Can seniors right-size comfortably from their landed homes? The answer is “Yes”.

During his first National Day Rally this year, Prime Minister Lawrence Wong cast a spotlight on housing options with improved infrastructure for Singaporean seniors, highlighting that “there are seniors who prefer not to move” who desire to “age in place, where they currently live”.

However, some seniors may not be able to preserve their current living arrangements – primarily those who live in landed homes. Here are three main reasons why we believe Senior homeowners residing in landed properties are considering right-sizing their homes.

1. As they age, seniors will face progressively reduced mobility and will eventually require elderly-friendly facilities. This could include extensive renovation such as installing lifts for easy access to upper floors.
2. The upkeep and maintenance costs of landed homes could require seniors to part with a significant amount of their savings, especially for those who have already retired and no longer have a steady source of income.
3. By right-sizing their home, some seniors can unlock some monies from their existing property that could support their retirement.

Recent Tweak to ABSD Rules Could Help More Single Seniors to Right-Size Their Homes

Announced during Budget 2024, Single Singaporeans aged 55 years and above will be eligible for an ABSD concession on their second residential property should they meet certain conditions.

These include disposing their first residential property within six months of purchasing their second completed property, or from the issue date of the Temporary Occupation Permit (TOP)/Certificate of Statutory Completion. For the full list of criteria, see here.

The extension of the Additional Buyer’s Stamp Duty (ABSD) concession to Single senior Singapore citizens, including divorcees and widows/widowers, will provide a greater incentive for single seniors to right-size their homes.

When considering HDB flats, seniors have to keep in mind that there is a wait-out period of 15 months if they aim to move into a 5-room or larger flat. Thus, a more manageable property could be a 4-room or smaller flat. On the other hand, some may prefer living in a condo for its diverse range of facilities as compared to living in HDB estates as a whole.

Landed Properties Being Home to a Higher Proportion of Seniors

A quick study of several landed enclaves across Singapore revealed that nearly all of them had a higher proportion of Seniors. While Seniors make up 37% of the population island-wide, certain subzones, such as Tagore & Sembawang Hills (43%), Lorong Chuan & Serangoon Central (42%), and Hillview (39%), showed a higher concentration of Seniors.

Likewise, results from ERA’s “My Dream Home Survey 2024” reflected a similar trend, revealing that seniors constitute more than half (52%) of the respondents living in landed homes, surpassing residents from other age groups.

Chart 1: Landed enclaves and their estimated proportion of Senior population

Here are some considerations to help Seniors decide if they should right-size to new or resale condos

1. Unlike Resale Leasehold homes, New Leasehold projects come with a fresh 99-year lease

New condominiums have unique advantages of their own too. For most Singaporeans, remaining leasehold tenure is a major buying consideration – this is especially true for anyone interested in creating a legacy asset. This is where newly-launched condos excel, offering fresh leases that translate into longer horizons for price growth.

2. Wide selection of units making it possible for Multi-generation families to buy homes within the same project

Additionally, finding the right condo unit on the resale market might be more challenging than picking one in a newly-launched project. Depending on the pool of available units, right-sizers may have fewer opportunities to find their ideal home in an older development.

In contrast, newly-launched developments offer a wide selection of homes, significantly increasing your chances of finding a dream home that perfectly matches your desired preferences. Moreover, Seniors could consider purchasing new homes alongside their adult children, i.e. buying two properties within the same project. This arrangement enables them to live close enough to easily care for each other while still maintaining personal space.

3. Newer facilities + lower renovation cost required

New projects will see brand new facilities and typically require lower renovation cost compared to resale homes.

4. Resale private homes are affordable

For many buyers, affordability is a crucial factor that influences their decision in making a purchase. Traditionally, new sale private homes command a higher selling price than a resale unit. From 2019 to August 2024, the average price of resale units maintained lower prices than new sale units.

Chart 2: Average Price of New Sale and Resale Condos

Source: URA, ERA Research and Market Intelligence

Moreover, the premium on new sale units has exponentially increased. In the same period, average prices of new sales pulled away from resale units, boosting the price difference of 27% to 42%.

5. Resale condos have shorter waiting period compared to new condos

In most cases, buyers of resale condos can complete their purchase within three to four months and move in once renovations are finished. However, for new homes, unless the project is nearly completed, buyers generally have to wait between 2 to 4 years for their homes to be ready.

6. Sizeable resale units but many of them may require renovation

One notable expense associated with buying an older condo is renovation cost. The existing structure of resale units may not align with buyers’ preferences or may be in poor condition due to wear and tear. As a result, buyers often need to invest heavily in renovations, which may chalk up unexpected costs along the way.

At some locations, it might mean only finding much older resale condos. For instance, about half of the condo developments around Tagore, Sembawang Hills are more than 20 years old. These older condos may also have maintenance issues in communal areas that cannot be easily rectified.

Resale and new sale: What are the Seniors’ housing options?

While the availability of resale homes largely depends on what is listed on the market, there is a consistent supply of new homes to choose from. According to “Dream Home Survey”, among the Seniors and Boomers looking to buy a private condo as their next home, a significant 61% of them prefer new condos, far surpassing the preferences of the Millennial and Gen Z demographics. This preference likely stems from the appeal of longer leases and greater potential for capital appreciation associated with new condos.

And since familiarity breeds contempt, but in the case of neighbourhoods, it’s more likely that they’ll breed comfort instead. Being well-acquainted with everything – from the nearest supermarket to the cheapest eateries – in an area will allow you to establish a day-to-day routine that ensures daily life stays pleasantly predictable.

Referencing the locations, we had earlier discussed in Chart 1, here’s a list of new developments found in the vicinity

Table 1: Landed Enclaves & Nearby New Developments

Source: ERApro, ERA Research and Market Intelligence

Even at this price point, it is still financially feasible for senior landed homeowners to right-size to a new private condo in 2024

Looking at historical transaction data for landed properties in the various subzones over the past 15 months, it’s evident that current landed homeowners will have sufficient funding to purchase a new condo within a 1km radius after downsizing.

Our survey results also showed that 78% of Boomers and Seniors looking to buy a condo have a budget between $1 million and $3 million, which is a comfortable budget after transacting their previous landed home.

Here are some examples of estimated surplus funds that senior landed homeowners can expect to have after using their sales proceeds to purchase a newly-launched unit within the same subzone:

Case Studies (using median transacted landed home prices within the last 15 months)

Case Studies (using median transacted landed home prices within the last 15 months)

Example 1: Selling a terrace home in Tagore and buying a new 2-bedroom unit at Lentor Hills Estate

Value of current property: $3,629,000 Misc. Fees: $82,661 Value of new unit: $1,555,000 BSD: $46,800 Refundable ABSD: $311,000   Surplus: $3,629,000 – $82,661 – $1,555,000 – $46,800 = $1,944,539

Example 2: Selling a semi-detached home in Sembawang Hills and buying a new 4-bedroom unit at Lentor Gardens

Value of current property: $5,099,000 Misc. Fees: $114,119 Value of new unit: $2,657,000 BSD: $90,880 Refundable ABSD: $531,400   Surplus: $5,099,000 – $114,119 – $2,657,000 – $90,880 = $2,2237,001

Example 3: Selling a semi-detached home in Dairy Farm and buying a new 3-bedroom unit at Hillview

Value of current property: $4,500,000 Misc. Fees: $101,300 Value of new unit: $2,048,000 BSD: $66,520 Refundable ABSD: $531,400   Surplus: $4,500,000 – $101,300 – $2,048,000 – $66,520 = $2,284,180

Example 4: Selling a terrace home in Mountbatten and buying a new 3-bedroom unit at Dakota

Value of current property: $4,370,000 Misc. Fees: $95,518 Value of new unit: $3,452,000 BSD: $122,680 Refundable ABSD: $662,200   Surplus: $4,370,000 – $95,518 – $3,452,000 – $122,680 = $696,802

Source: ERApro, ERA Research and Market Intelligence

*Prices of new units are last updated on 22 August 2024

With their liquidated capital, many seniors should still be able to afford a new condo and have surplus to support their retirement need. Comprehensive planning allows for seniors to overcome the difficulties of living in their landed property while quelling financial concerns – the seemingly impossible is made possible so these seniors’ next properties are no longer out of reach!

For Seniors who have embarked on this journey, some have chosen to rent to rent a unit for two years while waiting for the completion of their new home. Here is what their rental expenditure could look like:

Table 2: Rental Expenditure by District (24-month period)

Source: URA, ERA Research and Market Intelligence

*Based on median rental in Jan-Aug 2024.

Even though the rental expense may seem high, it could still be much more affordable than the renovation costs associated with buying resale properties, which can balloon to a similar or significantly higher amount.

So, what now?

Ultimately, don’t close the doors on living a stress-free life! Right-sizing to a smaller home has never been easier for seniors, now that ABSD remissions have provided some financial flexibility.  Without the presence of taxes to chip away at your finances, there is some flexibility when it comes to budgeting for your next property.

Given the holding power landed homes have in today’s market, senior landed homeowners can be rest assured that their landed properties can provide them with a competitive exit check to move into their desired right-sized property.

If you are a senior considering downsizing to a new or resale condominium, do not hesitate to consult with an ERA Trusted Adviser today!

Disclaimer

This information is provided solely on a goodwill basis and does not relieve parties of their responsibility to verify the information from the relevant sources and/or seek appropriate advice from relevant professionals such as valuers, financial advisers, bankers and lawyers. For avoidance of doubt, ERA Realty Network and its salesperson accepts no responsibility for the accuracy, reliability and/or completeness of the information provided. Copyright in this publication is owned by ERA and this publication may not be reproduced or transmitted in any form or by any means, in whole or in part, without prior written approval. 

Among the three types of residential properties available in Singapore, from HDBs, to condos, and lastly landed property, landed property is the most elusive. Making up only 17.9% of private housing in Singapore, there is much about the landed property segment that most don’t know about.

Not only are landed properties expensive, they come with other expenses. Depending on the age of the house itself, the cost to maintain the house varies, with brand new rebuilds having lower maintenance costs. Having additional features in a landed home, such as lifts or a swimming pool also incurs additional costs for homeowners.

Despite this, landed properties are often seen as ‘dream homes’ by Singaporeans. Surpassing other property types in terms of size, exclusivity and privacy, they are a symbol of affluence, and that one has ‘made it’ in life.

Here are three important things you need to know about landed property to get you started.

What are the different landed property build types?

There are four landed build types in Singapore: terrace houses, semi-detached houses, detached houses (or bungalows) and Good Class Bungalows (GCB). They differ from one another in categories such as minimum plot size, width, depth, site coverage, setback control, roof overhang clearance and location (in the case of GCBs)

1. Terrace Houses

Terrace houses are the most common landed house type in Singapore. They are characterised by shared side walls between each other. They are often built with at least three units in a row, consisting of at least one intermediate unit and two corner units

Intermediate terrace units share walls on both sides of the house, and are often cheaper than their corner terrace counterparts.

Corner units are usually more expensive as they have a larger land area, due to only sharing one common wall.

2. Semi-detached Houses

Semi-detached homes (also called semi-Ds) comprise a pair of conjoined houses, each with its own land title, separated by a common party wall or partition. Semi-detached houses have a minimum plot size of 200 sqm, or approximately 2,160 sqft.

3. Detached houses (Bungalows)

In contrast to the aforementioned house types, detached houses (often called bungalows) are completely independent of its neighbours.

They are regarded as a top tier landed property in Singapore due to their scarcity and land size. These properties must be no smaller than 400sq. m or approximately 4,360 sqft.

One of the main attractions of living in a detached house is exclusive privacy, as they do not share walls with their neighbours. The large land space also offers homeowners greater freedom with the construction of the house and other features.

4.       Good Class Bungalows (GCBs)

The golden goose of all residential property in Singapore, GCBs are the most prestigious and expensive housing type in Singapore. Not only does the land size have to exceed 1,400 sqm in size (or 15,070 sqft), they have to fulfil the select criteria:

–           be in one of the 39 gazetted areas zoned for GCBs

–          Be no more than two storeys high (excluding an attic and a basement)

–          Have a minimum plot width x depth of 18.5m x 30m

–          The site coverage (area covered by the building or building features) cannot exceed 35% of the plot

Landed vs Strata Landed: Key Differences

The type of land a landed house sits on, determines if the house is a Strata Landed or Landed house.

When you purchase a landed home, you own the land title of the property. While in a strata landed home, you own a strata title. This means you own an individual title to your unit, instead sharing the land and facilities built on it – like in a condo.

Landed houses

When you own landed houses, you own the title to the land itself (land title). This gives you the freedom to do whatever you want to the structure of the house, such as the ability to completely tear it down and rebuild it from the ground up (in accordance with URA and BCA restrictions of course).

With the exception of Sentosa Cove, or specific approval from the Singapore Land Authority, foreigners cannot purchase landed properties.

In Singapore, foreigners can only buy non-landed properties – except in Sentosa Cove for their own stay.

Strata landed houses

In the case of strata landed houses, you do not own the land. You own a strata title instead, or a share of the land with other owners. Similarly to a condo, these properties are clustered within a gated compound and contain facilities. As a result, they are also often referred to as ‘cluster houses’.

The very obvious drawback to owning a strata landed house is that you cannot do as you please with them. This involves any work done to the outside of the house, such as repainting the façade or changing the window panels. The management committee has to approve any changes you want to make to a property as these strata homes are part of a development and must maintain its identity.

In addition to this, cluster houses share a common vehicular access point. They tend to see congestion in parking spaces, often leaving owners with only one lane to drive through. This is due to these houses housing multi-generational families, who often have more than one car.

Foreigners looking for a landed home outside of Sentosa Cove can look towards strata landed houses within an approved condominium development (under the SLA planning act). However, they are not allowed to rent out their landed property, and can only buy one for their own stay.

Landed property lease types

Some people might have the misconception that all landed property is freehold. On the contrary, leasehold landed properties also exist. They have varying tenures, from 70, 90, 103 year leases. The length of these leases can go up to 999, 9,999 and 99,999 years, which makes them as good as freehold.

Table 1: Median Prices of Freehold and Leasehold landed property in 4m 2024

	Terrace	Semi-detached	Detached
Freehold	$3,900,000	$6,180,000	$11,690,000
Leasehold (under 103 years)	$2,639,000	$3,500,000	$5,250,000
% Difference	32.3%	43.4%	55.1%

Source: URA as of 29^th May 2024, ERA Research and Market Intelligence

Leasehold and freehold landed houses see a significant price disparity, with freehold landed houses costing about 41.5% more than leasehold ones.

Freehold landed properties are generally seen as the superior choice a for investment buyers, or those seeking capital gains.

Leasehold properties see their value deteriorate at a certain point due to lease decay. An example of this would be the houses at Jalan Chempaka Kuning and Puteh, which recently made the news. The land leases of these homes will expire in 10 years, where the units will have to be vacated, and land ownership returned to the state.

At the same time, they offer an opportunity for homebuyers to purchase and live in a landed home at a more accessible price point.

Conclusion

Landed houses come in various sizes and build types, and offer the most customisation available on the market. This makes them highly sought after by homebuyers with specific needs. For example, they make a fantastic choice for multi-generational families. These families often need large living spaces (upwards of 2,000-3,000 sqft), which are hard to find in an HDB flat or condo nowadays.

Many people dream of owning a landed property, particularly a freehold one. This is because of their stored value, making them fantastic instruments for capital gains or legacy planning.

There are also buyers that covet a landed home as they believe it is the most suitable form of housing for their desired lifestyle. They may be drawn towards leasehold landed properties despite shorter remaining leases. They value the privacy and space a landed home provides, especially at the lower price point.

While landed properties are the most expensive form of property in Singapore, they are not entirely out of reach for those looking to upgrade to their dream home. Being aware of the different options on the market opens up more accessible options if you are truly interested in owning a landed home.

With this knowledge, you are now ready to explore the intricate landscape that is the landed housing market in Singapore.

If you are interested in purchasing or finding out more about landed property in Singapore, do not hesitate to reach out to an ERA Trusted Advisor today!

Disclaimer

This information is provided solely on a goodwill basis and does not relieve parties of their responsibility to verify the information from the relevant sources and/or seek appropriate advice from relevant professionals such as valuers, financial advisers, bankers and lawyers. For avoidance of doubt, ERA Realty Network and its salesperson accepts no responsibility for the accuracy, reliability and/or completeness of the information provided. Copyright in this publication is owned by ERA and this publication may not be reproduced or transmitted in any form or by any means, in whole or in part, without prior written approval.