In the past few months, smaller housing units have taken the larger slice of home sales.
Two-bedder units and studio-type apartments remain the top picks for buyers in several of the latest property launches, implying that home-seekers remain price sensitive. Generally, home purchasers are “still not as ambitious,” said Brandon Lee, a property analyst at DMG & Partners.
Just recently, developer NTUC Choice Homes lunched Trevista, a 99-year lease, District 12 condominium located in Toa Payoh. Out of the 550 units launched, most units that are yet to be purchased are either three- or four-bedders. Most buyers chose to go straight for the two-bedroom units when Trevistat’s preview began about two weeks ago.
A similar trend was also observed in GuocoLand’s Sophia Residence, a condo located at Dhoby Ghaut and is readily accessible to Dhoby Gaut MRT station, Park Mall, Plaza Singapura and Cathay Cineplex. “All one and two-bedders were snapped up as soon as they were launched,” a spokesman for GuocoLand said. Sophia Residence also has three- and four-bedder units.
There is anecdotal evidence that suggests that home-seekers preferred smaller units at projects like Ascentia Sky and Viva. Airstream, a 70-unit freehold condo where most units are 625 square feet or smaller, sold out last month.
Contributing to the trend are some developers who modify their projects to launch more smaller-sized units after realising that home seekers’ pockets are shrinking because of the downturn.
Though the per square foot (psf) prices for smaller homes are likely higher than those of bigger ones, smaller housing units are still cheaper in absolute terms. For instance, prices for four-bedders at Trevista start from $1.448 million or $850 psf. However, prices for two-bedders start from $770,000 or $880 psf, attracting buyers who are cautious with regard to big financial commitments.
The director at Savills Residential, Phylicia Ang, notes that several purchasers in the market today are first-time private unit owners or Housing and Development Board (HDB) upgraders who tend to have an “affordability threshold.”
Real estate adviser DTZ’s latest analysis of caveats establishes this further – as many as 78 percent of private housing transactions in the second quarter of 2009 were for apartments worth lower than $1.5 million.
Selling larger units in the market with this kind environment has become trickier for developers. An anonymous agent said that penthouses in particular are hard to market when the majority of budgets remain less than the $1.5 million threshold. Even so, the market for bigger units is far from being dead and gone. “Seasoned” investors or buyers will still consider larger homes, Ang said.