With only 72,365 units, the landed home market* constitutes only 5.4% of Singapore’s total residential stock of 1.33 million units. Many home buyers aspire towards owning a landed home which is within the upper echelon of the housing market, attracted by the benefits of landed living as well as capital appreciation. Following the market upturn in mid-2009, landed home prices surged 87.7% over seventeen quarters, eclipsing the 56.2% rise in prices of non-landed residential properties (apartments and condominiums) during the same period. In the ten years between 2Q06 and 2Q16, the stock of non-landed homes climbed rapidly by 63.8% to 266,363 units while that for landed properties grew only 6.2% to 72,365 units. In land-scarce Singapore most of the residential land available for development is for high-rise non-landed homes with higher development intensity. Vacant sites slated for landed developments are limited and will become even more scarce over time.

From 2010 to 2013, the Government introduced several rounds of measures to cool the residential property market, including the Sellers Stamp Duty, Additional Buyers Stamp Duty, the tightening of mortgage loan limits and the Total Debt Servicing Ratio. The cumulative effect of all these measures was a slowdown in transaction volume initially and a softening in prices eventually. The sales volume of landed homes in 2015 was 73.6% lower than its previous high in 2010, a more severe correction than the 61.4% fall for non-landed properties. As landed homes are big-ticket items, the absolute loan quantum is usually substantial. With the strict loan curbs in place, the affordability of landed homes for many potential buyers has been reduced, shrinking demand in this market segment. The consequence was a sharper decline in prices of landed properties compared to non-landed. From the last market peak in 3Q13, to 2Q16, the Urban Redevelopment Authority’s price index for landed homes has declined 12.5%. In contrast, prices of non-landed homes registered a more moderate decline of 8.3% based on URA’s index. In the first half of 2016, the fall in non-landed home prices moderated to 0.7% but prices in the landed market still fell at the higher rate of 2.6%.

While the landed home market is likely to remain challenging in the short term, its longer-term outlook is expected to be favourable. The housing aspiration of many Singaporeans is to upgrade from an HDB flat to a private condominium and for those who can afford it, the next step is from a private condominium to a landed home. This aspiration remains intact although it may be facing a temporary setback due to the cooling measures. Between 2010 and 2015, the median income of resident households grew 38.0%. As income and wealth underpins demand for residential properties, higher levels of income and wealth should eventually lessen the effects of the cooling measures and enable more households to upgrade to landed homes. Since future supply of landed homes will be even more limited, their investment appeal to buyers will strengthen again.

 *comprising terrace, semi-detached and detached houses with restrictions against foreign buyers

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