1.25 million is the magic number for private condo sales!

By The Folks @PropTalk - October 15, 2014 1 Comment

A study by CBRE has showed that 71.7% of the new sales of private apartments and condos in the first half of this year had price tags of below $1.25 million each. This is higher than the 63.6% share recorded for the whole of last year.

Even with a longer-range view - looking at figures since 2007, despite rising wages and inflation - this sweet spot of consumers have stayed largely unchanged.

Caveats lodged for non-landed new sales from 2007 to H1 2014 showed that 55 to 75% of transactions were priced below $1.25 million each. In particular, the most popular price band was from $750,000 to $1 million.

Looking at the addresses of buyers of new sale units with price tags below $1.25 million, CRBE noted that, since 2008, 52 to 67% of them have been HDB occupiers. Although the proportion of HDB dwellers among buyers of new non-landed private homes below $1.25 million was at a high of 66.7% in H1 2014, the absolute number of such buyers was only 1,696 in the first 6 months of this year; this is lower than the 1,967 figure for H2 2013 and 3,385 for H1 2013.

The number of units below $1.25 million picked up by those with private addresses also fell markedly to 847 in H1 2014, from 1,449 in H2 2013 and 2,248 in H1 2013.

This reflects the across-the-board drop in property transaction volumes following the introduction of the TDSR framework in late June 2013.

And a large portion of HDB dwellers buying private homes are likely doing so for owner occupation and moving into smaller private housing units.

Although these "upgraders" may be downsizing, but psychologically, they feel they have arrived because they have upgraded to join the 20% of households here living in private homes.

Info source: BT

The wife and I read in a separate report that the median size of new private apartments and condos sold by developers shrank 10% to 743sqft in the first half of this year from 829sqft for the whole of last year. This compares to 1,270sqft in 2007 during the pre-global crisis property boom.

And analysis have shown that 500 - 800sqft units have been the most sought after, with their share of new sales rising to 38.6% in H1 2014 from 34.4% in 2013, 29.8% in 2012 and 26% in 2011.

On the back of this growing popularity of small units, the percentage of new homes sold by developers that were below 1,000sqft has climbed steadily to72% in H1 2014 from 24.4% in 2007. 

While such smaller unit of between 500 - 800 may probably be adequate for newly-weds or DINKs, the wife and I cannot fathom how this will work out for a family with kid and possibly a domestic helper. We currently live in a 1,600+sqft 3-bedroom apartment and it is already quite challenging sometimes to concentrate on the newspaper at the breakfast table, what with the wife's living-room TV blasting in the background and especially if our son happens to be off-school... again (which seems to happen more frequently these days compared to the times when we were in primary school). Call us pampered if you like but imagine what life's like for a family of 4 with a living space that's only half the size!

So this begs the question of whether you have indeed "arrived", especially in terms of living conditions, when you "upgrade" from a much larger HDB unit to a smaller private condo - club-style facilities and sky garden notwithstanding.

The wife and I have a pretty clear answer to this question ourselves: despite the lack of facilities in our estate, we will stay put rather than "upgrade" to a smaller full-facility condo unit... for the sake of our sanity. Emoji

What about you? Will you give up a larger living space without condo facilities for one that's half the size but comes with facilities?

1 comment to ''1.25 million is the magic number for private condo sales!"

  1. Ideally one should have 500 sq ft per person in the household. It is possible to get by with less if the kids are young. But four adults should have 2000 sq foot in my opinion...