Mr Tan also expects current unit sizes for new private homes sales to prevail until land prices shift, as developers will build according to what is affordable to buyers.

For new sales by developers, the median psf price has risen 31 per cent, from S$949 psf in 2007 to S$1,245 psf in H1 2014.

The latest figure though marks an 8 per cent drop from 2013 as developers have had to clip their price expectations following the introduction of the total debt servicing ratio (TDSR) framework in July 2013. CBRE's analysis shows that 500-800 sq ft units have been the most sought after, with their share of new sales rising to 38.6 per cent in H1 2014 from 34.4 per cent in 2013, 29.8 per cent in 2012 and 26 per cent in 2011.

This reflects developers' strategy of minting a higher ratio of "compact units" to keep lump sum prices affordable to buyers in the face of successive cooling measures that crimped loan-to-value limits for investors, topped by the TDSR rollout.

Shoebox units (under 500 sq ft) too saw a revival in their share of new homes sales to 19.1 per cent in H1 after easing to 13-odd per cent in 2012 and 2013. In 2011, the shoebox unit share was 15.1 per cent.

On the back of growing popularity of small units, the percentage of new homes sold by developers that were below 1,000 sq ft has climbed steadily to 72 per cent in H1 2014 from 24.4 per cent in 2007.

Century 21 CEO Ku Swee Yong was surprised that the median resale transacted unit size has remained constant at around 1,200-odd sq ft since 2007, given that the stock of completed shoebox units has increased. He estimates that there are now about 8,000 completed units that are under 500 sq ft each out of a total stock of some 230,000 non-landed private homes (excluding ECs). Ten years ago, there could have been around 500 shoebox units out of a total non-landed stock of 150,000, he added. "(Moreover,) since TDSR's introduction, there has been a constraint on transactions of big units because for large quantums, TDSR bites worse." On the median resale unit size holding at around 1,200 sq ft, Mr Ku said: "A higher portion of buyers in the resale market could be upgraders with a family, rather than pure investors who are buying just to get a rental income.

"Secondly, in the resale market because you've seen the completed physical unit, you may not be comfortable with buying a small unit, whereas for new sales, most developers sell one bedders without a show unit," Mr Ku added.

"What all this means is that the people who are holding shoebox units may find it difficult to find buyers," he suggested.

DTZ's South-east Asia chief operating officer Ong Choon Fah highlights that buyers may find it more affordable to pick a unit in the new sales market not only because of a wide selection of small units at developer launches but also because of the progress payment scheme based on the stages of a project's physical completion.

"Whereas if you buy a completed property in the resale market, you have to pay the full price almost immediately and your total loan commitment kicks in straight away."

*SRX flash estimate shows uptick in condo resale in Sept

*7 in 10 new private condos sold in H1 at under S$1.25 m

http://www.stproperty.sg/articles-pr...184340/page2/1