Higher demand for small-sized units in Singapore

November 25, 2010
Singapore Democrats

This post is at least a year old. Some of the links in this post may no longer work correctly.

Property Report

The number of transactions for units below 500 sq ft increased from 349 in Q2 to 625 in Q3. Eighty-seven per cent of the 625 units transacted in Q3 were purchased from developers reflecting the current trend among developers to offer units with digestible quantum.

Chua Chor Hoon, Head of DTZ South East Asia Research said that small units had been gaining popularity among home buyers since the trend of these ‘mickey mouse’ units picked up in 2009.  She added: “The recent cooling measures, which increased the minimum cash payment, will make such units even more attractive as buyers have to downsize their purchases without having to increase the cash component”.

The proportion of non-landed sub-sales to total non-landed transactions was 11 per cent in the quarter, slightly higher than the 10 per cent in Q2. The level of sub-sales has generally stabilised from 9-12 per cent since the first round of cooling measures in September 2009, which saw the removal of the interest absorption scheme and interest only loans.

According to Chua, the level of sub-sales is expected to remain low as prices are not increasing at a fast enough rate to justify flipping within a year. In addition, the market is flushed with liquidity from the low interest rate environment with many buyers looking to place their spare money in properties. They are purchasing with a longer-term holding time horizon in mind.

“For uncompleted properties, the buyers will decide whether to sell or hold for rental when the units are nearer completion,” said Chua.

DTZ’s analysis also reflected that the proportion of transactions in the prime districts of 9, 10 and 11 have been on the decline from 25 per cent in Q1 to 16 per cent in Q3. This is a result of both an increase in the number of homes for sales outside the prime areas from Q2 and the lack of new project launches in prime areas.

Despite the government measures and the usual slowdown at year end, developer sales could reach around 3,000 units in Q4 due to a number of attractive projects that will be launched. Total sales volume for the whole of 2010 is therefore likely to be between 14,500 and 15,500 for new units sold by developers. Judging from the determination of the government to clamp down on property speculation and rising prices, tougher measures are expected if the market continues to be buoyant.

http://www.property-report.com/site/higher-demand-for-small-sized-units-in-singapore-10281