More landed homes sold in Q3 as buyers seek to guard wealth

More landed homes sold in Q3 as buyers seek to guard wealth

Lockdown easing, low rates, supply issues led to highest quarterly figure since 2018 Q2

Mon, Oct 12, 2020

Siow Li Sen

https://www.businesstimes.com.sg/rea...o-guard-wealth

MORE landed homes changed hands in Q3, as price expectations between sellers and buyers came to an easier match amid a lower-for-longer rates environment.

Data from OrangeTee & Tie showed that in the third quarter of this year, a privileged group snapped up 544 landed homes, more than doubling the previous quarter's 212. It is also the strongest quarter since Q2 2018 when 775 landed homes changed hands.

The jump in landed sales led to a sharp rise of 3.8 per cent in Q3 over the quarter, in the URA landed residential price index.

To be sure, landed transactions in Q2 2020 were tepid at 211 units, with fewer than 100 sales per month between April and June, said Leonard Tay, Knight Frank Singapore head of research, reflecting buyers' patience amid circuit breaker constraints.

"As the majority of landed home sales in Singapore occur in the resale market, it was only natural that many buyers of landed homes would have waited for the circuit breaker to be over and for viewings to be possible in order to check out prospects before making a decision," said Mr Tay.

"Therefore, there was a delay of about a month, before the pick-up in landed transactions began to catch up with non-landed new sales, with buyers ready to meet sellers' price expectations." he said.

Wong Siew Ying, PropNex head of research and content, told The Business Times the transaction drive has largely come from a surge in demand in recent months, with the supply of landed homes available for sale generally remaining stable.

"The increase in demand is primarily driven by investors seeking to preserve their wealth as well as to hedge against inflation, as countries rolled out quantitative easing measures in response to the pandemic," she said.

"Singapore's reputation as a safe haven for investment and the positive long-term outlook for its property market also gave investors the confidence to park their funds here."

To add, the number of landed properties traded in 2020's first nine months reached 1,142, slightly more than the 1,118 done in the same period last year. But total transaction value rose faster, standing at S$4.9 billion, up 11 per cent from S$4.4 billion in the same nine months of 2019.

The sellers are not necessarily offloading out of distress amid a pandemic-fuelled crisis, either. Jeffrey Sim, OrangeTee & Tie's associate executive director who specialises in bungalows, said: "The sellers of these bungalows, some are from old money - they don't need the house or money, or their children say they don't need the house, and have no time to re-build nor the interest to do so.

"Before the pandemic started, there were a lot of buyers with cash in hand but holding out because of the ABSD and hoping prices would adjust."

Buyers have to pay 12 per cent additional buyer's stamp duty (ABSD) for their second property.

One buyer, who declined to be named, said she was hunting for a place in District 9 or 10 that was near to her children's schools in Bukit Timah, "and near my mum who stays in the River Valley area". "I was looking for a 2,500 sq ft equivalent, because my condo was going en bloc."

She found a three-storey semi-detached house off Farrer Road, a house that is about 3,000 sq ft built up; she has since added a lift and enlarged the house.

One of the reasons for the jump in landed-property transactions are "aspirations for a landed property and the status that comes with owning and living in one", said Knight Frank's Mr Tay. Another very Singaporean factor for favouring landed homes, is to be near brand-name schools.

The latest transactions also point to some natural bias for freehold properties.

Nicholas Mak, ERA Realty head of research, said the median per sq ft land price for 99-year leaseholds has fallen 9.5 per cent to S$886 per sq ft in Jan-Sept 2020 compared to S$979 per sq ft in 2019. For freehold and 999-year leaseholds, it has risen 4.5 per cent to S$1,408 per sq ft this year over 2019's S$1,348, he said.

The rise in transactions in landed homes speaks to the limited supply of such properties.

As at Q2 2020, there were 73,456 landed homes against 301,296 non-landed properties in private housing stock. In the decade from Q2 2010 to Q2 2020, the stock of landed residences rose just 5.5 per cent while non-landed homes surged 63.1 per cent, said Ong Teck Hui, JLL senior director of research & consultancy.

In Q3 the most popular houses sold were in the 2,000-4,000 sq ft land size (265 units) followed by 125 units of less than 2,000 sq ft, according to Mr Tay based on URA Realis data as at Oct 1. Bigger houses on 4,000-8,000 sq ft land saw 100 sold. There were 12 houses sold in the 8,000-15,000 sq ft size range while the most coveted of them all, bungalows of over 15,000 sq ft, found 10 new owners.

In terms of pricing, 287 houses were traded between S$2 million and S$4 million. Houses which cost over S$4 million saw 161 transactions, while 64 houses costing under S$2 million made up the rest.

Within the landed housing segment, "pure" landed is preferred. The 544 landed housing deals in Q3 comprised 468 landed and 76 strata-landed units, said Christine Sun, OrangeTee & Tie head of research & consultancy. In Q2, there were 212 landed deals: 176 landed and 36 strata-landed units. Strata-landed housing includes condominium developments with some terrace or landed units, or cluster houses.

While more than half of the strata-landed properties are leasehold, only about 15 per cent of pure landed properties are leasehold. OrangeTee's Mr Sim added that many landed owners don't buy cluster homes because they are "like a condo".