Property developers are building smaller condo units as they compete to keep prices affordable amid tougher market conditions and the government’s loan curbs, revealed a Knight Frank study reported in the media.
“It appears that there is a reduction in the variety of size ranges since the implementation of the Total Debt Servicing Ratio (TDSR) framework,” said Alice Tan, Research Head at Knight Frank.
For instance, five-bedders shrank the most with average sizes of the biggest units dropping from 2,035 sq ft to 1,569 sq ft, while the smallest units in this configuration shrank from 1,605 sq ft to 1,505 sq ft.
The next most sizeable reduction was seen in two-bedders. The average size of the largest units decreased from 973 sq ft to 864 sq ft in a one-year period, while the smallest units shrank from 703 sq ft to 698 sq ft.
To maintain their overall target prices of new condominiums and move units at the same time, developers want to put the right price to their projects, Tan noted.
Another reason property players are opting for smaller condos is due to rising land and construction costs, said Lim Yew Soon, Managing Director at EL Development.
However, while the biggest three- to four-bedders have shrunk by 4.2 percent on average, the smallest units in both categories became a bit larger. The sizes of three-bedroom units increased from 947 sq ft to 998 sq ft, while four-bedders rose from 1,229 sq ft to 1,275 sq ft.
Hence, buyers could consider these slightly bigger units if they are unable to afford a five-bedroom, Tan added.
Involving 17 suburban condominiums with at least 200 units, Knight Frank compared homes that were launched before the implementation of the TDSR in June 2013 and those released thereafter.
Credits: Property Guru