Landed homes closing the psf price gap

Published 2011-02-24
The Business Times
By Uma Shankari

The price gap between non-landed property and landed property has narrowed in per square foot (psf) terms over the last two years, according to an analysis by a property firm.

Landed homes closing the psf price gapAt the end of March 2009, terrace houses, semi-detached houses and detached houses transacted at discounts of 23 per cent, 36 per cent and 38 per cent respectively as compared to non-landed units in psf terms.

By the end of 2010, the gaps had narrowed, although landed properties are still transacting at significant discounts compared to non-landed properties: discounts of 14 per cent, 30 per cent and 26 per cent respectively for terrace, semi-detached and detached houses.

The Urban Redevelopment Authority’s (URA) price index for landed homes climbed 30.8 per cent last year. The sub-index for detached houses, or bungalows, soared 37.6 per cent.

By contrast, the index for non-landed private homes rose a relatively smaller 14 per cent last year, the government agency said last month.

Property consultancy International Property Advisor, which pinpointed the trend of the narrowing price gaps using data from URA, said that landed home prices are climbing on the back of growing demand due to the demographic changes and lifestyle needs of the Generation X-ers (Singaporeans born in the 1960s and 1970s).

‘Based on the instructions we have been receiving from our clients, the demand for landed properties is strengthening,’ said the firm’s chief executive Ku Swee Yong.

In addition, demand is also being boosted by new Singaporeans who are used to living in landed properties in their countries of birth. High net worth Malaysians, Indonesians and Chinese who become new citizens fall into this group.

Echoed Savills Singapore’s executive director for investment and prestige homes Steven Ming: ‘Landed price gains are underpinned by growing affluence and demand against a limited availability of supply.’

Savills, which tracks the prices of Good Class Bungalows (GCBs) as well as non-landed luxury and high-end private homes in Singapore using its own baskets of properties, noticed that GCB prices grew more sharply in 2009 and 2010.

Prices of GCBs and other types of landed homes are now growing faster as they have typically been depressed compared to non-landed units, noted Mr Ming. He explained that they are starting from a ‘lower base’ and are therefore recording more rapid gains.

Looking ahead, Mr Ming said that the price gap between landed and non-landed home prices can be expected to narrow further – as long as economic fundamentals remain intact to continue supporting demand for landed homes.

But as with non-landed home prices, prices for landed properties are expected to rise at a more measured pace this year compared to last year, analysts said.

Recent government measures to cool the property market – including further slashing the loan-to- value limit on housing loans to 60 per cent for buyers with outstanding housing loans – have dampened homebuyer sentiment and are expected to have some impact on the landed property market as well, they said.

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