Tuesday, December 29, 2009

Terrace prices are king among landed homes

For 4 years running their prices have been most resilient, Credo study finds

Landed home prices have largely continued to rise this year in the five most popular districts despite price fatigue setting in for condominiums and apartments.

A caveats analysis by Credo Real Estate, covering a four-year period from when the residential property market first stirred to life in 2006, shows that prices of terrace houses have been the most resilient over the past four years, rising by over 50 per cent in some areas.

More than semi-detached houses and bungalows, the average per square foot price of terrace houses has risen consistently between 2006 and 2009 in the five most popular districts.

The most sought-after landed housing location is District 19, followed by Districts 15, 28, 20 and 10.

Credo’s study does not include the Good Class Bungalow Areas (GCBAs) and Sentosa Cove (which are the more exclusive landed housing locations in Singapore), and strata landed homes. The latter are a hybrid housing form with shared condo-type facilities like swimming pool and tennis courts, and are usually built more intensively than conventional landed housing.

While terrace home prices have fared relatively better than semi-Ds and bungalows, landed home prices on the whole have also appreciated steadily between 2006 and 2009 in the five districts. ‘For most districts and sub-classifications of landed, we are at the all-time peak in terms of prices,’ says Credo’s managing director Karamjit Singh.

In most instances, price gains were achieved last year despite the general property downturn.

Agents attribute this resilience to the relatively limited supply and stock of landed homes.

‘There’s a very strong desire on the part of many Singaporean households to upgrade to landed property, which is regarded as an emotionally satisfying form of housing to own because you actually own something very tangible on the ground rather than in the air,’ says Credo’s Mr Singh.

The government’s promotion of larger families – with three or more children – has also set more parents thinking about the need for bigger homes with at least four bedrooms.

‘Many times you’ll find terrace houses offer better value than large apartments and condos. A 2,000 sq ft 4-plus-1, brand-new freehold condo in Katong might cost $2.4 million. But you can probably buy an intermediate terrace for about $2 million and have a bigger gross floor area of 2,500 sq ft, with saleable area inclusive of car porches possibly exceeding 3,000 sq ft. And you could have as many as five bedrooms,’ Mr Singh says.

He also points out that landed housing is an asset class that is predominantly bought and sold by Singaporeans rather than foreigners – which accounts for why landed ‘has always been like a steady ship, less volatile than high-end condos in particular’.

Knight Frank chairman Tan Tiong Cheng reckons, however, that new citizens could also be potential buyers. ‘A lot of new citizens also like landed homes, once they realise security is not an issue in Singapore,’ he said.

Terrace houses, which form the bulk of landed housing stock here, made up the lion’s share or nearly 60 per cent of the total 1,552 caveats lodged for landed homes in 2009 in the five hot spots.

In the most popular location of District 19 (which includes Serangoon Gardens and Yio Chu Kang), the average price of terrace houses has risen from $409 psf of land area in 2006 to $586 psf this year – an increase of 43.3 per cent.

In the second most sought after locale, District 15 (covering Katong, Opera Estate, Mountbatten and Joo Chiat), the average terrace home price has appreciated 51.8 per cent, from $475 psf in 2006 to $721 psf this year. Average terrace house prices in 2009 are at an all-time high in four of the five districts, and close to the record level in the fifth district.

Bucking the overall uptrend in bungalow and semi-detached home prices last year, the average detached home price in District 15 fell 23.1 per cent to $635 psf in 2008 from $826 psf in 2007. ‘District 15 detached houses benefited from that wave of buying we saw for luxury condos in 2007. But they also shared a similar fate when prices later fell in 2008,’ says Mr Singh.

District 28 includes Seletar Hills Estate, Luxus Hill and the Mimosa and Saraca areas; District 20 covers Jalan Pemimpin, Sembawang Hills Estate, Thomson Ridge Estate and Soo Chow Gardens; while District 10 includes the Bukit Timah and Holland Road areas.

The five hot spots account for 54.2 per cent of total caveats lodged this year for landed homes in Singapore, excluding GCBAs, Sentosa Cove and strata landed properties.

Overall, the 1,552 caveats lodged for landed homes in the five districts this year is about 65 per cent higher than last year’s figure, but still below the 2,516 caveats lodged in 2007.

More than 90 per cent of landed homes transacted this year in Singapore (excluding GCBAs, Sentosa Cove and strata landed homes) were in the secondary market – which is not surprising given the dearth of new project launches in the primary market.

For the year ahead, Knight Frank’s Mr Tan reckons the outlook for landed home prices remains strong, ‘just like the recovery in 2009 – and more so than condos’.

He reasoned: ‘Not only is supply limited but also static. It’s more difficult to create landed housing stock; when government sells land, it wants to maximise value especially if it’s near MRT stations. Hence the tendency to award higher plot ratios and these can’t be maximised by doing landed housing.’

Mr Singh, too, is upbeat about prospects for landed homes as long as the economy continues to grow. ‘Landed is dependent on Singaporeans at large feeling richer and confident about their earnings prospects. It has also got to do with the other forms of wealth creation taking place, like people becoming IPO-rich, or en bloc-rich,’ he says.

Source: Business Times, 29 Dec 2009

No comments:

Post a Comment