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reporter2
28-08-13, 17:01
http://www.businesstimes.com.sg/archive/tuesday/specials/property/cooling-measures-push-buyers-small-homes-20130827

Published August 27, 2013

Cooling measures push buyers to small homes

Units under $1m make up 38% of Q2 sales, compared to 31% in Q1: study

By Kalpana Rashiwala [email protected]


DEMAND for private homes has gravitated towards smaller and more affordable units following the introduction of the property cooling measures in January, which increased additional buyer's stamp duty rates and imposed stricter financing restrictions, DTZ said in a report.

Based on its caveats analysis, the proportion of purchases below $1 million rose significantly in the second quarter of this year, chiefly on the back of higher sales of shoebox apartments in the Outside Central Region (OCR), which command a smaller absolute price quantum.

Most of the shoebox sales in OCR involve projects which received provisional planning permission before Urban Redevelopment Authority's guideline kicked in from Nov 4, 2012, capping the maximum number of units in non-landed private residential projects outside the Central Area based on an average unit size of 70 square metres gross floor area.

With the rollout of the total debt servicing ratio (TDSR) framework in late June covering all property loans, investment demand for private residential properties is expected to be hit, especially for the third property onwards.

"We expect demand to continue to gravitate to smaller and more affordable units," said DTZ. However, transaction volumes could hinge on the supply of small units in the market - which will be constrained by the URA guideline.

DTZ's analysis of caveats shows that private homes costing under $1 million have seen their share of total private home transactions rise from 31 per cent in the first quarter of this year to 38 per cent in the second quarter.

In absolute numbers too, the number of transactions of private homes costing under $1 million rose 40 per cent quarter on quarter to 2,571 units in Q2 from 1,835 units.

Units costing $1-1.5 million have also seen their share of total private home transactions inch up from 32 per cent in Q1 to 33 per cent in Q2. In absolute terms, the number of purchases in this price band rose 19 per cent quarter-on-quarter, from 1,905 units to 2,265 units.

DTZ's analysis also showed that the jump in purchases of units costing below $1 million was due largely to the sale of shoebox apartments (smaller than 500 sq ft) within this price band. Shoebox apartments' share of the number of private homes sold at below $1 million climbed from 17 per cent in Q1 to 29 per cent in Q2.

In absolute terms, transactions of shoebox units costing under $1 million more than doubled from 310 units in Q1 to 738 in Q2. All but one of the 739 shoebox units sold in the second quarter were priced less than $1 million.

Slightly more than half or 52 per cent of the 739 shoebox units that changed hands in Q2 were located in Outside Central Region (OCR), up from a 32 per cent share in the first three months. In absolute terms, the number of shoebox units sold in OCR more than tripled from 115 units in Q1 to 384 in Q2.

DTZ's caveat analysis covered both primary and secondary market transactions of private homes excluding executive condos. It also showed that the bulk or 62.7 per cent of shoebox apartments transacted in the second quarter were picked up by buyers with HDB addresses.

In fact, shoebox units were the main factor that contributed to an increase in the total number of private homes bought by those with HDB addresses - from 2,544 units in the first quarter to 3,091 in Q2.

Some 463 units or around 15 per cent of the private homes bought by those with HDB addresses in Q2 comprised shoebox units, compared with 204 units and an 8 per cent share in the first quarter. The second quarter's 15 per cent share was close to the record high proportion of 18 per cent in Q1 2012.

dtrax
28-08-13, 17:03
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