The popularity of small apartments pushed down the total value of non-landed homes by 22 percent last year compared to 2010, according to the latest report by CBRE.
A total of 13,611 caveats were lodged for new non-landed homes in 2011 amounting to S$16.568 billion, significantly lower than the S$21.173 billion collected from 13,933 caveats a year before.
The sharp decline is attributed to the robust sales of shoebox units, which are not only located within the city fringes but also in suburban condo projects located on government land sites.
Based on caveats analysis, the median size of new units fell to 721 sq ft in Q1 2012 from 1,249 sq ft in Q3 2009. Moreover, the median quantum of new apartments dropped below the S$1 millionth-mark since Q1 2011 and median quantum of new apartments shrunk to S$797,000 per unit from S$1.06 million in Q3 2009.
“While it is true that there is resistance at this level, particularly for suburban condominiums, the declining median price does not imply a fall in home buyers’ affordability,” noted CBRE.
It added that government statistics indicate a rise in average monthly income for resident employed households from S$6,342 in 2010 to S$7,037 in 2011.
“It just means that the property measures are working because home buyers are lowering their risk by investing smaller sums. The industry has come to realise that the playing field has changed and is still changing,” said Li Hiaw Ho, Executive Director at CBRE Research.
He noted that by offering cheaper units below S$1 million, “developers have now been able to attract not only families but also single professionals, empty-nesters and retirees into the market”.
Most recently, National Development Minister Khaw Boon Wan said that units built by private developers are becoming smaller and cited the sudden increase and popularity of shoebox units.
He noted that the government “may have to step in” if the number of such units coming into the market gets too high.
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