Buyers now prefer new private houses with a total price tag of up to $1.2 million rather than pricier units, due to the introduction of the total debt servicing ratio (TDSR) framework in June 2013.
In the past 12 months, sales of private homes sharply declined for units costing more than $1.2 million, according to media reports.
In fact, there were 854 transactions for houses priced from $1 million to $1.1 million, and 764 for units selling for between $1.1 million to $1.2 million. That figure falls to 618 in the $1.2 million to $1.3 million price range, and plummets to 411 units in the $1.3 million to $1.4 million category.
Overall, apartments costing between $700,000 and $1.2 million made up 49 percent of the 8,254 units sold from July 2013 to June 2014.
But before the TDSR was implemented from July 2012 to June 2013, sales only fell sharply after the $1.4 million mark. There were 1,062 deals in the $1.3 million to $1.4 million price bracket, and only 656 homes were sold in $1.4 million to $1.5 million price range.
“Projects with units that are priced within the affordable range of $800,000 to $1.2 million still perform well,” said Dr Chua Yang Liang, JLL’s Research Head for Southeast Asia.
Buyers now go for cheaper and smaller units like one or two-bedroom apartments because of the TDSR. Although these condos usually have a lower absolute price, their psf price is sometimes a bit higher than larger apartments.
These smaller units are also more popular thanks to their dual purpose; for investment or owner’s accommodation, noted R’ST Research Director Ong Kah Seng.
“It is also easier to rent out a small apartment than a typical three-bedroom one that requires more tenants to get together to co-rent,” he added.