The landed homes segment is bearing the brunt of the government’s property cooling measures compared to the non-landed sector, according to media reports.
In fact, the price index for landed houses suffered a larger decline of 5.1 percent in the past four quarters, while non-landed index saw a smaller drop of 3.3 percent, based on URA data.
“It was previously thought that the landed segment, which has so little new supply and strong demand, might be more resilient than other segments,” said JLL’s Singapore Research Director Ong Teck Hui.
“The effect of the Total Debt Servicing Ratio (TDSR) on the landed segment has turned out to be worse than anticipated… now, with severely constrained borrowing, there are probably much fewer potential buyers of landed homes. Or if they are still in the market, their budgets would have been substantially cut.”
In five quarters after the introduction of the TDSR, transaction volume for this segment is 65 percent lower compared to the five quarters pre-TDSR, while the non-landed sector saw a 57 percent slide over the same period.
Additionally, buyers now prefer smaller and more modern-looking units, said Ong Kah Seng, Director at R’ST Research.
“Savvy property buyers feel there is less value in buying a landed home in Singapore where costs are high and designs tend to be older.” Moreover, Johor offers landed property at a more affordable price, he explained.
Another factor that has negatively affected the landed homes market is the more stringent eligibility criteria for Permanent Residents (PRs), who want to purchase this type of property, added SLP International Executive Director Nicholas Mak.
Since the tougher rules were rolled over the past two years, the number of PRs who were allowed to buy such plummeted to 31 in 2012 from 117 a year ago and 145 in 2010.
For more listing or condo properties, please click here!