While purchasing a conventional landed home in Singapore is a far-fetched dream for many given their expensive price tag, there is actually a more affordable variety of landed housing.
Aside from its lower cost, unit owners will also have access to a wide array of facilities like a gym, swimming pools, 24-hr security and private parking space.
Yes, you heard it right. It’s cheaper than typical landed housing and comes with condo-like facilities.
So what is it? It’s cluster housing, which is a form of strata landed homes that can be built in landed housing estates such as Good Class Bungalow (GCB) areas.
But unlike typical landed dwellings, cluster homes are strata-titled properties. Consequently, developers can construct multi-floor residences next to one another that share communal facilities.
Cluster housing are like condominiums, but instead of high-rise residential blocks with many apartments, these are low-rise projects comprising terrace homes, semi-detached residences and bungalows or a combination of the three properties.
What are the advantages of buying a cluster house?
Cluster homes are darlings of shrewd property investors due to the many perks they offer, such as:
Substantial capital appreciation
The growth in the capital values of cluster homes have outpaced that of other private landed residential properties during Singapore’s two market booms from 1H 2004 to 1H 2008 and 1H 2009 to 2H 2013.
In fact, a research by SLP International in 2015 revealed that median prices of freehold cluster homes or strata landed houses increased by 15.4 per annum during the first boom time or a total of 77.3 percent over the four-year period.
This is the fastest appreciation in prices compared to freehold non-strata landed homes, 99-year leasehold strata landed houses and 99-year leasehold non-strata landed dwellings.
For instance, a terraced house in the freehold cluster housing development of Casa Fidelio at Siglap was purchased for S$760,000 in 2004. But by 2008, it changed hands for S$1.18 million, translating to a 55 percent surge from its original price.
Then in the second bull run of the property market from the first half of 2009 to 2H 2013, it was 99-year leasehold cluster homes that reported the fastest growth, with prices rising by 20.1 percent per annum from S$357 psf to S$813 psf.
Over 2004 to 2015, SLP International’s study found out that the median prices of freehold cluster houses exceeded that of freehold non-strata landed houses by S$110,147 on average. That for 99-year leasehold cluster homes was pricier by S$329,205 than non-strata landed houses with similar leasehold terms.
Based on the aforementioned data, it’s better to invest your hard-earned cash on cluster homes, whether freehold or 99-year leasehold, due to their significant capital appreciation.
Furthermore, not only are cluster homes more affordable than landed residential properties, but their monthly rent is roughly similar to that of landed residences.
Robust demand for cluster homes
Following the peak in 2011, sales of strata landed homes like cluster houses declined. But after hitting rock-bottom in 2014, transaction volume steadily rebounded.
As a matter of fact, transactions of such properties surged by 168 percent between 2014 and 2017, surpassing the 141 percent growth in the sales of land titled homes.
In 2017, sales of strata landed houses also reached 394 units or the highest since the imposition of the total debt servicing ratio (TDSR) framework in June 2013. Moreover, over 100 strata landed homes were sold from the second half of 2017 to Q1 2018.
Numerous condo facilities coupled with the privacy of landed housing
Cluster housing combines the top perks of owning a condo unit and a landed house.
With a cluster home, not only will your privacy be ensured similar to living in a landed residence, you will also benefit from a wide array of condo-like amenities and facilities that many typical landed homes don’t have, such as sauna rooms, gyms and swimming pools.
Cluster housing developments usually come with round-the-clock security and surveillance cameras to ensure the safety of all residents and their families, as well as their home and belongings.
While all these facilities are shared among the residents of a cluster housing project, you won’t have to worry about installing such amenities yourself unless you bought a typical landed home instead.
Cluster houses are more affordable than a typical landed property
According to the research by OrangeTee & Tie, prices of cluster homes are sharply lower than that of conventional landed residences. As of the last quarter of 2017, the average price of freehold strata terrace house was at S$817 psf versus S$1,417 psf for freehold land titled terrace dwellings.
Of the newer land titled houses that were constructed 10 years ago or below and sold from 2013 to 2017, fewer than 10 changed hands for up to S$2 million.
Even with the TDSR framework that curtails how much housing loan you can borrow based on all existing debts and the tighter loan-to-value (LTV) limits introduced on 6 July 2018, cluster homes are substantially more affordable than land titled houses.
As a matter of fact, it’s easier to find cluster homes costing under S$2 million. For instance, you can buy such properties at The Shaughnessy from S$1.52 million to S$1.85 million.
Given the better affordability, cluster homes are expected to remain sought-after by buyers holding onto a huge amount of cash like condo upgraders and those who have successfully resold their homes via collective sale. Such properties may also be attractive to HDB upgraders, who can more than afford large private condos but are aspiring for landed residential properties instead.
Clusters houses are rare and have limited supply
Demand for cluster homes has also been increasing over recent years due to their rarity and meagre supply. For instance, not a single new cluster housing development was launched in 2014. Then in 2015, the yearly supply of new units dropped below the 10-year average of 200 cluster homes.
Thereafter, only five cluster housing projects entered the market from 2015 and 2017 with a total of 107 units, a far cry from the 896 cluster homes across 26 developments that were completed between 2010 and 2014.
Based on the URA’s monthly poll of real estate developers, the unsold supply of cluster homes in January 2018 represented the lowest level since 2014.
The monthly sales of cluster houses by number also sharply increased from June 2017 to March 2018, suggesting that the strong demand for such properties is exceeding the available supply.
The dearth in cluster housing stock is also forecasted to worsen in the future. This is because the URA changed the development guidelines for strata landed housing in 2014, requiring builders to allocate at least 45 percent of the site area for communal open space compared to 30 percent previously.
Of this 45 percent, a maximum 20 percent can be used for communal facilities like playgrounds and swimming pools, while at least 25 percent must be allocated for foliage and greenery.
Given the higher required area for open communal space, developers are likely to build fewer cluster homes due to the lower profit margins for undertaking such residential developments.
Nonetheless, the capital values of cluster houses are likely to hold up given their limited supply. Their prices are also likely to be more resilient than private condos, as a greater amount of precious space in land-scarce Singapore are set aside for high-rise non-landed strata homes.
Someone else will look after and maintain common facilities
By purchasing a cluster house, you won’t have to worry about maintaining the facade of your home as well as the facilities in the development, unlike owning a typical landed home.
Your development’s management corporation or Management Corporation Strata Title (MCST) will either oversee the regular maintenance of the cluster housing project. These include taking care of the pool and gym, hiring cleaners and security guards, carrying out repairs and repainting the facade of your home. Alternatively, the MCST may appoint a managing agent to handle all of these things.
As a result, there’s less hassle and worrying over how to personally do such stuff, which isn’t the case if you had purchased a conventional landed home.
The upkeep expenses are also lower as all residents of a cluster housing project must contribute to the maintenance and sinking fund. In comparison, you will only have to depend on your own money for maintaining your property if you bought a titled landed house.
Fewer people to share the common facilities with
Compared to large condominiums with thousands of units, where you have to share the common facilities with lots of people, cluster housing projects are smaller and the number of homes don’t typically exceed 150 units. This means the latter’s facilities are more exclusive and there will be less people using it.
However, please be warned that the monthly services charges or maintenance fees are likely to be higher in cluster housing project as there are fewer people shouldering the upkeep costs unlike in large condominiums.
Cluster homes are ideal for families with kids
Unlike high-rise condos, you don’t have to use a lift to get to your unit and go out, and all units have first floor access. This set-up makes it easier for kids to go outside and play. 24h security is also likely to be present to prevent any untoward things from happening.
Furthermore, swimming pools in most cluster housing projects are usually situated just a few steps from the houses. As such, parents can easily watch over their kids from the comfort of their own home or while lounging on a nearby beach chair.
Outlook on cluster houses in Singapore
OrangeTee & Tie believes that the rarity and limited stock of cluster houses will preserve their prices, making them even rarer and more exclusive. With their better affordability versus usual landed homes, the appetite for such properties is expected to continue to rise.
The large amount of collective sales before the imposition of the new property curbs on 6 July 2018 may also boost the demand for cluster homes as thousands of families who have successfully sold their units will surely look for replacement dwellings.
With en bloc sales proceeds of between S$1.5 million to S$3 million, many en bloc sellers are well-capitalised to buy cluster homes. Aside from that, such properties will likely appeal to former condo residents who are used to enjoying the many amenities offered by condominiums.
In addition, demand for landed housing in Singapore has sharply increased over the past few years. In fact, data from the URA’s Real Estate Information System (REALIS) revealed that sales of such properties jumped by 145 percent from 968 units in 2014 to 2,369 units in 2017.
The average selling price of strata landed homes like cluster housing also rebounded from 2015 to S$805 psf in January 2018, while that for land-titled houses recovered to S$1,290 psf.
Three popular cluster homes in 2017
Given the many perks offered by such property, we shortlisted three cluster housing projects you should definitely check out if you’re considering to buy or invest in such property.
Belgravia Villas is the top-selling cluster housing project in 2017, with a total of 63 units sold. One likely reason for the strong demand is its nearness to the North–South Corridor (NSC) that is expected to be completed by 2023 and the expanding Seletar Aerospace Park, which houses multinational aeronautics companies such as Airbus and Rolls-Royce Holdings.
Located in Belgravia Drive in District 28, the freehold gated community comes with condo-like facilities like 24-hr security with surveillance cameras. It’s also equipped with a gym, wading and lap pools, in addition to a steam and sauna room.
Unit prices start from S$2.3 million. The development consists of 118 terrace homes and semi-detached houses measuring from 3,520 sq ft to 4,026 sq ft.
Although Belgravia Villas is situated in the tranquil Seletar Hills Estate, there’s no nearby MRT station. Nonetheless, there is a bus stop directly in front of the project, where residents are picked up by busses to Ang Mo Kio MRT Station.
For those with kid, the development is within walking distance to Rosyth School and Hougang Primary School. Yio Chu Kang Primary School, Montfort Junior School, Da Qiao Primary School, Serangoon Garden Secondary School, Bowen Secondary School, Xinmin Secondary School and Nanyang Polytechnic are within a 2km radius.
Touted as the second best-selling cluster housing project in 2017, Watercove shifted 39 units in all. One major reason for its popularity is that it’s the only seafront landed housing project in Singapore with a freehold tenure.
Apart from being a beach-lover’s paradise as it’s just a short walk from the sands and waves, the resort-like project in Miltonia Close at District 27 comes with many facilities like a swimming pool, reflexology pool and Jacuzzi.
Unit prices start from S$2.1 million. The project comprises 80 terrace houses and semi-detached homes ranging from 3,200 sq ft to 4,400 sq ft
But if you want to buy a home in Watercove, it’s advisable that you should have a car. This is because the project is about 2.3km from the future Canberra MRT station that will be completed by December 2019, while the existing Sembawang MRT station is around 2.7km away.
If you got children, you’ll be glad to know that there are many good schools within a short drive from the project. These include Wellington Primary School, Canberra Primary School, Endeavour Primary School, Chongfu Primary School, Yishun Junior College, Furen International School, Singapore American School as well as Sembawang Primary and Secondary School.
The Shaughnessy is the third top-selling cluster housing project in 2017, with 17 units changing hands. This is significantly more affordable than the other two projects as a unit can be yours for S$1.52 million to S$1.85 million.
Also, unlike Belgravia Villas and Watercove, it is relatively closer to an MRT Station, namely Khatib along the North South Line (NSL). However, it’s a 99-year leasehold development built in 2006.
Situated at Miltonia Close in District 27, the project is close to the Seletar Aerospace Park, and it sports condo-like facilities such as two swimming pools, Jacuzzi, function rooms/games room and a tennis court.
Overall, there are 254 terrace houses there with sizes ranging from 3,285 sq ft to over 3,700 sq ft.
Furthermore, finding a school is not a hassle as there are several learning institutions with a 1km radius, such as Northland Primary School, North View Primary School and Northbrooks Secondary School.
You may also browse our resale HDB flats or private condos for sale or rent. If you want to know about future property hotspots in Singapore that will benefit from ambitious government plans, check our AreaInsider.
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