Is Singapore’s Property Market on the Verge of a Crash? Understanding the 5 Factors at Play
The Singapore property market has long been an attractive option for both local and international investors. However, as with any...
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TLDR
Three-bedroom units in Singapore have significantly downsized from 1,700-1,800 sq. ft. in the 1980s to around 1,000 sq. ft. today. Recent launches show sizes ranging from 893 to 1,302 sq. ft., with some extreme cases as small as 624 sq. ft. Key reasons include rising property values, URA’s focus on smaller units, older units being less efficient, developers rushing to beat ABSD deadlines, and the shrinking size of Singaporean families. Developers are now focusing on efficient floor plans and compact appliances to offer the same living quality in smaller spaces.
According to the latest findings, the once-spacious three-bedder units have undergone a significant downsizing over the years. From a lavish 1,700 to 1,800 square feet in the 1980s, these family dwellings have now shrunk to a mere 1,000 square feet. While this trend may not come as a shock, it is intriguing to witness the gradual decline in the size of what was once deemed the ideal “family unit.”
How Big Is A Three-Bedder Unit Anyway?
Let’s look at some of the recent launches:
- Sky Eden @ Bedok: 893 to 1,087 sq. ft.
- Lentor Modern (3-bedroom + flex): 969 to 1,130 sq. ft.
- Enchante (3-bedroom + study): 1,001 to 1,087 sq. ft.
- Liv @ MB: 1,119 to 1,302 sq. ft.
- North Gaia (Executive Condominium): 958 to 980 sq. ft.
- Bartley Vue: 947 sq. ft. (there is also a premium 3-bedder layout, that is from 1,044 to 1,066 sq. ft.)
Imagine living in a 4-room HDB flat, with an estimated area of 915 to 1,022 square feet. As I was discussing this with a curious reader, they brought to my attention the size of 3-bedroom units at Floravale EC, built in 2000 and currently privatized, which boast a spacious 1,390 square feet.
Some other popular 3-bedders completed from the early 2000s include:
- Northoaks: 1,292 sq. ft.
- The Tropica: 1,238 sq. ft.
- Ballota Park: 1,313 sq. ft
- Crystal Rhu: 1,270 sq. ft.
While the overall trend in the property market shows a decrease in the size of 3-bedroom units by approximately 200 sq. ft., there are a few standout projects that take the concept of “shrinkage” to new extremes. Take for example Fort Suites, a 2018 development with only 106 units, yet its 3-bedroom units measure a meager 624 sq. ft. In comparison, The Rise @ Oxley Residences, a mixed-use development, offers 3-bedroom units at a diminutive 667 sq. ft. These anomalies may be few and far between at the moment, but who’s to say they won’t become the norm?
To truly grasp the significance of this trend, let’s take a journey back to 1995 and examine the proportion of new property sales by unit size range.
Size of Our 3-Bedroom Homes Shrinking Further!
What Are The Reasons?
1. Soaring Property Values and Expenses: The Real Estate Rollercoaster
Despite some people’s belief that developers are solely driven by greed to increase property prices, the truth is that there are numerous factors contributing to this phenomenon. Skyrocketing land costs, soaring construction expenses, and escalating land betterment charge rates are just a few of the culprits behind the inflated prices.
As a result, the discrepancy between HDB resale and new launch condo prices has widened, potentially impacting the number of HDB upgraders. In order to prevent pricing out too many potential buyers, developers of mass market properties may have to get creative and reduce unit sizes in order to maintain a more affordable price range.
2. URA Focuses Solely on Shoebox Units for Size Regulations in Latest Move
If URA were to impose minimum dimensions for 3-bedroom apartments, the diminishment of shrinking spaces would be swift. However, it seems that URA is content with only targeting the shoebox units for now (as evidenced in this article). Let’s take a look at how this applies to central and non-central regions.
For developments outside of the bustling central areas, the number of units allowed will be determined by dividing the Gross Floor Area (GFA) by 85 sq. m. (previously 70 sq. m.). This will inevitably lead to fewer units per project and more spacious living quarters.
As for nine other areas where shoebox units have overrun the market (Marine Parade, Joo Chiat-Mountbatten, Telok Kurau-Jalan Eunos, Balestier, Stevens-Chancery, Pasir Panjang, Kovan-How Sun, Shelford, and Loyang), the maximum number of units will be determined by dividing the GFA by 100 sq. m. instead.
The treatment differs for central regions, as starting from January 18th, 2023, all residential developments (including mixed-use properties) must allocate at least 20% of their units to a minimum size of 70 sq. m. (around 753 sq. ft.).
This means that developers, who typically favor shoebox units for maximum profits per square foot, may have to shift their focus to larger units to maintain their margins. This could result in a reduction of the sizes of other units, such as 3-bedrooms.
Therefore, if developers can design efficient floor plans that offer the same quality of living space, we may not need larger units like we did before (e.g., we can achieve the same functionality with 1,000 sq. ft. as we could with 1,200 sq. ft., once we factor in wasted spaces like corridors and oversized planter boxes).
3. Bigger, Yet Less Efficient: The Space Dilemma of Older Units
Some realtors enthusiastically championed the benefits of modern condos, arguing that relying solely on square footage is not an accurate measure of living space. While it may appear that older condos boast more generous dimensions, the inclusion of bay windows, planters, and hallways can actually eat up valuable real estate. In contrast, newer developments boast “dumbbell” layouts that eliminate the need for connecting corridors and even offer “flex” options, allowing for customizable rooms that can double as a study or extra bedroom.
Not only does this provide greater flexibility for homeowners, but it also streamlines the renovation process and offers a diverse range of design possibilities.
Moreover, developers now collaborate closely with appliance manufacturers, resulting in sleek, compact white goods that are specifically designed for these modern spaces. Not only does this contribute to the overall space efficiency of the condo, but it can also lead to lower maintenance fees for larger projects. After all, when it comes to condo shares, size isn’t everything.
4.Developers Racing Against Time to Beat ABSD Deadline
The key issue lies in the need for speed. A spacious 3-bedroom unit may come with a heftier price tag, and it is no secret that higher-priced properties tend to linger on the market for a longer period.
A recent study revealed that the current average price for new condominiums in 2022 stands at a whopping $2,470 per square foot. This means that a mere difference of 200 square feet can easily amount to a staggering $494,000; a figure that could put a spacious 3-bedroom unit out of reach for the average HDB upgrader.
Moreover, with the newly implemented cooling measures in December 2021, developers are now facing a higher Additional Buyer’s Stamp Duty (ABSD) rate of 35%, with a non-remissible five percent included. This puts pressure on developers to sell their units within the five-year ABSD deadline, leading them to prioritize the construction of smaller, more affordable units.
5. The Market Adjusts to the Absence of Key Home Amenities
While there are realtors who argue that older units were less efficient (as seen in point 2), we can’t ignore the fact that it’s not merely “wasted space.” These aged units possess distinct characteristics that are now rare or completely nonexistent.
One such feature is the service yard – a luxury that is becoming increasingly scarce in new launch units (which, let’s be honest, have a penchant for slapping the word “compact” onto every unit type). Say goodbye to storing your bicycles, cleaning equipment, and airing out laundry without the convenience of a washer/dryer. And let’s not forget that service yards are actually environmentally friendly (take note, authorities).
Yet, a stroll through modern condos will reveal that balconies have now taken on the role of clotheslines, as the absence of service yards leaves no other option. Another vanishing feature is the domestic helper’s room, as it is now commonplace to see helpers making use of living rooms or studies.
And let’s not even mention the dining room – it’s slowly fading away as families opt to eat in the kitchen or living room, with dedicated dining spaces shrinking with each passing year. The evolution of living spaces never ceases to surprise.
6. Singaporean Families Shrinking in Size: A Trend on the Rise
Discover how our homes are evolving as our households shrink. In today’s context, we have more aging individuals living independently and smaller households with just three members.
The days of needing large living spaces like in the ’80s and ’90s are fading, and developers are keeping up with the times. With our high home-ownership rate, it’s no surprise that children are flying the nest in their late 20s to mid-30s, while grandparents are already settled in their own homes.
Smart couples are recognizing this trend and happily saving hundreds of thousands by downsizing their dream home. After all, who needs those extra square feet when you can save big and live in a cozy and modern space?
Should You Buy, Sell or Wait?
If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?
It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.
I can bring you a wealth of on-the-ground experience and a data-driven approach to provide clarity and direction. From beginners to experienced investors, our top-down, objective approach will help you on your real estate journey.
I can help you by:
- Offering Strategic Real Estate Advice – I can help create a comprehensive plan to guide you through your property journey.
- Connecting Your Home with the Perfect Buyers – Through stunning visuals, an effective communication strategy, and an in-depth knowledge of the market, we’ll ensure your home is presented in the best possible way to fulfill your goals.
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