Price of good class bungalows expected to rise in tandem with positive property sentiments

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2017 was a bumper year for good class bungalows and with the sales of a few of these luxury properties sold in the first few months of this year, it certainly looks like the good run is all set to continue into the next. Based on caveat records from the Urban Redevelopment Authority’s Real Estate Information System (URA REALIS), 37 good class bungalows sales were transactions in the year 2016 with a total value of $789 million. In 2017, 41 good class bungalows with a cumulative value of $867 million changed hands.

According to CBRE Research’s analysis of caveats data, year to date seven deals totaling $181.6 million have been sealed in good class bungalow areas; this is higher than the five deals totaling $116 million in quarter 1 of 2017.

Newsman Realty managing director KH Tan is confident that the total value of sales in good class bungalow areas in 2018 will surpass last year’s figure. “I foresee a lot of big transactions of S$30 million and upwards.”

JLL Reasearch also suggested in February 2018 that they expected good class bungalows to remain sought after in 2018. They cautioned however that pricing and the available stock for sale will remain key considerations for buyers.

Under a policy change that took effect in the second half of 2012, only Singapore citizens are allowed to buy landed residential properties within good class bungalow areas.

The Urban Redevelopment Authority (URA) has gazetted 39 good class bungalow areas, which are the pinnacle of Singapore’s landed housing segment. The URA has stipulated strict planning conditions for good class bungalows to preserve their exclusivity and low-rise character. URA also requires good class bungalows to have a minimal plot size of 1,400 sq m or 15,069 sq ft – but those with land plots smaller than the stipulated size when the 39 good class bungalows areas were gazetted in 1980 are still classified as as such.

In his book ‘Singapore Good Class Bungalow 1819-2015’, Professor Robert Powell says no one can recall precisely how the words ‘good class bungalows’ came to be chosen or by whom. He added: “It is possible that they may have been called ‘Good Class’ in order to differentiate them from smaller bungalow plots”.

In an interview during the book’s launch, Powell noted that “it was probably for economic reasons that the government decided to officially recognise the bigger bungalows and their surroundings so as to attract or retain high-wealth citizens to contribute to the economy”.

Former URA chief Liu Thai Ker agrees with Powell and said:

“As far back as 1980, we anticipated that Singapore will become a very prosperous city and given the fact that land is so short (in supply), if we don’t protect the (good class bungalow areas), then when people become billionaires, where can they find good-quality housing? Despite the fact that we are pushing mainly for high density, we must retain some very low-density housing for the very rich because people in other countries, even if they are not super-rich, they still can get large tracts of land to build their homes.”

The 41 good class bungalows which changed hands last year fetched anywhere between $858 to $2,351 per sq ft on land area. The transacted price also depended on other factors like location, plot size, terrain and the condition of the bungalow.

KH Tan predicts “a 10 per cent rise (from last year’s price) in good class bungalow prices on average.”

While Realstar Premier Group founder William Wong noted that “nowadays a lot of buyers are waiting for good class bungalows in prime locations like Dalvey and Cluny. When such properties are made available, they are snapped up within a few weeks as buyers are prepared to pay a premium.”

He added that this contrasted with the situation in 2016 and the first half 2017, when buyers were not prepared to match asking prices.

The JLL Research noted that the buyer pool for good class bungalow was small and that new citizens who were originally from China, were prominent buyers of such exclusive property.

Besides the new citizens, buyers of good class bungalows also comprised of Singapore corporates, ultra-high-net-worth Singaporean families and Singaporean entrepreneurs in their 40s. Coveted address, prestige, exclusivity, wealth-preservation quality and measure of their financial success, were all reasons for such buyers to seek good class bungalows.

KH Tan said: “All the positive news on en-bloc sales has led many ultra high net-worth individuals who became Singapore citizens around a year ago to think that now’s the right time for them to pick up that GCB they have been waiting to buy.”

Despite the restricted demand pool, prospective sellers are expected to raise or be firmer on their price expectations in 2018, noted JLL. This is because sellers are mindful that good class bungalows will further enhance the wealth preservation quality for the buyers.

But the prices of good class bungalows are expected to be tempered by Additional Buyers’ Stamp Duty (ABSD) and Total Debt Servicing Ratio (TDSR) requirements.

Mr Paul Ho, chief mortgage consultant of icompareloan.com, believes that the price of good class bungalows will rise in tandem with the generally positive sentiments surrounding real estate in Singapore.

“As the sales proceeds start to come in from the en bloc sales completion from now till 2019, landed properties will hot up,” Mr Ho said.

Mr Ho added that buyers of good class bungalows stand to potentially save tens (if not hundreds) of thousands of dollars if they engage the services of a mortgage broker for their purchase of the high end property.

“And every dollar counts!” Mr Ho said.


If you are home-hunting for good class bungalows, our Panel of Property agents and the mortgage consultants at icompareloan.com can help you with affordability assessment and with best home loans. The services of our mortgage loan experts are free. Our analysis will give best home loan seekers better ease of mind on interest rate volatility and repayments.

Just email our chief mortgage consultant, Paul Ho, with your name, email and phone number at paul@icompareloan.com for a free assessment.