Hard to find condo unit under $1,000 psf

 

Monday, Sep 23, 2013

Melissa Tan

The Straits Times

If you think it is near impossible to pick up a mass market condominium unit for under $1,000 per sq ft these days, you could be right, as recent statistics show.

The majority of suburban private home transactions were above that price level in the second quarter of this year, according to Urban Redevelopment Authority (URA) data compiled by property consultancy OrangeTee.

The numbers underline a trend that has been increasingly apparent for the past two years - buyers will shrug off high prices on a per sq ft (psf) basis as long as the overall quantum is seen as affordable.

That seems to mean paying up to $1.2 million for a suburban private home, consultants said. Out of 3,627 mass-market private units sold in the three months to June 30, 2,180 were above $1,000 psf.

That is 60 per cent, a starkly higher proportion than the 25.5 per cent recorded in the second quarter of 2011, when 1,188 out of 4,368 suburban units were sold above that price point.

The proportion of units costing more than $1,500 psf has also climbed dramatically, from 0.5 per cent in the second quarter of 2011 to 14.2 per cent in the same period this year. Recent condo launches in the suburbs have notched up astronomical psf prices.

Take the 738-unit J Gateway in Jurong East.

It was launched in June and its units have been sold for as much as $1,774 psf. That price was paid for a shoebox apartment of 484 sq ft at the 99-year leasehold project. It works out to $858,000.

At the freehold The Tembusu in Kovan, which was launched last month, the highest price paid was $1,687 psf for a 474 sq ft home or $799,000. The 337-unit project saw more than 200 units sold on the first day of sales.

"It appears that home buyers today are no longer concerned with the unit psf prices as long as the total quantum is within their reach, either for investment or their own stay," said OrangeTee research head Christine Li. "The high psf prices could remain for a while longer, given the land prices developers have paid over the last year."

The URA is launching two adjacent private residential plots in Upper Serangoon View with the same tender closing dates before the end of this month. Releasing sites in a batch like this is part of an experiment to moderate land tender bids.

Its previous experiment, conducted in July with three executive condominium plots that were not adjacent, ended up smashing price records. However, it is not just psf prices; total price quantums have also gone up even as unit sizes shrink.

"Three years ago, $1 million could buy you a 1,000 sq ft three-bedroom unit," said PropNex chief executive Mohamed Ismail. "But today, even though three-bedders have been reduced to 800 sq ft, which is already a 20 per cent drop in size, if it costs $1,350 psf, you'll be paying $1.08 million." Knight Frank research head Alice Tan said the "sweet spot" price level for first-time home buyers was in the range of $950,000 to $1.1 million.

"We could see some resistance for prices beyond $1.2 million," she added. Mr Ismail reckons the psychological ceiling is around $1.5 million for a mass-market home. The highest suburban mass-market condo price this year was $1,920 psf paid in April for a unit at Centro Residences in Ang Mo Kio. It works out to $1.9 million for a 1,001 sq ft apartment. Consultants expect suburban price increases to be more muted in the coming months due to dampened buyer demand on the back of mortgage restrictions introduced in late June. [e-mail]