Saturday, June 30, 2012

LIVING LARGE: Bigger homes making a comeback after shoebox craze

Straits Times: Sat, Jun 30
LARGER-SIZED homes seem to be making a comeback, with upgraders leading the charge, amid tentative signs that the craze for shoebox units may be subsiding.

New figures from property consultancy CBRE show the median size of all new non-landed homes sold rose to 79 sq m in the second quarter, well up from 65 sq m in the three months before.

The market share of tiny shoebox units of 50 sq m or less sold also fell from a peak of 28 per cent to 23 per cent in the same period. Still, this second-quarter figure remains higher than the 20 per cent for the whole of last year.

While it is too early to say interest in smaller homes is definitely fizzling out, experts say cooling measures such as the additional buyers' stamp duty and sellers' stamp duty of up to 16 per cent might have put a dampener on investor demand for shoebox units.

These units have been popular among investors owing to their affordable price point - typically less than $1 million.

Mr Joseph Tan, CBRE's executive director (residential), noted some correlation between upgraders and their interest in larger homes. But whether the fresh figures signify a definite reversal of the popularity of compact units remains to be seen, he added.

Anecdotally, however, the firm has noticed stronger interest in the larger units of some private suburban and executive condominium projects. One example is exec condo project One Canberra in Yishun where the larger units are all sold out, he said.

'(But) the interest in small units will always be there, especially if the current trend of reducing average family size persists and home owners continue to look for affordable smaller apartments,' he added.

'It also depends on developers' supply and pricing strategy; if prices are kept at an affordable quantum, investors will continue to view this as an attractive form of investment in view of the prevailing financial crisis.'

Some home buyers continue to snap up shoebox units. Parc Rosewood in Woodlands has moved at least 309 units of 50 sq m or less this year, CBRE data shows.

Guillemard Edge in Geylang sold another 114 small units while Casa Cambio in Lim Tua Tow Road found 96 buyers.

EL Development managing director Lim Yew Soon said owner- occupiers typically prefer larger units.

'When we launched our design, build and sell scheme project Trivelis in Clementi last year, the five-room flats sold out very quickly,' he said.

'This is a clear indication that when it's for 'own stay', buyers want it as big as possible, especially in this low interest rate environment. They don't mind taking out a bigger loan,' he added.

ERA Realty key executive officer Eugene Lim said buyers might be increasingly attracted to the value proposition of larger homes.

He said the per sq ft price of small homes can be up to 15 per cent to 20 per cent higher than that of larger ones even within the same project.

'The shoebox market seems to be taking a breather as people are more cautious now due to what is being said,' he added.

For instance, National Development Minister Khaw Boon Wan last month said the Government is monitoring the trend of shoebox units and would consider additional regulations, if necessary.

The bumper supply of completed shoebox units expected over the next few years has also been highlighted in recent reports.

PropNex chief executive Mohamed Ismail agreed that as the shoebox market is still a relatively untested one, buyers who are taking a medium- to long-term perspective due to the sellers' stamp duty might prefer to park their cash in larger homes instead.

New rules introduced last November that set minimum plot sizes for apartment blocks and restricted the number of flats that can be built on certain sites could also have bumped up median sizes of homes, he noted.

For example, in Telok Kurau where there has been a rapid proliferation of small apartments, the gross floor area on sites there is divided by 100 sq m to determine the maximum number of homes that can be built.

This could have resulted in fewer homes coming up on land parcels there...
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