Commentary: There is greater demand for bigger homes in a pandemic but will it last?
SINGAPORE: They say proficient things come in pocket-sized packages.
But when it comes to domicile sizes, information technology seems similar bigger is meliorate, particularly since the COVID-19 pandemic hit.
Since the end of the excursion breaker in June 2020, we have seen an uptick in interest in larger units, peculiarly in older HDB flats built in the 1980s to 1990s with generous floor areas. Buyers likewise are on the lookout man for larger private homes.
This makes sense when being confined to a express space with several family members either working-from-home or doing home-based learning - leading many to experience the effects of cabin fever.
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The pandemic has changed the fashion we live and work, with people waking up to the realisation this indeed may be our new normal and nosotros would have to re-evaluate our space needs and the expanded office the abode plays in our lives.
RISE IN DEMAND AND PRICES OF LARGER HDB RESALE FLATS
For the whole of 2020, 5,984 5-room units and ane,882 executive units have been resold, representing a year-on-yr increment of 10.iii per cent and 12.8 per cent from 2019.
The pace of increment in the sales of larger flats also exceeded the iv.half dozen per cent rise in four-room HDB unit resale over the same period.
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Meanwhile, the number of 3-room flats resold dipped by 0.7 per cent from 2022 to 2022 – the start almanac pass up since 2015.
While there was a sharp bound in sales beyond all flat types from Q2 2022 to Q3 2020, merely the five-room and executive flats managed to book a second straight quarter of growth in Q4 2020, transacting 1,955 units and 640 units respectively.
This comes on the back of three prior consecutive quarters of decline for these two categories of larger HDB homes.
In fact, the demand for executive flats posted the steepest quarter-on-quarter increase of 138.ii per cent in Q3 2020.
While subsequent demand weakened slightly – falling by 3.2 per cent for 5-room flats and 13.three per cent for executive flats - this easing was due to the loftier base in the previous quarter, express availability of larger flats and some price resistance.
To be sure, this strong interest in larger flats, while turbocharged by WFH, is not a new trend. There has been steady demand for 5-room and executive flats since 2014, when their resale volumes accept posted year-on-year growth each year, with the exception of 2019.
But clearly this trend has come into sharper focus in 2020. The 10.three per cent annual growth in resale volume for 5-room flats terminal year was the largest since the ten.5 per cent increase in 2016, while the 12.8 per cent annual growth in the number of executive flats sold in 2022 was the highest since the xv.5 per cent jump in 2018.
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The average prices per square human foot have generally risen too. For instance, the boilerplate per square human foot price of a 5-room resale flat increased by v.2 per cent in the last quarter of 2022 and those of executive units rose by over 4 per cent over the final two quarters.
Five-room resale flats also saw the largest compounded boilerplate growth charge per unit from 1Q 2022 to 1Q 2022 of about ii.nine per cent.
(We have non looked at sale of larger flats for BTO projects considering they tend to exist in very selected areas and some applicants drop out during the process.)
Like SHIFT IN Buying Tendency FOR NEW Individual HOMES
There is a similar tendency in the individual housing marketplace, with an increment in queries for 3-bedroom units at recent new launches and prospective buyers citing the need for more space for a home office.
In 2020, the sales of new private homes (excluding executive condominiums) with sizes ranging 1,200 sq ft and above rose by nigh 37 per cent to 1,006 units from 736 units in 2022 - outpacing the 4 per cent increase in sales for units sized beneath i,200 sq ft over the same menstruation.
In particular, units spanning 1,200 to one,600 sq ft have seen a sharper increment in sales in 2020, rising by 54 per cent and 41 per cent year-on-year respectively. These were steeper than the 16 per cent increment units of 600 to 800 sq ft and the 28 per cent for units between 1,000 and 1,200 sq ft concluding twelvemonth.
All regional sub-markets beyond Singapore witnessed a huge spring in sales of larger individual homes (ane,200 sq ft and up) since the end of the excursion breaker.
Demand DRIVERS FOR LARGER HOMES
What's driving more households to expect at larger homes? Couples are looking at the long term and ownership larger homes to accommodate a growing family, including the possibility of having elderly parents move in with them.
Only as staying home more frequently might be the new normal with on-off restrictions, lifestyle preference likewise plays a office as the well-heeled buy a larger unit of measurement to create a music room or a library or a yoga studio. Other also knock downwardly walls to enlarge the rooms.
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With homes generally shrinking in size, larger units tin become something of a rarity. Five-room flats built between 1990 and 2000 accept an average size of 1,300 sq ft, while those built between 2000 and 2010 averaged 1,190 sq ft.
Jumbo flats (typically ranging from ane,442 sq ft to over 1,800 sq ft) are sought-afterwards because the HDB no longer builds them, meaning the supply is fixed at about ii,900 units as at 2017.
That said, in accented terms, the sales of larger units would still trend below that of small and mid-sized homes mainly on business relationship of affordability. Large homes, with their bigger price tag, may exist beyond the budget of many.
WHAT DOES THIS Mean FOR DEVELOPERS AND BUYERS?
From a housing programmer's perspective, while there is a growing demand for larger units, this increase is non yet significant enough to justify building fewer smaller units and allocating a lot more than floor area to larger units, particularly for projects in the city or the city fringe where in that location tend to be more investors looking at smaller units.
Analysing the sales transactions in the the Core Central Region (CCR) sales of units below 500 sq ft take accounted for a ascension proportion of transactions – ticking upwardly to 15.eight per cent of new non-landed home sales in 2022 from 11.viii per cent in 2022 and 7.6 per cent in 2018.
Most buyers are still quantum-sensitive, and developers volition still need to offer a diverse range of unit sizes to fit unlike budgets. Buyers looking for a larger unit just have a tighter budget tin can, in any case, explore options in the Outside Key Region (OCR) for a private home.
A buyer with a upkeep of non more than S$i.6 million will be able to purchase a new 1,000 to one,200 sq ft unit in the OCR, which had an boilerplate transacted absolute toll of S$1.59 million.
Notwithstanding, that aforementioned upkeep will only exist sufficient for new private homes below 800 sq ft in the Rest of Core Region (RCR) and CCR.
To go along units affordable while driving sales, developers may remember nigh introducing other amenities that facilitate WFH.
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They can offering more than efficient and flexible unit of measurement layout, provide common co-working spaces and meeting rooms exterior homes merely within the development, or even a hospitality-mode lobby where residents can receive business visitors.
For buyers thinking of getting a larger domicile, they should work out their sums carefully, considering the burden of the monthly mortgage payment can go even college if interest rates tick up.
Charter disuse is another important consideration, especially for buyers looking at older, larger resale backdrop with a leasehold land tenure.
Ismail Gafoor is CEO of PropNex.
Source: https://cnalifestyle.channelnewsasia.com/commentary/commentary-there-greater-demand-bigger-homes-pandemic-will-it-last-282776
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