Homebuyers’ affinity for shoebox units and slightly larger offerings below 800 sq ft has been creeping up, according to an OrangeTee & Tie study on new sales and resales of small apartments between 2008 and 2018.
The study centred on units below 500 sq ft or roughly the size of a one-bedder or shoebox unit, and those slightly larger, between 500 and 800 sq ft or roughly the size of a two-bedder.
OrangeTee & Tie believes that such small homes will remain relevant, amid the latest government measures to increase the average unit size of private homes outside the central area to at least 85 sq m, from 70 sq m.
Such sales could even increase in upcoming launches as the supply is set to be reduced by the latest measures, the consultancy said.
Last year, new sales of units under 500 sq ft hit a four-year high at 1,199, or more than four times since 2008 when 275 units were sold. The sales comprised roughly 12 per cent of all new sales last year; in 2008 they comprised 7 per cent.
However, the sales were significantly lower than the 10-year high seen in 2012 of 2,709 units, before measures like Total Debt Servicing Ratio (TDSR) in 2013 kicked in.
There has also been a spurt of shoebox units in the Outside Central Region (OCR). In 2008, 23 shoebox units or 8 per cent of all shoebox units sold were in the OCR; last year 557 OCR units were sold, comprising 46 per cent of all shoebox units transacted.
As for resale, OrangeTee’s caveat analysis found that volumes for shoebox units rose last year to a 10-year record of 670 units, compared to just 18 units in 2008.
The shoebox unit, defined as 50 sq m or smaller, has been under focus in recent years by the Urban Redevelopment Authority (URA).
As at Q1 2018, there were 28,000 completed shoebox units comprising 8.7 per cent of the 323,000 non-landed private housing units. Eighty-five per cent are located outside the Central Area, a URA spokesperson said.
The latest revision in guidelines is meant to moderate the growth of non-landed shoebox units outside the Central Area, manage potential strains on local infrastructure, and safeguard the liveability of residential estates, the spokesperson said.
But Ms Sun believes the revised regulations would reduce the supply of the 500-800 sq ft offerings.
Such units have seen growing demand over time. New sales of 500-800 sq ft units, or roughly the size of a two-bedder, reached a four-year high of 3,443 units last year. That is nearly five times the volume in 2008 when 710 units were sold.
Last year, the segment comprised 35 per cent of all new units sold.
New sales of such units had also fallen from the 10-year high of 5,833 units in 2012, but the 2017 sales still vastly outperformed the 985 new units sold in 2008.
Resales of the 500-800 sq ft segment have risen to a 10-year high as well with 1,466 units transacted last year.
“Small apartments will remain popular among investors and young couples due to their price affordability and potentially attractive yields,” said Christine Sun, head of research and consultancy for OrangeTee & Tie.
Such units are often bought for rental income or as a short to mid-term investment, as investors believe it will draw expatriate rental demand.
Meanwhile, she believes that there are more singles and married couples with no children, or elderly who may buy for owner-occupation. Rising affluence among young people may also be a factor, she said.