswing in prices.
"The Urban Redevelopment Authority’s (URA) residential price index for landed homes rose 87.7 per cent during the upswing from Q2 2009 to Q3 2013, while prices of non-landed homes appreciated 56.2 per cent over the same period.”
A research by CBRE freehold projects will present a better value over leasehold projects in the growing landed property market.
Joseph Tan, Executive Director at CBRE Asia Pacific, speaking at a Propertyguru seminar in May last year said:
“As of now, the total number of housing units offered in the market is 380,000. Landed properties only consist of 1.5 percent of the total housing stock, a small supply compared to non-landed properties which comprise 98.5 percent. Around 90 percent of landed properties are freehold while the remaining 10 percent are leasehold.
“Non-landed homes priced at $1 million to $2 million remain most favoured amongst Singaporeans. For landed homes, most investors prefer those priced at $2 million to $3 million. However, the gap between property prices for 99-year leasehold and freehold landed properties is quite narrow due to the scarcity in this category.”
Mr Ho said that given the land scarcity in Singapore, demand for landed homes in Singapore will continue to rise over the long term.
He pointed out that Singapore continues to be a global financial centre and a trade hub with high livability scores – all of which attracts high net worth investors to the Republic. All these factors will inevitably fuel demand for landed property in Singapore he added.
Mr Ho believes that value buys in the property market right now are are landed inter-terrace houses which’s per square feet price on the built-up area is usually less than $1,000.