Recent price increases of relatively scarce landed homes have outstripped gains for non-landed homes, leading to talk of an increasingly segmented market.
According to the Urban Redevelopment Authority’s third quarter price index released, overall private home prices rose 2.9 per cent in the three months to Sept 30 – below the preliminary estimate of 3.1 per cent.
The market was buoyed by landed home prices, which surged 7.7 per cent in the third quarter – up from 6.2 per cent in the previous quarter.
Prices of non-landed homes inched up only 1.6 per cent as the market slowed, owing to the impact of the Government’s property cooling measures introduced on Aug 30.
Detached homes, in particular, have led the pack with a strong 8.4 per cent price jump. They are now up 27 per cent in the first nine months of the year.
Terrace and semi-detached homes prices also rose 7.2 per cent and 7.5 per cent respectively from the previous quarter, surging 22 per cent and 23 per cent since the start of the year. This compares with a 12 per cent price gain in the same period for non-landed homes.
Property experts say that landed homes have performed robustly due to their limited supply and the strong economic growth.
The segment is also relatively insulated from the new property rules which target speculators. Landed homes tend to attract less speculation given the higher prices of such homes, the experts say.
Mr Colin Tan, head of research and consultancy of Chesterton Suntec International, said that home buyers are now looking towards landed property as they are less risky and are more likely to rise in value.
Mr Steven Tan, executive director of residential at the OrangeTee, said that unlike condos, where the Government can release more land to cater to growing demand, the supply of landed homes is relatively limited.
‘The new rules might affect buying sentiment but if the economy grows, more businesses make profits and incomes will rise, resulting in an increasing demand for such homes.’
He however expects a slight moderation in landed home price rises to about 2 per cent in the fourth quarter.
Cushman & Wakefield’s senior manager of Asia-Pacific research Ong Kah Seng predicts an average 3 per cent gain till the second quarter of next year.
Mr Ong said: ‘In addition to locals, foreigners – mainly PRs who are granted permission to buy landed homes – are also looking at landed homes where possible.’
DBS economist Irvin Seah said that the landed homes segment was more stable as it is usually made up of wealthier buyers who are less affected by the new rules such as tighter financing measures.