By Romesh Navaratnarajah:

A huge 52 percent of total residential purchases in Singapore during the first quarter were for units sold between S$1,000 and S$1,500 psf, the first time such homes formed the bulk of sales.

A new report from DTZ revealed that home sales in this price bracket have overtaken units sold at S$1,000 psf or less. In addition, sales in this segment increased by 14 percent in Q1, while other segments saw a decline of between 26 and 63 percent.

The report was based on caveats lodged for new and secondary home sales using data from URA Realis comprising 53.4 percent of the 6,526 units sold by developers and 2,524 units sold in the secondary market.

It added that smaller apartments usually command a higher unit price. Hence the strong demand for affordable units measuring 500 sq ft was the main reason behind the uptick in the unit price bracket to between S$1,000 psf and S$1,500 psf.

Shoebox units in the price segment comprised 15 percent of total transactions in Q1, compared to the quarterly average of 11 percent in the past two years.  As demand for these homes remain strong, developers continue to feature them in new projects.

In addition, buyers with HDB addresses drove demand for shoebox units in Q1. Such homes accounted for 472 units or a record high of 16 percent in the total number of transactions done by buyers with HDB addresses. In absolute terms, this is more than double the 234 units in the previous quarter. At the same time, these purchases accounted for 67 percent of the total shoebox market in Q1, a rise from the 55 percent recorded in Q4 2011.

“Besides singles who may be buying such units for owner-occupation, the rising popularity of shoebox apartments reflects increasing investor demand amongst purchasers with public housing addresses,” said Chua Chor Hoon, Head of Asia Pacific Research at DTZ.

“As a shoebox apartment is smaller than a three room HDB flat, it is unlikely that purchasers with HDB addresses are buying such units for owner-occupation and are thus more likely to be buying for investment.”


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