Discuss: Demand for Smaller Homes on the Rise as Buyers Become Price-Sensitive

In: Other Topics

Submitted By carolyntan
Words 1226
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The article that I have chosen was reported by Channel News Asia on 20th March 2014. It relates to the concept on demand and supply for housing units in Singapore and argued that the developers should build more smaller housing units in order to meet the growing demand for them as buyers are becoming more price sensitive.

The article reports that caveats lodged with the Urban Redevelopment Authority and analysis provided by REMS Advisor, (one of Singapore’s advisory firms) indicated that 48% of total housing sales were from the sale of units below 800 square feet. This figure had jumped significantly from 31% in 2010 and 43% in 2012.

An example used to affirm the shift in demand to smaller housing is the recent sales of UOL’s 555-unit Riverbank @ Fernvale in Sengkang. Despite a 40% of its units sold in over a month since its launch, it is the smaller units that were of highest demand as all of its one- and two-bedroom units were sold completely.

The article also cites that the introduction of the new Total Debt Servicing Ratio framework that took effect from 29 June 2013 has led buyers to become more cautious about purchasing larger units which comes with higher price premiums. This new framework introduced by the Monetary Authority of Singapore has increased the requirements for housing loans and tightened the cap granted to individuals. Financial institutions will now have to consider other factors before granting loan to its borrowers and borrowers will need to declare and provide documentations on their other debt obligation before their loan application can be considered. Given that housing in Singapore are serviced through loans, many borrowers who could have qualified for larger loans previously, now may no longer be able to purchase larger housing as they do not meet the new requirements. This will thus…...

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