Essential considerations whether to buy and invest in landed property
The demand for landed properties grew tremendously in 2020-2021. This was driven by the restrictions imposed during the pandemic as people were compelled to spend a lot of time under one roof. The benefits and space of a landed property shone through during this period and buyers were willing to pay the premium. The lack of supply and the need to future proof a landed home for multi-generational living also provided a gap where boutique developers were quick to capitalise in with new homes that maximised the new envelope control and modernised the new landed home for the new generational living standards.
No significant supply for landed housing stock
The supply part of the equation is fundamentally crucial when deciding if its still worth to invest in landed property today. Apart from private land projects, the last time there was a Government Land Sale (GLS) site for the development of landed homes was more than five years ago in 2017. That was for homes at Lorong 1 Realty Park, where 53 units of the Parkwood Collection, a cluster landed housing project, were recently completed.
Over the last two decades, less than 7,000 new landed houses were added to the private home inventory. At the same time, new private non-landed homes grew exponentially, with almost 180,000 new units. As at end-2022, there were 73,295 landed homes, with this number likely to remain stable as it is not easy for developers to purchase suitable land for subdivision.
New benchmark prices for landed property
The entry price of landed properties is an important factor in deciding whether its worth buying landed property as land cost and construction costs have escalated significantly in the past 3 years. Landed residential sales totalled S$17 billion in 2021 with 3,099 recorded transactions, the highest since such data became available in 1995. Among the three landed housing types in Singapore, terrace homes were the most proliferate in sales as they are the most numerous landed home type islandwide.
A total of 1,641 terrace, 993 semi-detached, and 465 detached houses were sold in 2021, with District 19 being the most popular location, accounting for 539 landed transactions. Another popular location was District 15 where 419 houses changed hands.
As more landed properties are transacted at high prices, these set new benchmark prices in their respective areas. Currently the landed property segment comprises just 5% of the total residential stock in Singapore. With an increasing supply in the public housing and non-landed private property segments, the percentage of landed property to total residential housing stock is set to decline.
Should You Buy and Invest In A Landed Property?
Yes, investing in landed property is increasingly viewed as one of the best wealth preservation assets and it is a preferred choice of real estate investment for HNWIs. However, acquiring a landed property requires careful consideration and due dilligence as it is one of the most expensive types of real estate in Singapore.
A landed house especially a Good Class Bungalow is considered the most prestigious type of property one can own in Singapore. Landed property is a piece of real estate that is tangible, can be improved in value and proves to be a good hedge against inflation and protection against future price increase due to land scarcity. People value the security of owning something physical that they can live in, rent out, improve its value or use for various purposes.