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RESIDENTIAL PROPERTY | Marianne Estioco, Singapore
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Cheaper, larger resale homes lure buyers away from new condos

New homes are getting smaller and smaller.

Pre-owned homes are hot commodities in Singapore’s sizzling private residential resale market. Resale transaction volume jumped by 17.6% month-on-month in April, with the number of homes hitting a record high since before cooling measures were rolled out in May 2013.

Eugene Lim, key executive officer at ERA Realty, noted that resale homes are particularly attractive because pre-owned units usually offer greater value for money.

“Resale units typically are larger in size while priced quite similar (in terms of price quantum) to new apartments. So buyers may feel that they are getting a better value for money in terms of living space. In addition, buyers who have immediate housing needs prefer to purchase from the resale market,” he said.

Data from CBRE Research show that the median size of new homes sold in the first quarter was 753 square feet, slightly smaller than the 764 sf for homes sold in 2015. This is also a far cry from the 900 sf recorded for homes sold in 2011.

SRX Property’s statistics also show that resale prices in the Core Central Region (CCR) and the Rest of Central Region (RCR) rose by 0.7% and 1.3%, respectively, while prices of mass-market homes in the Outside Central Region (OCR) dropped by 0.2% month-on-month.

Analysts say that the unabated slide in mass-market resale prices is not surprising given that there are more available units in the OCR compared to other regions.

“The suburban market is under greater pressure, as the bulk of unsold units are in this segment, where buyers have lower affordability and are more price sensitive,” said Tay Huey Ying, head of research at JLL Singapore.

ERA’s Lim added that sellers in the OCR are competing not only with private developers, but also with investors who had bought shoebox units from 2011 to 2013.

“Many property investors who had bought small units in the OCR during the property boom period of 2011 to 2013 could also be looking to sell due to the weak rental market currently. This further increases competition in the OCR, which adds downward pressure on prices,” he said.

Going forward, Lim reckons that resale transaction volume will remain robust for the next few months before cooling off during the Hungry Ghost month.

“In the absence of any stimulus, we expect prices of private resale units to remain subdued for the rest of the year, with moderate movements. With the higher buying activity, sellers should make use of this window of opportunity to sell their unit by right-pricing it; as buyers remain price conscious in the light of tight lending rules and the ABSD regime,” Lim said.

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