Surge in demand sees buyers paying higher prices, but rate of increase likely to slow
More buyers are picking up landed homes and paying higher prices amid the strong economic recovery, said a recent Savills Singapore study.
It found that 2,198 caveats were lodged for landed houses between January and June this year, which is more than 57 per cent of the 3,832 caveats lodged last year.
And the total value of these transactions reached about $7.2 billion, which is about 75 per cent of the value of what was sold last year, it said.
Savills noted that more homes priced $5 million and above were traded this year.
'The surge in demand could be that purchasers are seeing better value in landed homes, as condominium prices have soared beyond peak levels,' said its prestige homes and investment director Steven Ming.
Also, compared with prices of their non-landed counterparts, prices of landed homes were relatively stable during the recent economic downturn, he said.
Median landed home prices have increased by 6.2 per cent from $745 per sq ft (psf) in the first quarter to $791 psf in the second, according to data from Savills.
The rise over the past year has been 31.4 per cent, it said.
Last Friday, the Urban Redevelopment Authority released data showing that landed home prices are still climbing, but at a slower rate of 6.2 per cent in the second quarter this year, compared with 8.3 per cent in the first.
Prices of detached houses saw the highest rise of 6.8 per cent among the landed housing types, while terrace house prices rose by 5.6 per cent.
Two to three years ago, buyers could easily find a typical freehold landed home of around 1,600 to 1,800 sq ft for about $1.3 million to $1.5 million, said Colliers International's deputy managing director (agency and business services) and auctioneer, Ms Grace Ng.
Today, they must be prepared to pay a higher amount of $1.6 million to $1.8 million, she said.
However, there are still bargains to be found in the resale market if 'you spend time doing your homework', she said.
These are likely to be run-down houses that need a lot of work.
Or they could be old houses that were bought a few decades ago at relatively low prices, such that the owners may be happy to sell around today's valuation price instead of above it, she said.
Property consultants say the attraction of landed homes lies in the scarcity factor, as there is limited supply.
Even the recent floods won't affect landed home values - that is, in the long term.
'Floods won't affect values in the long term, but in the short term, buyers may turn away,' said Ms Ng.
For instance, in the Bukit Timah area, where only the main roads were flooded, homes remain attractive because of their proximity to schools and the city, she said.
Unless the floods become a common occurrence, they won't weigh down on prices, she added.
Landed home prices are likely to continue rising, though the rate of increase could slow further as price resistance has set in, said Ms Ng.
Savills senior manager of research and consultancy Christine Sun believes that more buyers are likely to enter the market as the economy continues to improve.
'Landed home prices will still increase, but unlikely at the 10 per cent rate that we saw around the middle of last year,' she said.
'We believe that price rises will hover around 5 per cent to 6 per cent per quarter for the rest of the year.'
Source: Sunday Times, 25 Jul 2010