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This year, the landed segment is the star performer in residential real estate. Many of the record-breaking deals have been made in the Good Class Bungalows, (GCBs). The total number of house deals in the first nine months of 2021 was 2,649. These deals included detached, semi-detached, and terraced houses as well as GCBs.
Ray Teo, Senior Group District Director at PropNex Realty, projects that the current pace for sales, which averages at least 800 transactions per quarter, will continue through 4Q2021, bringing the total number of house transactions to between 3,200- 3,500. Teo said that it has been a “phenomenal year” at the Landed Property Webinar hosted by EdgeProp Singapore and PropNex on Oct 3.
As it happens, Singapore has only 73,263 homes as of end-2Q2021, which is compared to the total of 340.283 non-landed units (apartments and condominiums, executive condominiums, etc.). According to HDB data, there were 1.08 million HDB apartments as of end 2020.
Teo says that only 5% of Singapore’s population lives in landed property. Teo says that buyers are primarily Singaporeans and new citizens. Foreigners cannot purchase landed property unless they have been approved by the Land Dealings Approval Unit of the Singapore Land Authority. Teo notes that there is less speculation and therefore less volatility in the landed property segment due to its high prices.
Twenty years ago, there were 1,836 transactions in landed property. The average price was $483 per square foot.
The average price and transaction volume both grew, reaching an all-time high in 2007, when 5,525 transactions were completed. This was at the height the property boom. Average prices stood at $645 per square foot. Teo says that a significant proportion of transactions were for new homes.
2008 marked the beginning of the global financial crisis. The transaction volume fell 61% to 2,145 units. EdgeProp Singapore data shows that the average price rose slightly to $666 per square foot. Teo says, “It shows that most landed property owners have strong hold power, and reacted to this by pulling their property from the market.”
Today’s average price is $1,379 per square foot. Despite the Covid pandemic affecting sentiment across the economy, the residential market and notably landed properties, are still hot. Teo says, “I predict that transaction volume will continue to be high, but there is currently a shortage of stock.” He notes that strong demand and a dearth in housing stock could cause prices to soar.
This trend is already evident in the GCB marketplace, where the highest-priced transaction in absolute terms was for a GCB located at Nassim Road, which was sold for $128.8million — also a record at $4,000.psf — in March. Two months later, a Cluny Hill GCB sold for $63.7million or $4.291 psf. This was a new record in terms psf. It was still being built at the time. The seller, a property developer has promised to complete the project as part the sale.
According to PropNex CEO Ismail Gafoor it’s never too late to get started. In the early 1990s, he purchased his first landed property, a intermediate terraced house. It was purchased at $610,000. He had bought it from a developer, as it was a new development. He says that the same house today is worth $3.5million.