Shoebox apartments are back on the popularity charts. Chalk it up to the new home loan restrictions.
Instead of entirely deterring home buyers, the new loan curbs have instead steered buyers towards cheaper home options, in order to fit the smaller loans made available. And these cheaper options often mean the smaller homes, such as shoebox units or one-bedders. Smaller homes mean lower total quantum costs in accordance to the total debt servicing ratio (TDSR) framework put out by the Monetary Authority of Singapore.
The lack of new units could also have contributed to the herding of sales towards the secondary market. 481 private home units were sold in July compared to the 1,806 in June. But that’s not to say demand has dropped 73 per cent. Only 557 units were launched in July, thus the 481 sold would mean a 86 per cent success rate.
Overall resale prices have risen by 0.2 per cent in July, according to the Singapore Residential Price Index (SRPI). In June, there was a 0.4 per cent drop. But with the other recent shift in housing policy for PRs, the further rise in private property prices may be quick and sharp. How will the resale HDB flat market fare in comparison?