"Shoe box units" a big hit among home buyers
Total primary sales of homes rose strongly +83%QoQ in the first quarter of the year on the back of buyers’ preference for units of less than 30 square meters.
Data from the URA showed that the tiny home spaces made up 27% of the 6, 458 primary units sold in 1Q112.
According to DMG Research, developers are cashing in on this preference by launching more homes in the mass segment during the quarter (6,903 units launched, +68%QoQ), which resulted in 82% of total units sold in the mass segment during 1Q12.
The analyst said the recent private residential take-up reflects the current price sensitivity of buyers, with now 42% of total transacted units for units at pricing <S$750,000.
In line with the flash estimate 1Q12 PPI, URA released 1Q12 private residential data showing overall private residential prices declining -0.1%QoQ following +0.2%QoQ in 4Q11.
Following a gradual deceleration of residential prices, private residential prices now see a decline in prices for the first time since 2Q09.
The decline is mainly driven by the CCR and RCR segments with declines of -0.6%QoQ, versus firm prices in the mass segment +1.1%QoQ for the OCR segment.
Figures for resale transactions were also at their lowest since 1Q09, DMG Research noted.
1Q12 registered 1,143 resale transactions, c.21.8% of total transactions. Resale prices, meanwhile, eased -0.7%QoQ, versus the +0.2%QoQ marginal price increase for sub-sale transactions which accounted for 3.6% of total sales transactions.
“We believe the easing of resale prices is mainly attributed to demand shifting to the primary launches during the quarter. While we noted an uptick in resale volume in Mar 12 likely attributed to firm primary sales in Feb 12 at firm prices, demand in the private secondary market could still remain weak which may pose a drag to primary/overall prices moving forward,” the analyst said.