SINGAPORE (EDGEPROP) - Persistent demand for one- and two-bedroom units in Singapore has pushed up the median price for units in this size range in the Rest of Central Region (RCR) by 31.3% y-o-y from $1.34 million in 1Q2022 to $1.76 million in 1Q2023. This was the conclusion of a report by Savills Singapore, which examined transaction data for non-landed private residences above or equal to $2,000 psf and up to 800 sq ft.
The report noted that one- and two-bedroom units in this size range saw median prices go up from $1.58 million in 1Q2022 to $1.63 million in 1Q2023. The uptick in the median price for units in this segment translates to an increase of 3.4% every year. In the suburbs, or Outside Central Region (OCR), one- and two-bedroom units also saw a noticeable uptick of 15.3% y-o-y to reach $1.39 million in 1Q2023 compared to $1.21 million in 1Q2022.
“Buyers' preference is turning to smaller sized homes and are willing to pay a premium for these unit types,” says Alan Cheong, executive director of research at Savills Singapore. “Even before the pandemic, smaller unit sizes had been popular among HDB upgraders and investors due to their more palatable price quantum”. (Find HDB flats for rent or sale with our Singapore HDB directory)
Recent transactions also show that the proportion of sales transactions of one- and two-bedroom units against total new home sales is going up from 21.4% in 1Q2022 to 47% in 1Q2023. The Savills report added that “the rising popularity of smaller one- and two-bedroom units may be attributed to several factors, including their rental potential and proximity to key amenities”.
Recent new launches, such as The Botany at Dairy Farm and Sceneca Residence, demonstrate strong underlying demand for these smaller-sized unit types. For example, in the 268-unit Sceneca Residence, 161 units were sold at an average price of $2,082 psf, with 72.7% of the sales attributed to the smaller one- and two-bedroom units.
Buyers' buying behaviour in the new sales market “hints of their yearning for new private residential properties and that the desire to own one is driven by budget rather than by the number of bedrooms,” says Cheong. “With rising unit square feet prices, new sale demand is funnelling in towards the small format homes. This means buyers are now paying more to buy smaller-sized homes”. Rising land and construction costs have also been increasing recently, and these costs are “inevitably” being passed on to the buyers, especially through the pricing of smaller-sized units, he adds.
Savills maintains its forecast that private residential property prices will increase by 7% over 2023.