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THE cluster housing market is in a sluggish state. The performances of new launches have been lacklustre, with substantial numbers of unsold inventory in many projects. Performance has been non-homogenous, with certain projects seeing more demand than others.
The most recent new launch was Alias Villas, a 99-year leasehold development by WHA Heritage Pte Ltd. The project is located along Jalan Haji Alias off Sixth Avenue and is expected to be completed by 2017. The development has a total of six three-storey villas, with sizes ranging from 3,000 sq ft to 3,670 sq ft. Since its launch in Jan 2015, the six-unit development has yet to sell any units.
To the uninitiated, cluster homes look exactly like regular landed homes. They are usually at least two storeys high and are located within zoned landed or mixed landed estates. A cluster development can comprise terraces, semi-detached, bungalows or a mix of these property types.
Cluster housing combines the status and appeal of landed properties with the convenience and perks of condominium living, with facilities such as swimming pools, gyms and the like. Like condominiums, owners have to pay monthly maintenance fees for property upkeep. However, they do not have the flexibility of rebuilding their properties or making changes to the external facade, without the approval of the management committee.
Therefore, the key difference between cluster housing and conventional landed housing are the availability of facilities and their property rights. Due to the difference in property rights, cluster houses are usually priced lower, relative to comparable conventional landed houses.
The cluster housing market has seen transaction volumes dwindle. Since the peak in 2011, when 613 units were sold, transaction volumes had been heading south. Volumes bottomed in 2014, and saw a slight recovery in 2015, when volumes moved up slightly.
Currently, volumes are mainly supported by the resale market, due to the dearth of new launches in recent years.
Cluster housing prices have fallen in tandem with the broad market. The overall median prices of cluster housing are now around S$697 per square foot (psf), having fallen about 14 per cent since their peaks in 2013, which saw prices hover at around S$812 psf. Prices have been dragged down by current loan curbs and poor market sentiment.
In August 2014, the Urban Redevelopment Authority (URA) revised the guidelines for cluster housing. In short, developers now have to set aside 45 per cent of the land for communal facilities and greenery. This proportion was previously at 30 per cent.
The revision was done to address feedback about congestion in landed estates and indirectly decreases the future supply of cluster houses. The change helps to preserve the value of landed housing estates, making them more exclusive and valuable.
New cluster housing developments are also affected by URA's new guidelines on landed housing. One of the changes reduces the maximum permissible height for two or three-storey houses.
However, this change is expected to have limited impact on the value of cluster housing, as most of a home's value would be derived from its location, tenure and age.
The short-term outlook for the cluster housing segment remains dim. With cooling measures unlikely to be changed, the demand for large-sized properties will remain capped.
However, cluster housing will continue to appeal to buyers who are looking for an affordable landed home that comes with exclusivity and facilities. It also remains a viable option for buyers who are looking to upgrade from a non-landed residence to a landed property, given its lower entry price.