Are Landed Properties Good Investments in Singapore?
Updated: Aug 10
Landed properties in Singapore are some of the most coveted residential segment among Singaporeans. With their high quantum, only 5% of Singaporeans own landed properties.
Good hedge against Inflation
Landed living offers many perks such as space and privacy. (Read my post on Why you should live in a landed property!) However, the dollars and cents aspect also makes landed properties very good investment in terms of capital appreciation against rising cost of living.
To protect ourselves against inflation, it is crucial for us to place our resources on suitable assets with good returns as well as fit our risk profile. If you are like me, assets like Bitcoin while giving very high returns, are simply too volatile for my fragile heart.
In contrast, I would much rather sit on comparatively safe and steady captial appreciation assets such as Singapore properties. Across the 3 main residential segments (landed, private non-landed & HDB), you will see from the chart above that landed Properties have performed the best as a good hedge against rising costs of living.
Landed Properties VS Condo & HDB
Now, you may wonder about the returns on landed properties in comparison with other residential segments such as HDB and Condo.
To put it into an example, let's imagine 3 property owners - Happy, Contented, and Lucky with reference to the chart above.
Happy purchased a HDB flat for $500,000.
Contented purchased a Condo for $1.5M.
Lucky purchased a Landed property for $3M.
If the past 1 year, Happy's HDB flat would have appreciated $62,000. (12.5%)
Contented's Condo would have appreciated $144,000. (9.6%)
And Lucky's landed property would have appreciated $378,000.(12.6%)
It is crystal clear which residential segment you should invest in if you have the resources. Landed, of course.
Capital Appreciation of Landed Properties
Over the past 5 years of sales transactions of landed homes over all districts, there is an approximate capital appreciation of 17% per year with average price about $1,403psf.(Source: Edgeprop Property Market Trends)
Post Crisis Landed Prices
Landed properties are also able to better stand their ground against fluctuations in the market. Historically, prices of landed homes have remained steady even in times of crises.
Landed Homes prices had taken a small dip with each crisis but always appreciated to a new high, by 16.6% and 52% respectively. Now, post covid crisis, what do you think the next high would be? How much higher would it go? It is anyone's guess, but it appears to be a lot of runway for landed property prices to increase.
Prediction of Landed Property Prices
With the pandemic, properties including landed ones are facing higher labour and construction costs due to supply chain delays and labour shortages. This in turn pushes prices of properties up. With the crunch in the GLS (Government land sales) and higher costs faced by developers because of the recent cooling measures, the landed market is facing a dwindling supply, but demand is stronger than ever because of a genuine need from homeowners.
Home space has become a necessity because of work from home arrangements, and more and more homeowners want a bigger space for them to live and work comfortably. Hence, I think the demand and prices for landed properties will continue to rise. This may be a good time for you to purchase a landed property.
In summary, purchasing landed properties in Singapore is a great investment vehicle. It is the perfect marriage of both worlds - lifestyle enjoyment and sound investment. Not everyone has the resources to purchase a landed property. But keep this piece of information at the back of your mind and take one step at a time to get into this segment when you get the chance.
If you need to chat with someone regarding your financial wealth planning and real estate matters, feel free to contact me at 8268 1409.
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