Low prices, cramped houses: Number of residents per housing stock hits all-time high in 2013

Homebuyers are scrimping on size to spare some savings.

Singaporeans are choosing cramped houses in order to keep their investments affordable, a report by CIMB revealed today.

According to CIMB, the population per housing stock has increased to a historically high level of 4.4, suggesting that there are now more people cramped under a single roof than before, implying a pent-up demand.

CIMB also notes that the Property Price Index (PPI) recovered more than 60% since the bottom of 2009, while the median value of new home sales remained near the S$1m level.

“With median size falling from average 1,200sqft to the current 800sqft, we believe most buyers compromised on smaller units in order to keep the investment amount more affordable,” noted the report.

Here’s more from CIMB:

Based on our estimates, median home price to income ratio for both private and public housing is still below the highs seen during 2007 and 2010 as well as during the mid-1990s period as wages improve on the back of positive economic growth.

Mortgage installments as a percentage of monthly wages is at a low, due to the still low interest rates environment. Even after taking into account the higher mortgage rate of 3.5%, used to assess homebuyers affordability under the TDSR limit, housing still remains relatively affordable.