Size does matter

While the focus has been shifted to 2-room flats, the 4-room is still most popular

AS the Housing Board launched its last Build-To-Order (BTO) exercise for the year, offering 1,181 units in Punggol and Choa Chu Kang, applications for its Dew Spring @ Yishun, which draw to a close today, reflect an interesting trend.

While just 864 flats are up for grabs at Dew Spring, 2,091 applications had been received as of 5pm yesterday not surprising, given the trend of oversubscription for BTO projects, and the robust public housing market despite the downturn.

But the 2-room flats have not proved as popular as bigger units. Just last month, National Development Minister Mah Bow Tan said the HDB would focus on building more smaller flats, so more low-income families can own their homes.

For the 144 2-room units up for grabs at Dew Spring, there were 152 applications. This compares to 487 applications for 216 3-room and 1,452 applications for 504 4-room flats.

Are Singaporeans just not ready for a smaller living space, as some analysts contend?

A HDB spokesperson revealed that the response to the 2-room units at Dew Spring was, in fact, “good compared to past BTO exercises, where the subscription rate was generally less than 50 per cent”.

“From our experience, 2-room flat buyers are usually applicants wishing to monetise their existing bigger flats and move to smaller flats,” she said. “They generally prefer flats which are ready for immediate occupation. Hence, the demand for 2-room flats usually improves when the flats are nearing completion.”

PropNex CEO Mohamed Ismail pointed to a general mentality that “a basic home for any young family is ideally 3- or 4-rooms”, to cater to children. Two-room flats would appeal mainly to retirees or those on a tight budget.

Chesterton Suntec International research director Colin Tan suggested that Singaporeans are not yet ready to live in a tight space like Hong Kongers, and the depressed demand for small flats could indicate a threshold: The 2-room units at Dew Spring are about 48 sqm, compared to 67-sqm for a 3-room and 93-sqm for a 4-room flat.

In addition, Mr Mohamed Ismail noted that those buying direct from the HDB a second time, like downgraders, would have to fork out a resale levy. Given the difference in prices at Dew Spring -$76,000 to $90,000 for a 2-room and $120,000 to $146,000 for a 3-room buyers would likely opt for the bigger unit.

Nevertheless, the HDB will continue to forge ahead with building more small flats, which present an option for older Singaporeans wanting to monetise their assets for their retirement needs.

“We expect that smaller flats will be in greater demand given the increasing ageing population, and demographic changes that Singapore is undergoing,” said the spokesperson.

More studio, bigger flats on offer

By contrast, 4-room flats have always been hugely popular in BTO exercises this year, the average subscription rate was 300 per cent, said HDB.

And more will come online with the launch of the Punggol Regalia and Sunshine Court projects yesterday.

As of 5pm yesterday, already, there were 117 applications put in for 546 4-room units (priced between $250,000 – $312,000) at Punggol Regalia, and 46 applications for 183 5-room units ($342,000 – $428,000). The project, located near the future Punggol Town Centre, offers premium flats with better finishes.

As for Sunshine Court along Choa Chu Kang Avenue 3, studio apartments on offer will be fitted with elderly-friendly features like grab bars and non-slip flooring. There were 29 applications for 164 such units ($58,000 – $66,000 for 35-sqm, and $72,000 – $80,000 for 45-sqm) as of last night.

But again, it was the 4-room units that proved hottest: 158 applications for 171 units ($202,000 – $236,000).

In light of the recent debate on new flat prices, the housing board said the units are priced affordably, with average households forking out about 20 per cent of their monthly income to service their mortgage, which can be fully paid using CPF funds.

Source : Today – 31 Dec 2008

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