In Singapore, owning a landed property seems like an unattainable dream for most people. But if you’re looking at other alternatives or options that will make your life feel more like living on one without breaking the bank too much then you are at the right place. One type that has been gaining popularity is cluster house- read this article if you’re interested in learning about what they offer and why it may be right for your needs!
What is a cluster house?
This is a perfect solution for those who want the best of both worlds. Hybrid properties offer landed estate living with condo amenities, allowing residents to enjoy status and perks such as swimming pools, fitness gyms, security, playground, etc in most instances and in a larger cluster housing estate.
As mentioned, cluster housing is like condominiums, but instead of high-rise blocks with many units, they are low-rise blocks consisting of terrace homes, semi-detached bungalows, or a combination of the three properties.
Cluster homes are a great way to get into the property market, especially if you’re looking for something different. They have strata titles, unlike landed properties that allow developers to build multi-floor properties that are connected to one another, and which share common areas and facilities between them.
Advantages of buying a cluster home
Below are 5 pros of buying a cluster house in Singapore.
- Substantial capital appreciation
The findings of a recent study show that cluster homes have been more resilient than other forms of land ownership. In fact, during the first boom time period from 2004 – 2008 when prices grew by 15% per year on average for freeholds and leases with an increase in value over four years at almost twice as fast at 52%.
In contrast, non-strata landed properties saw their values drop 19%. This data points out just how valuable this type of property truly is!
The cluster house at Siglap is a good example of how property values have increased in recent years. The original purchase price was $760,000 in 2004 and after just four years on the market, it had grown to almost double that amount to $1.18 million. This shows that it had increased by 55% from its original price.
Based on this, it has been shown that investing in cluster homes whether freehold or 99-year leasehold is a great idea. Not only do they offer significant capital appreciation but also monthly rent similar to landed properties!
- Robust demand for cluster homes
The demand for cluster homes is on the rise. Between 2014 and 2017, transactions of these types of property skyrocketed by 168%. This means that it surpasses the 141% rise in sales of landed titled homes. Besides, the total sales of strata-landed properties have reached 394 units since the imposition of the Total Debt Servicing Ratio (TDSR) framework in 2013. Furthermore, over 100 such lands were transferred during Q1 2018 alone!
- Condo facilities coupled with the privacy of landed housing
With cluster homes, you get the best of both worlds; a landed property and a condominium. This is because they come with all amenities that condominiums have to offer such as pools, fitness centers, etc! Plus homeowners can enjoy peace of mind knowing their space will always be safe due to security cameras around every corner 24/7, unlike landed properties. This is to ensure the safety of all residents and their families, as well as their homes and belongings.
- Cluster houses are more affordable as compared to landed properties
The affordability of cluster homes makes them ideal for people who want to live in landed properties but don’t have the budget. They’re also attractive among HDB upgraders, as they can more afford large private condos but are aspiring for landed properties. The prices of cluster homes are much lower than the typical landed properties. As the last quarter saw average freehold strata terrace house prices at S$817 psf compared with a typical land titles mortgage worth $1,417 per square foot (psf), it is clear that this type offers great value!
Even with the TDSR framework that shows how much housing loan you can borrow, cluster homes are considerably more affordable. The new tighter loan-to-value (LTV) limits introduced in 2018 mean it’s easier to find a home for under $2 million – if your property has this price tag then they’ll be just right.
With their price, cluster houses are expected to remain sought-after by buyers holding onto a huge amount of cash like HDB upgraders.
- Cluster homes are perfect and ideal for families with kids
Cluster homes are great for families with young children. They don’t have any lift access, so all of the houses in a cluster are on ground level which makes it easier for kids to go outside and play. Another benefit is having 24-hour security. They will likely be present to prevent any untoward things from happening.
When it comes to swimming pools in most cluster housing developments, parents can say goodbye to lugging cumbersome floats and towels. The pool is just a few steps away from their house! With this advantage, they’ll be able to enjoy supervising children while relaxing on the beach chair with a drink in hand or sunbathing – all without having any worries about what might happen if their kids are gone for too long.
Drawbacks of buying a cluster home
Below are the 3 cons of buying a cluster house in Singapore.
- Not ideal for the elderly
When you live in a cluster home, there are some things that need to be considered. For example, most cluster houses in Singapore do not have a bedroom on the ground floor. If you are planning to stay in your cluster home forever, this is something to think of. As we age, our bodies tend to change and have different needs. If you happen to have knee problems, do think about whether the stairs would be a daily challenge. It is also not ideal if you have elders staying with you. They have to be prepared to climb the stairs every day, on a daily basis.
- Maintenance fee
The cost of maintenance fees is usually very high, as there are fewer units in the development. The expense has to be shared by a smaller number of residents; some may range from $500-$1000 per month for an entire year’s worth (around 12k). It’s definitely something you should think about if your budget allows it.
- You do not own the land
You don’t own the land your house sits on, but you do have a share in it. Unlike landed properties where people can use their homes as they wish and enjoy all of its amenities for themselves, residents who live in cluster households are not allowed to make any changes whatsoever unless given permission from other owners within that particular development or community firsthand.
We hope that our pointers help you as a home buyer to navigate the pros and cons of cluster homes. Be sure not to make an expensive mistake by choosing incorrectly! All best-in luck with your decision.