Singapore’s Real Estate Market: The 5 Most Important Documents to Review Before Buying a Property
Singapore's real estate market is highly regulated and can be complex for those unfamiliar with the process. As a prospective...
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The COVID-19 pandemic triggered Singapore’s first lockdown in April 2020, leading to the implementation of work-from-home (WFH) arrangements and flexible work schedules to curb the spread of the virus. As WFH becomes the new norm, it is widely assumed that buyers now favor larger condo units to accommodate their remote working needs.
In this piece, we delved into the resale records of condo units lodged with URA from 2016 to present. Our investigation involved a comparison of unit sizes sold before and after the pandemic, in a bid to uncover the truth behind the alleged preference for spacious homes.
Surprisingly, despite the challenging times, the resale market remained resilient with a total of 8,713 caveats lodged in 2020, surpassing the 2019 figure of 7,543. A staggering 16,375 caveats were recorded in 2021, but the number dipped to 12,124 in 2022 and further down to 10,228 last year. As of now, this year has seen a total of 3,930 resale caveats lodged, indicating a steady demand for condo units in the market.
Average sizes for resale units fell during pandemic
The average size of resale units decreased from 1,223 sq ft in 2020 to 1,100 sq ft last year, but has now increased to a modest 1,123 sq ft this year. It is noteworthy that the size of resale units has consistently been above 1,000 sq ft, whereas new units have not yet surpassed this standard.
Smaller Condo Units on the Rise: The Shift in Resale Market Trends
The percentage of units sold measuring between 1,001 to 2,000 sq ft saw a slight decrease from 55.3% in 2020 to 46.8% last year, and has remained steady at 46.8% this year. Despite this decline, these medium-sized units remain popular in the resale market, making up the majority of condo units sold. Last year, a significant 4,791 units within this size range were sold, surpassing both smaller units (measuring 501 to 1,000 sq ft with 3,898 transactions) and even units below 500 sq ft (with only 968 transactions).
D’Leedon and The Minton are standout performers in the resale market this year, both offering units ranging from 1,001 to 2,000 sq ft. D’Leedon achieved an average price of $1,945 per square foot (psf) with 23 units sold, while The Minton sold 15 units of similar size at an average price of $1,475 psf. Despite being located in different districts, District 10 and 19 respectively, these leasehold developments have attracted buyers, with D’Leedon completing its construction in 2014 and The Minton in 2013.
Contrary to common belief that buyers prefer larger units for work-from-home setups, there has been an increased demand for small units of 500 sq ft and below post-pandemic. In 2020, these small units made up 6.8% of the total resale volume, which rose to 9.5% last year and currently stands at 8.2% this year. Sims Urban Oasis and Commonwealth Towers are examples of popular leasehold condos offering small units, with 11 units from Sims Urban Oasis selling at an average price of $1,832 psf and nine units from Commonwealth Towers fetching $2,131 psf on average. Both developments were completed in 2017, with Commonwealth Towers standing out in District 3 and Sims Urban Oasis in District 14.
One interesting trend is the increasing demand for units of 1,000 sq ft and below, accounting for 36.7% of the total resale volume in 2020 and rising to 47.4% this year, surpassing the previously dominant units ranging from 1,001 to 2,000 sq ft, now making up 46.8% of the total resale volume.
Glimpsing What Lies Ahead
The demand for small living spaces under 500 square feet is expected to continue, driven by the growing number of individuals living alone, which increased from 217,300 in 2022 to 222,700 last year.
Conversely, units ranging from 501 to 1,000 square feet are becoming more popular, meeting the needs of the majority of households in Singapore, typically consisting of two to three people. In fact, there were 334,200 two-person households and 315,500 three-person households reported last year. With an average household size of 3.11 individuals, a slight rise from 3.09 in 2022, these medium-sized units provide a good balance between space and functionality.
Moreover, as of January last year, a new regulation on unit sizes was implemented. A minimum of 20% of the units in newly developed non-landed properties in the central region must have a net internal area of at least 70 sq m (753 sq ft). This requirement excludes voids, balconies, aircon ledges, and other external spaces, focusing solely on the living space within the unit. Consequently, the latest units being put up for sale are notably larger. When these units enter the resale market, they will undoubtedly increase the variety of resale options available.
Interestingly, the average price growth for condominium units ranging from 1,001 to 2,000 sq ft has exceeded that of smaller units. From 2020 to the present, these units have experienced a strong growth of 26.1%, with an average price of $1,595 per square foot. On the other hand, the smallest units of 500 sq ft or less had the slowest price growth at 25.3%, reaching an average of $1,828 per square foot. Units measuring between 501 and 1,000 sq ft saw slightly stronger price growth, increasing by 25.5% to $1,776 per square foot.
Although many families desire a larger living space, they need to find a balance between their wish for more room and their financial situation. For example, a 2,000 square foot condominium currently on the market is priced at a high $3.19 million, with an average price of $1,595 per square foot. On the other hand, a resale condominium of 1,000 square feet can be purchased for a more affordable $1.78 million, given its lower average price of $1,776 per square foot.
Unfortunately, the previous year only saw a modest 2.8% increase in median household income from employment, reaching an average monthly income of $10,869. While Singapore’s GDP grew by 1.1% during the same period, forecasts for this year indicate a relatively small increase ranging from 1% to 3%. In contrast, resale condo units ranging from 501 to 1,000 square feet experienced a significant 9.5% year-on-year price rise, while larger units measuring 1,001 to 2,000 square feet also saw a notable 6.8% increase in average price.
Conclusion
As the pandemic spread, many thought that buyers would prefer larger homes. However, our detailed analysis of resale data shows a different reality. Contrary to popular belief, the average size of resold condominium units has been decreasing since 2020. In fact, based on this year’s transactions, the average resale unit now measures 1,123 square feet, a noticeable decrease from 1,223 square feet in the previous year. Additionally, resale units have been accounting for a larger portion of condominium sale transactions since 2021.
However, it’s important not to be misled by the numbers. While most resale units fall within the 1,001 to 2,000 square feet range, it appears that buyers are increasingly interested in smaller units. Yes, you heard correctly – compact units of 500 square feet and below are becoming very popular among buyers. This trend is not just temporary; with the increase in single-person households, these cozy units are expected to continue to have strong demand. Nowadays, households are constantly seeking a balance between space and affordability, particularly due to the rising prices of resale condos that have surpassed both median household income and Singapore’s GDP.
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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