HomeNewsAre Landed Houses Still Affordable For HDB Upgraders?
Are HDB Upgraders Still Able To Afford Landed Houses

Are Landed Houses Still Affordable For HDB Upgraders?

HDB Owners Find It Increasingly Difficult To Upgrade To Landed Houses

Landed property is the most exclusive type of residential property. Despite the high prices, a not-insignificant number of landed property buyers are those who have “upgraded” from public housing.

In the 10 years from 2004 to 2013, some 23.3 per cent of all landed properties transacted in that period were sold to buyers with a registered HDB address. The proportion of landed housing units bought by HDB upgraders peaked in 2009 at 29.5 per cent.

In 2014, HDB flat owners bought 24.5 per cent of landed homes sold that year – the second time the upgrader proportion peaked in the past 20 years.

Buying a private landed home is perhaps the ultimate housing upgrading for HDB dwellers. However, landed housing has become less and less accessible, for several reasons.

History shows buyers jumped into the landed market when prices took a hard fall. The proportion of HDB upgraders in the landed housing market peaked in 2009 after prices were battered by the 2008 global financial crisis. The landed housing price index contracted 19.1 per cent in the 12 months from mid-2008 to mid-2009.

In 2014, the landed residential price index contracted 5.4 per cent after the implementation of severe cooling measures. This likely contributed to the small rise in the proportion of landed homes purchased by HDB upgraders – from 22.6 per cent in 2013 to 24.5 per cent the following year.

Since then, private property prices have outpaced the price appreciation of HDB flats, limiting the financial ability to move up the housing ladder.

Over the past decade from 2013 to 2023, prices of landed and non-landed private residential properties increased at about the same pace of 31.7 per cent and 31.6 per cent, respectively, based on official price indices. Resale prices of HDB flats, meanwhile, appreciated by a slower 23.7 per cent.

Price Growth Of Different Housing Types

The gap is even more stark over a longer 20-year timeline. From 2003 to 2023, prices of private non-landed housing and HDB resale flats increased by 143.1 per cent and 140.2 per cent, respectively. Over the same period, prices of landed homes jumped by a steeper 180.6 per cent.

A second reason that exacerbates the rising inaccessibility of landed homes is the wide difference between prices of public housing and landed homes. In 2013, the median price of a five-room HDB resale flat, the biggest type of flat built in the past two decades, was S$537,000. The median price of the smallest type of landed property, a terrace house, was S$2.68 million – five times the price of a five-room resale flat.

Over the past decade from 2013 to 2023, the median price of terrace houses grew 34.3 per cent to S$3.6 million, while the median price of a five-room resale flat grew by a slower 21 per cent to S$650,000. As a result, the typical terrace house has become 5.54 times more expensive than the average five-room flat.

The absolute price gap also widened, from S$2.14 million in 2013 to S$2.95 million in 2023 – up by 37.7 per cent, greater than the 21 per cent increase in the price of five-room flats over the past decade.

Where and What Landed Houses Did HDB Upgraders Buy

HDB graders predominantly buy terrace houses, as terrace houses are more affordable than the other two types of landed homes – semi-detached houses and detached houses or bungalows.

Terrace houses are also the most common type of landed homes in Singapore. Based on transactions of landed homes in the past decade, 59 per cent of transacted landed properties are terrace houses, while bungalows and semi-detached houses made up 12.3 per cent and 28.7 per cent of sales, respectively.

In 2023, 71.2 per cent of landed homes purchased by HDB dwellers were terrace houses. This is followed by semi-detached houses (23.2 per cent) and bungalows (5.6 per cent).

Almost eight out of 10 houses bought by HDB upgraders in 2023 are in suburban areas in the Outside Central Region. It is also likely that these buyers gravitated towards the HDB estates where they lived, or where they have extended family and social networks.

Nevertheless, some HDB upgraders have deep pockets – 9.9 per cent of upgrader buyers were in the Core Central Region and 10.7 per cent in the Rest of Central Region.

In the coming years, the price gap between public housing and private landed homes is likely to widen further. Government policies to keep public housing affordable would result in the deceleration of price growth of HDB resale flats.

While the government ramps up the supply of HDB flats to the range of 18,000 to 23,000 flats annually, there are only about an average of 300 newly completed landed housing units yearly in the past decade. The limited supply of landed homes will only widen the price gap.

(Source: The Business Times)

>>> For Property Insights

Do you intend to buy a property?

You may be thinking what is the next step for you and if it is worth going through the necessary groundwork to buy a property.

When is the best time to buy and how can I purchase it at the best price?

Here at The Landed Collective, we specialise in residential properties and that means, HDB flats, Condos, Landed Houses and New Developer Sales. 

Before you start anything, speak to us for a complimentary consultation as we will provide you with comprehensive advice, run through the essentials on the property market and answer any questions you may have.