Shrinking sizes, steady demand

Smaller units being offered in mass market private housing sector; mild price hikes likely

As the Government remakes the outskirts of Singapore into attraction satellite towns, more investors may start to see investment value in mass market private homes located in these regions. One example is Optima @ Tanah Merah, one of the most sought-after mass market projects last year. -- ST FILE PHOTO

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Mass market private homes gave a roaring start to the recovery of Singapore's property market last year, fuelled by pent-up demand and priced-to-sell projects in the earlier part of the year.

Home hunters, dominated by HDB upgraders, thronged showflats in the euphoria of improved market sentiment. The speed at which these units were taken up, and the number of long queues spotted at property launches, stunned market watchers.

The mass market rally showed little signs of easing until anti-speculative measures were introduced by the Government in September last year.

Having given a resounding overall performance, surpassing even the levels attained in the 2007 market boom, would the mass market segment remain a star performer this year?

The strong run-up in the sales of new mass market homes had seen prices of new launches slowly inching up over the last few months.

The transacted prices of these new homes rose from between S$500 per sq ft (psf) and $700 psf in July last year to between S$750 psf and $1,000 psf in November.

The number of mass market transactions surpassing the $1,000 psf mark also increased. There were 392 such transactions last year, compared with 75 in 2008. The highest-priced mass market home was a unit at Centro Residences in Ang Mo Kio which, at $1,289 psf, fell comfortably within the mid-tier range.

More mass market projects have also achieved average prices in excess of $1,000 psf. Besides Centro Residences, some of the projects were Hillvista in the Hillview area and The Lenox along Changi Road.

Moreover, a 99-year leasehold residential plot located along Serangoon Avenue 3 drew a winning bid of $221.2 million, or S$529 psf per plot ratio, from a unit of Hong Leong Holdings. Based on this land price and current construction costs, the selling price for this mass market development could breach the $1,000 psf mark when launched.

Although prices of mass market private homes have increased, a growing number of developments is also offering a new product mix to keep prices affordable.

The popularity of smaller unit types (studio, one bedroom plus study, two bedroom, and two bedroom plus study) within the central region seems to have filtered down to the mass market segment.

Unlike the high-end and mid-tier segments, mass market homes are usually larger in sizes as buyers often purchase them for their own occupation rather than for investment. Therefore, only an estimated 10 per cent to 20 per cent of units within a mass market development are designed with smaller sizes.

However, recent trends seem to indicate that more mass market developments are offering smaller units. For instance, 59 per cent of Optima @ Tanah Merah and 43 per cent of Hundred Trees are given to smaller unit types. Buyers seem receptive, going by the good take-up rates seen in both projects.

As the Government remakes the outskirts of Singapore into attractive satellite towns, more investors may start to see investment value in mass market private homes located in these regions.

For example, the transformation of the Jurong Lake District may have contributed to the spike in property transactions in the western part of the island. Popular projects in the western region last year were Caspian, Mi Casa, Lakeshore, The Centris, Lakeholmz and Parc Vista.

The rejuvenation of Bedok Town Centre, expansion of the Tampines Regional Centre and Changi Business Park, and the building of the fourth university may also have increased interest in developments in the eastern suburbs such as Optima @ Tanah Merah, Livia, The Gale, Oasis @ Elias, Waterfront Waves and Ferraria Park Condominium.

As more towns undergo rejuvenation, mass market homes may become even more attractive in future.

Going forward, prices of mass market private homes are likely to increase at a more moderate and sustainable pace this year.

For one thing, more mass market homes will come on stream over the next few quarters. About 14,500 such new homes will be completed over the next five years, with another 8,960 potential units to be added from the Government's land sales programme for the first half of this year.

Also, HDB resale prices are expected to ease with the Government's plan to introduce 10,000 to 12,000 new flats annually over the next five years.

The writer is senior manager of research and consultancy at Savills Singapore.

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Latest comments Developers are building 700 sq ft like in Hong Kong and expect you to pay S$1 million for it. Singaporeans - are you smart enough to be conned by developers? Posted by: kennyticks2010 at Mon Jan 18 06:58:35 SGT 2010 exactly. i don't mind living in a shoebox but please don't expect me to spawn the next generation only to live worse than i do. Posted by: unewolke at Mon Jan 18 01:46:28 SGT 2010 Singapore ranked 70th best place to live in the world after Romania January 17, 2010 by TR (http://www.temasekreview.com) Singapore is ranked the 70th best place in the world to live in based on the Quality of Life index computed yearly by Ireland-based magazine “International Living”. (Read report herehttp://www.il-ireland.com/il/qofl2009/) The index is produced based on the following nine categories: cost of living, culture and leisure, economy, environment, freedom, health, infrastructure, safety and risk and climate. Each country in each category is graded on a curve and it is scored relative to every other country. The scores run 0 to 100 for each category. This means the country that gets 0 is the worst in that category, and the country that gets 100 is the best. The data is collated from official government sources, the World Health Organization, The Economist, and many other journals, tables, and records. While Singapore scores high on risk and safety, health and infrastructure, it scores poorly in environment and freedom, bringing down its final score to a mediocre 61. The 5 most desirable places to live in the world are France, Australia, Switzerland, Germany and New Zealand. Singapore is ranked below Japan, South Korea and Taiwan among Asian countries. Singapore’s leaders have always boasted of their accomplishment of transforming Singapore from third to first world country within a few decades, but if Singapore is really a first world country, why is it ranked among third world countries in terms of quality of life? It is highly unlikely that this damning report will be published by the Singapore media. Neither will anybody from the ruling party respond to it. They will probably dismiss it as quite “dissociated from reality” to borrow the words of Law Minister K Shanmugam. But International Living is read widely by Europeans and Americans and they may have a poor perception of Singapore based on the report. If Singapore really wishes to attract first class talents around the world and not just uneducated peasants from China or India, it needs to improve on the two categories of environment and freedom where it performed particularly badly. A world class healthcare, infrastructure and economy is not everything that people look for in life. They also yearn for civil and political liberties for them to play a meaningful role in society. Singapore has a first world economy ruled by a petty third world dictatorship. We cannot claim our rightful place as a developed country in the world so long our archaic, oppressive and obsolete political system remains in place to perpetuate the rule of a particular group of self-serving, power-hungry elites with little participation in nation-building from the rest of the people. Source: Sunday Times, 17 Jan 2010.