Older landed homes now within reach

July 27, 2008
property
Older landed homes now within reach
Prices are attractive in suburban areas but buyers need to be aware
of the property's condition
By Joyce Teo

Owning a landed property may feel like a distant dream for some after
the prices of such homes surged significantly last year, but the
dream may not be as distant as it seems.

If one looks hard enough in suburban locations, such homes can be
found for as little as $800,000.

The good news for potential buyers is that price growth in landed
homes is slowing in line with the general market.

Indeed, suburban bungalows and terrace houses have already registered
a drop in prices, according to data from Savills Singapore.

For instance, in the second quarter, prices of suburban terrace
houses dropped 6.8per cent to an average price of $605 per sqft,
compared with a 2.4per cent rise in the first quarter.

Overall, official data from the Urban Redevelopment Authority on
Friday showed that landed home prices rose 0.6per cent in the second
quarter, down from a rise of 3.9per cent in the first three months of
the year, and 23.4per cent for the whole of last year.

While the downward growth trend may continue, landed home prices are
at least supported by a limited supply of such homes and a relatively
illiquid market, market watchers say.

As more houses are being converted into apartment blocks, landed
homes could become rarer in 15 years' time, says the director of
Savills Residential, Mr Ku Swee Yong.

He foresees an annual rise of at least 5per cent in the general
landed home market in the next three years even as growth slows.

* What to look out for

Those with a small budget of around $800,000 should check out
locations such as the MacPherson area, or Jalan Hari Raya in the
Thomson area, according to Mr Eugene Lim, assistant vice-president of
ERA Asia-Pacific.

Those with a slightly bigger budget of around $1million might like to
consider older, 99-year leasehold landed homes in Paya Lebar, Hougang
and Rifle Range Road.

They could also look at the terrace houses in Choa Chu Kang, Kallang,
Pasir Ris, Sengkang, Sembawang and Toa Payoh, or semi-detached homes
in Jurong West.

A 2,399sqft terrace unit in Pasir Ris Heights, for example, was sold
for $870,000 last month, while a bigger 3,674sqft unit in the same
area went for $818,000 in April.

Generally, though, landed homes below $800,000 are few in number, are
likely to be very old and are often single-storey terrace houses.
Buyers would likely need to spend money on renovation, said Mr Lim.

With older homes, potential buyers should pay particular attention to
the structure and look for signs of leakage, he said.

But even if a buyer has money set aside for renovation, said experts,
he may find it tough securing a contractor, as the construction
sector is stretched in the current market.

Aside from location and the cost of renovation, buyers should also
consider the shape of the site on which the house sits.

'Odd-shaped land means there is less effective land area for built-up
space, and that compromises on space maximisation as well as the
prospect for redevelopment or even sub-division,' said the head of KF
Property Network, Dr Tan Tee Khoon.

Fortunately, most houses sit on rectangular or square-shaped plots.

'Other practical considerations include ensuring that there is no
termite problem and that the property has no illegal extensions or
erection of structures,' he added.

Also, buyers typically want a landed home for their own use. Those
buying for investment should note that landed homes are generally
less attractive to tenants than condominium units because of the lack
of facilities, said Savill's Mr Ku. Many tenants also do not want to
be bothered with maintaining a landed property.

Median rents for suburban terrace units have remained stable this
year at $1.84 psf - the same median rent level for semi-detached
houses in the second quarter. Median rents for surburban bungalows
have fallen to $2.40 psf in the second quarter, from $2.67 psf in
general.

'In general, the lower rental value is reflected in the lower price
on a per square foot basis. This is why landed prices are a laggard
to the general market,' said Mr Ku.