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Shoebox units in increasing demand

Buyers shift focus to shoebox units: DTZ

Aug 27, 2013 - PropertyGuru.com.sg

Buyers are being drawn to more affordable and
smaller units following the government's latest
property cooling measures and stricter loan rules,
according to a report from DTZ. During the second quarter, 2,571 buyers (38
percent) opted to buy homes below S$1 million,
higher than the 1,835 buyers (31 percent) in the
previous quarter. Purchases between S$1 million
to S$1.5 million also increased to 33 percent or
2,265 units in Q2. In contrast, sales of homes prices from S$1.5
million to S$2 million fell to just 12 percent in Q2,
while purchases between S$2 million to S$3
million slipped to nine percent. "The sharp increase in purchases of units costing
below S$1 million was largely due to the sale of
shoebox units (defined as units below 500 sq ft in
size) within this price band. The proportion of
shoebox unit purchases within this price band
rose from 17 percent in Q1 to 29 percent in Q2. In absolute terms, the number of units more than
doubled from 310 units in Q1 to 738 units in Q2.
Almost all of the shoebox units purchased in Q2
cost less than S$1 million," the report said. Of the shoebox apartments sold, 52 percent or
384 units are located in the Outside Central
Region (OCR). The popular projects include
Bartley Ridge, D'Nest and Urban Vista. Moreover,
Q2 also saw a 22 percent quarter-on-quarter
increase in purchases by HDB addressees mostly buying shoebox units. In the high-end segment, sales remained firm as
"buyers have deep pockets and are less affected
by the cooling measures". In fact, 40 units worth
over S$10 million were sold in Q2, up 33 percent
from Q1. Moving forward, DTZ expects MAS' new Total
Debt Servicing Ratio (TDSR) framework "to have
limited impact on purchase demand for the first
and second private residential property, although
the maximum quantum of the property they can
now purchase is reduced". The TDSR will also likely affect investment demand especially for the
third property onwards as transactions will take
longer to be completed. "With the maximum absolute quantum of loan
being reduced, we expect demand to continue to
gravitate towards smaller and more affordable
units," it added.

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story.

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