Limited supply
Given their scarcity and exclusivity, landed homes are among the most coveted real estate assets in Singapore.
The supply of landed homes has been limited. From 4Q10 to 4Q20, the total stock of landed homes rose by 5.1%, from 69,743 units to 73,273 units. However, over the same period, the total stock of non-landed homes went up by 60.6%, from 188,500 units to 302,767 units. As of 1Q21, there were 142 landed units from two projects, which have not been launched for sale, whereas 8,466 non-landed units from 59 projects were in the launch pipeline.
Stronger price growth
Driven by limited supply, landed home prices have generally outperformed their non-landed counterparts.
Since recovery in 2Q17, landed home prices have risen by 23.4% between 2Q17 and 1Q21, faster than the 17.5% rise for non-landed properties.
A spike in demand accompanied the rise in landed home price. The number of caveats lodged for landed homes surged from 968 transactions in 2014 to 2,395 transactions in 2017 and 2,319 in 2018, according to URA caveats data.
Although sales volumes of landed homes inched down significantly by 34% in 2019 due to the impact of the economic uncertainties and July 2018 cooling measures, prices stayed robust and registered a full-year increase of 5.7% in 2019, outperforming the 1.9% increase recorded for the non-landed segment.
Demand for landed properties strengthened in 2020, rising by 37% from the 2019 level, despite the impact of the pandemic on the economy and the Circuit Breaker measures to minimise the spread of COVID-19, which disallowed show-flat operation and property viewings from 7 April to 18 June 2020. In the first five months of this year, 1,376 landed homes have changed hand – more than double the sales volumes during the same period last year.
On the back of a healthy sales market, prices of landed properties proved to be more resilient, rising by 7.9% between 4Q19 and 1Q21, compared to the 5% increase in prices of non-landed properties.
Figure 1: Transaction volumes and price index for landed properties
Source: JLL Research, URA
Figure 2: Prices of landed homes versus non-landed properties
Source: JLL Research, URA
Key hotspots
Some key hotspots which are popular among prospective homebuyers and investors of landed homes include district 19 (Serangoon Garden and Hougang) and 15 (Katong, Joo Chiat and Amber Road). They were the top two that recorded the highest numbers of landed home deals in the first five months of 2021.
Figure 3: Key hotspots for landed properties (Jan-21 to May-21)
Source: JLL Research, URA, Microsoft
Conclusion
Generally, the limited supply of landed houses in Singapore has helped such properties to preserve their value, growing their appeal by making them more exclusive and sought after.
It would be beneficial for Singaporean homebuyers to consider landed property an asset for wealth preservation and a good hedge against inflation. Landed homes are restricted properties, but foreigners, who are Singapore permanent residents for at least five years, can seek approval from relevant authorities to acquire landed housing.
Given a low supply of landed homes, developers with relevant development expertise can actively lookout for opportunities in this market segment. The sale of landed units will provide them with more diversified income streams, complementing their sales of condominium and apartment projects.
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