Landed residential properties are among the most expensive housing in Singapore. Prices can range from $1.5 million for an older terrace house to tens of millions of dollars for a Good Class Bungalow. In 2021, landed residential property prices in Singapore appreciated at the fastest pace in the past 10 years. They surged by 13.3% year-on-year in 2021, compared to a lackluster 1.2% expansion in 2020. In the first three months of 2022, the landed housing price index expanded by another 4.2% quarter-on-quarter (QoQ).
Growth of Landed Housing Prices Accelerated
When the Covid-19 pandemic slowed the Singapore economy in 2020, capital values of landed housing -- like other real estate values in Singapore -- were adversely affected and resulted in a much slower annual growth rate that year. However, real estate market sentiment started to improve from the second half of 2020 onwards. It received a further shot in the arm when the Covid-19 vaccination program was implemented in 2021. This contributed to the subsequent faster rate of property price growth.
Interestingly, the capital values of landed housing increased at a faster pace in the first two years of the pandemic compared to the two years before Covid-19 became a household word. Landed residential property prices increased at a compound annual growth rate of 6% in 2018 and 2019. However, prices expanded 7.1% annually on average in 2020 and 2021.
Prices of landed housing also grew faster than prices of non-landed properties, such as condominium units, from 2018 to 2021. During this four-year period, capital values of landed residential properties increased by 28.8%, while capital values of non-landed housing grew by 24.2%.
Table 1: Residential Property Price Growth
Annual growth of landed housing price index
Annual growth of non-landed housing price index
Source: URA, ERA Research and Consultancy
The new round of property market cooling measures introduced in December 2021 brought a halt to the non-landed property price growth. However, the landed market segment emerged unscathed as the landed housing price index grew 4.2% QoQ in 1Q 2022. The quarterly rate of price increase of landed housing accelerated from 2.6% QoQ in 3Q 2021 to 4.2% QoQ in the quarter that ended March 2022.
More Landed Homes Sold in 2021
The Covid-19 pandemic prompted more white-collar workers across the globe to work from home. This sparked a demand for more space at home, and the growing wealth and income of the upper-middle class led to more demand for bigger condominium units and houses in Singapore.
Some 2,113 landed homes were reportedly sold in 2020, compared to 1,547 units transacted in 2019, a 36.6% jump. In 2021, landed property transaction volumes jumped a further 74.0% to 3,676 units, due to the overall recovery in the residential property market.
Figure 1: Landed Property Transaction Volume
Source: URA, ERA Research and Consultancy
Due to the limited supply of landed housing in the primary market, the sales of more than 90% of landed homes were transacted in the secondary market. Both primary and secondary markets saw increases in the number of units sold in 2021. Primary market sales volumes of landed housing rose by 157.6% year-on-year (YoY) while secondary sales volumes increased by 71.6% you.
Among the three market segments in Singapore, the Core Central Region saw the highest increase in the number of landed homes transacted in 2021, followed by the Rest of the Central Region and Outside Central Region, respectively. The growing transactions in the prime areas underpinned the growing appetite among landed housing buyers who can afford more expensive homes in prime locations.
Table 2: Landed Property Transaction Volume By Market Segments
Core Central Region
Rest of Central Region
Outside Central Region
Rental Demand Strong Remained
Meanwhile, changes in landed property rental rates in Singapore were more closely correlated to the economic climate and the job market. The landed rental index contracted from 1Q 2020 to 3Q 2020 when border restrictions were tightened and expatriate tenants left Singapore, leading to a decline in leasing demand.
When the vaccination program was announced towards the end of 2020, market sentiment improved. Furthermore, the demand for bigger homes contributed to the stronger rental demand for landed houses. As a result, the landed housing rental index started to rise from 4Q 2020 and into 2021. By the end of 2021, rental rates of landed homes had increased by 8.2% year-on-year, compared to the 2.7% contraction in 2020.
In the first quarter of 2022, the landed housing rental index expanded a further 5.3% QoQ, which was the highest quarterly rate of growth among all the property market segments. This could be due to the tenants’ strong preference for bigger-sized homes. Meanwhile, the limited supply of rental landed homes coupled with the growing demand contributed to the robust rental growth.
supply-chain bottlenecks, some homebuyers had to temporarily rent their accommodation while waiting for their new homes to be completed. The demand for rental landed homes was also boosted by the demand for more space due to the widespread work-from-home practice.
Looking Ahead: Impact of Cooling Measures
In the wake of the strong price gains and exuberance in the residential property market, the Singapore government introduced a new round of property market cooling measures on 15 December 2021. The new market curbs included raising the Additional Buyers’ Stamp Duty (ABSD) rates and tightening the Total Debt Servicing Ratio (TDSR) threshold from 60% to 55%.
Figure 3: New Market Curbs* From 16 December 2021
Property sales could face a slowdown in the near term as both buyers and sellers adopt a wait-and-see approach. However, as the majority of the buyers of landed homes are Singaporeans, who are exempted from paying ABSD if they are buying their sole residential property, the landed housing market could be less affected by the government’s new measures in the longer term.
Higher Property Taxes
Furthermore, in the Singapore Government’s Budget for 2022, the government announced that it will increase the property tax rate for owner-occupied residential properties in two stages -- from 4% to 16% currently, to 6% to 32% by 2024. The property tax rate for non-owner-occupied residential properties will be raised from the current 10% to 20%, to 12% to 36% in 2024.
Although the increase in the tax rate appears to be rather large in absolute terms, it is not expected to have a significant negative impact on demand for landed homes. This is because landed homes in Singapore are typically owned by wealthy individuals who could likely afford to absorb the increase in property taxes. Moreover, owners of landed homes may view that the incremental amount of property tax may not be particularly significant if the capital values of landed properties continue to expand in the long term.
As the Singapore economy recovers further with the lifting of the COVID restrictions, household income and the appetite for residential real estate, including landed homes, will rise. The pandemic had also led to the preference among some home buyers to keep a distance from others. This in turn had contributed to the demand for landed homes as the owners do not need to share common facilities, such as the lift, or come into regular contact with their neighbors.
On the other hand, the stock of landed homes launched and available for sale by developers fell to a historical low with a total of 60 unsold units island-wide in the first quarter of this year. There are an estimated 160 landed homes yet to be released. The launch of these residential projects could occur in the next two years. The total stock of these 220 landed homes can easily be absorbed within one to 1.5 years. Replacing them could take longer in land-scarce Singapore.
Among the landed residential projects that are yet to be launched, the 132-unit Pollen Collection is the largest, while Spring Waters Villas at Sembawang is the smallest with 6 units.
A new landed housing development on the site of the former Caldecott Broadcast Centre is the only reported landed residential development in the CCR. Located in District 11, the site could be developed into 15 to as many as 26 Good Class Bungalows.
Table 3: Upcoming Landed Residential Projects
Source: URA, ERA Research and Consultancy
Therefore, due to the limited supply of new landed homes in the next two years, about 95% of the transacted landed housing units will be resale homes, while the primary market sales will continue to make up only a small minority of the transacted houses. The expected rise in demand coupled with the limited supply would result in prices of landed homes continuing to appreciate in 2022. At the same time, the easing of travel restrictions to Singapore and the expected resumption of business activities to pre-pandemic levels would attract more expatriates with large housing rental budgets to Singapore. This would increase the leasing demand for landed housing. As the stock of houses is limited in Singapore, the rental rates of landed homes would also continue to increase this year.