Recently, I sat down with my colleagues, Jackie and Raama, to record the first ever episode of the Property Roundtable podcast. Of course, there’s no better way to start than with a topic that is close to our hearts: landed homes.
With our combined experience clocking in at over 50 years, and hundreds of transactions in this segment under our belts, we’re not talking about hearsay or speculation. Instead, we’re dishing insights straight from the property trenches, exploring the trends taking the island by storm and discovering what makes the “new rich” tick.
Forget mind-numbing statistics and drab market analysis, here are the juicy bits you need to know.
Supply will dwindle in the near future
Picture this: You're a buyer with a hefty budget of S$5 million. Chances are, you're eyeing the exclusive world of landed homes. Perhaps you've outgrown your fancy condominium and are in need of something that will stroke your ego, along with your bank account.
Well, here's the scoop: Given the high volume of transactions in recent years, it's safe to say that the new owners who have moved in aren't going anywhere. Once people purchase a landed home, they tend to stick to it like glue. Trades aren't as frequent as in other segments, happening every three to four years, and these properties are difficult to outgrow. Therefore, don't expect them to appear in the resale market anytime soon. Instead, they establish the benchmark for the increased prices that the "new rich" must pay to gain entry into this elite club.
The next wave of “darling” locations
We all know the hotspots like Thomson and Novena, where prices have skyrocketed to ridiculous levels, leaving only the top 1% of income-braggers able to afford them. Other aspirational buyers have since looked to Districts 19, 13, and 15 – which has recorded the most transactions of late. But the prices of these “entry-level” landed homes will eventually chase up in the next decade. When that happens, we expect other districts such as Seletar, Upper East Coast, Pasir Ris, and Upper Bukit Timah to form the next “support” tier in terms of affordability. Meanwhile, buyers who are serious and more open-minded may be drawn to the “dark horses”. For example, I was recently asked if a landed home in Jalan Merdu going at S$1,500 per square foot is a good deal. While I think it’s not too shabby, most buyers will be quick to dismiss it because it lacks the visibility of lifestyle enclaves like Serangoon Gardens. But regardless of where you are in Singapore, prices will eventually chase up due to the scarcity of land and especially landed homes.
Don’t know what you don’t know? Price filters will help you find it. If you’re travelling to Tokyo on a budget, you may discover alternative neighbourhoods to Shinjuku or Ginza when browsing a hotel directory. In the same way, it’s a matter of time these “dark horses” eventually get the attention they deserve.
A closing price gap between bungalows and GCBs
In 2033, Singapore’s population is set to increase by 300,000. The number of PRs will increase by 100,000, and non-residents by 200,000. We’re targeting a population of 6.5 to 6.9 million – a million more than what we have today. Against this backdrop of newly minted citizens, only 700,000 new homes are sprouting. Suffice to say, none of them will be ghost towns. At the same time, the traditional trajectory of going from a foreign citizen to PR to Singapore citizen is slowly becoming outdated, and may eventually be replaced by an “express route” of sorts. The well-heeled among these new citizens will likely buy into the space between bungalows and GCBs. It’s got plenty of room for growth, and we can expect the price gap between S$1,3000 to S$2,000
Buying activity among foreigners may slow down
Between the first quarter of 2022 to 2023, the number of foreigners buying homes in Singapore has increased by 120%. Their share of the local property pie has nearly doubled, and the last time it was this large (6.9%) was in 2018 (7.3%). In the last five years, these buyers have chiefly hailed from China, Malaysia, Indonesia, India, and America. How does the 60% ABSD they’re subjected to affect you, then? Well, most foreigners are currently buying properties above the 10 million mark. In the next year, this will be lowered to 5 million. If your property is valued between S$5 to 10 million, and you’re thinking of selling out, you may have to taper your expectations or shelf that plan temporarily. The new ABSD is going to be onerous for buyers (unless we’re talking about the mega wealthy and big family offices) and sentiments may be shaken. At the same time, we may see more buying activity among PRs, who have a renewed appreciation for the 5% they’re charged. In other words, their “discount” has become psychologically bigger.
Young buyers will start trading land size for convenience
In sprawling places like Opera Estate and Teachers' Estate, the neighbourhoods are so vast that you’d be hard-pressed to find a convenience store or public transportation. Gone are the days where buyers will overlook the lack of amenities for the sheer glory of living in a landed home. Today, we’re seeing an increasingly selection pool of buyers who do not want to compromise on the conveniences they are used to. Youngsters want to have their cake and eat it too.
Oh, and don't even get us started on the competition for schools. Proximity to a top-notch institution, my friend, can make or break a deal for them. This isn’t news – it’s always been the case in Singapore – but it has become increasingly apparent that it’s a non-negotiable of the emerging wealth group.
Young buyers will enter the market at all costs
We recently sold a landed home to a couple in their early 30s, and let us tell you, these youngsters mean business. Many youngsters are buying a landed home today not because they expect the market to grow exponentially, but because they’re data-savvy enough to know that waiting five years won’t make a difference. Prices are only going up, up, up. In fact, buyers from this group will go as far as to liquidate whatever other properties they have in order to snag their dream house. Apart from reconsolidating their portfolios, they’re also looking to rebuild an affordable home with “good bones”, and use the cost savings for a big-time facelift.
Given the limited supply and skyrocketing prices, entering the landed homes segment in Singapore may call for a gutsy move or two indeed. Want a slice of the pie? You’ve gotta do your homework. And if you’re not sure where to start, I’m always a Whatsapp away at 9199 9141 (Harvey Chia).
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