While visiting new condo show flats over the past decade, one can’t help but notice that typical sizes of dwelling units have shrunk significantly. Just how significant can it be?
According to the article titled “Median Sizes for New Condo Units Shrank in Past Decade” published in the Straits Times on 14 February 2021, the shrinkage is significant.
The median size of new homes in the suburbs (OCR) fell 38.7% from 116 sq m in 2007 to 71 sq m last year. Resale units downsized 10.1% from 118 sq m to 106 sq m over the same period. The median size of new homes in the prime districts (CCR) shrank 47.9% from 119 sq m in 2009 to just 62 sq m last year, while units in the city fringe (RCR) dropped 31% from 100 sq m to 69 sq m.
Incidentally, the price gap between new sale and resale in the suburbs is at 47%, the widest in 25 years!
Meanwhile, the price differential in prime areas has narrowed to 37.7% last year.
The question to ask is: Is this size shrinkage sustainable?
Without a doubt, TDSR (Total Debt Servicing Ratio) plays an important part in developers pricing their products sensitively. The average threshold for most home purchasers and investors is about $1.5M.
In order to ensure affordability, developers have downsized each residential unit to keep it within this quantum. On top of that, there is a worrying trend that in new launches, 1 and 2 bedder units are taking up a growing proportion of the unit mix even in suburban projects.
Even if smaller units become the more affordable, the biggest trade off is the increase in per square foot (psf) prices.
This begs the question: what is the real cost per residential unit?
More alarmingly, ever-increasing per square foot (psf) prices for new launches in the respective regions that have gone up significantly over the past 12 years. Not only have the psf shot up, the median unit sizes have shrunk. This is a double whammy! In short, we are paying a lot more for each unit while getting shortchanged on size.
This brings out my next point that it is not entirely correct to ONLY look at the property price index. (See article titled “IS URA’S PROPERTY PRICE INDEX SHOWING THE WHOLE TRUTH?” for my opinions).
I have come out of many show flats that feeling that other than paying an very high price for a lifestyle, the actual liveable area one gets is much smaller than older HDB flats. The common bedrooms are so tiny that it is nearly impossible to fit anything else in the bedroom after squeezing in a queen-sized bed. With this pandemic and WFH (work from home) becoming the new norm, many households now need more rooms at home to cater for a home office. I cannot help but wonder if this will bring about a mismatch in what people want in a home versus what developers would like to build and sell.
Unfortunately the latest regulation to increase the average sizes of dwelling units in RCR and OCR regions back in December 2018 came a little too late. Many upcoming launches in 2021 will witness a large proportion of units less than 750psf in size.
If it were up to me personally for the long-term sustainability for Singaporeans and future generations, I will put in place a few tweaks to all future new non-landed property submissions by developers:
- 1 and 2-bedroom units cannot exceed 30% of the total unit mix of the development for new launches in OCR and RCR;
- The total space dedicated to the balcony and AC ledge cannot exceed more than 5-7% of the net liveable area of the individual dwelling unit;
- The average gross strata area of each dwelling unit be increased to 105 sq m for new launches in OCR and RCR;
- Ratio of lifts to number of dwelling units per floor cannot be lower than 1:3
I hope that the authorities will take note of these and do the right thing.
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