Homes shrink as prices rise

Homes shrink as prices rise

Singapore home buyers are squeezing into ever smaller homes in order to be able to afford that prized apartment. Figures show the median size of new homes sold in the three months to today is now a very cosy 667 sq ft - a touch smaller than a squash court.

The latest figure is a hefty 24 per cent smaller than the same figure a quarter earlier. This trend is made even more stark compared with the median home size of 1,141 sq ft in the second quarter of 2010.

The median size of new suburban homes is slightly larger than the 667 sq ft, standing at 721 sq ft this quarter, but it is also well down from the 915 sq ft in the three months before.

Experts say the main draw of small units is their affordable overall price, which is also attractive to investors. The new data seems to back up their claim.

The median price of all new non-landed private homes is about $790,000 in the first quarter, down sharply from $960,000 in the quarter before, in tandem with shrinking sizes.

In general, however, median unit prices have risen to $1,179 per sq ft (psf) from $1,084 psf in the same period.

The smaller quantum makes compact apartments very affordable, providing a safe haven for investors keen to park their savings.

The projects with small units that were fully sold in the first quarter include 275-unit Guillemard Edge at a median price of $1,215 psf, 198-unit Casa Cambio at $1,390 psf and Millage, which moved 70 units at $1,350 psf.

Three-bedroom apartments have shrunk from about 1,200 sq ft five to six years ago to about 1,000 sq ft now to fit the budgets of home buyers.

This is still larger than in cities like Hong Kong, where the average apartment size is about 600 sq ft, according to a CNN report last year.

We are headed in the direction of smaller apartments, but it is unlikely to be as small as Hong Kong. Three-bedroom units are likely to remain larger than 900 sq ft.

Some experts emphasize that smaller homes are largely a function of sky-high prices - they surged 17.6 per cent last year - rather than lifestyle changes.

When prices come down, apartment sizes are likely to increase again. This is partly because HDB flats with three bedrooms are typically at least 1,000 sq ft, and so most Singaporeans are not used to living in tiny units yet, they add.

But shoebox apartments of 500 sq ft and less are also likely to have brought the median home size down, as they have been gaining in popularity in recent years. They usually go for under $1 million and attract mostly investors.

Sales of such units have shot up from 300 in 2008 to 1,900 in 2010, or from 6 per cent to 12 per cent of developers' sales over the same period.

Home hunter Pang Zhijian, who works in the financial industry, is not keen on units of less than 1,000 sq ft as the apartment will be meant for his own stay. 'I plan to live there for a while. It is not an investment home, so it needs to be bigger so that it can accommodate my family even five years from now.'

New home sales in the first quarter are expected to come in at 5,200 units - close to the previous quarterly peak of 5,578 units in the third quarter of 2009 - driven by easy credit.

Home sales averaged about 4,000 units each quarter for the past few years.

Top sellers for the quarter were Watertown in Punggol with 924 units sold, Parc Rosewood with 577 units sold and The Hillier in Upper Bukit Timah with 457 units snapped up.

Source: The Straits Times – 31 March 2012