The average size of condo apartments on sites acquired via the Government has been generally declining since 2010 as developers turn to bite-sized units to deal with loan curbs, a new study has found.
“The Additional Buyers’ Stamp Duty and Total Debt Servicing Ratio framework have limited the housing budget of many buyers. As a result, the absolute price quantum of the unit has become the primary consideration of a large majority of owners,” noted Mr Mak. The Mortgage Servicing Ratio is also applicable to executive condo applicants. Existing executive condo include The Terrace EC, Brownstone EC and Signature EC.
The decline in space was most apparent in new projects launched on the city fringes.
Average sizes there fell from 1,051 sq ft at Waterbank in Dakota Crescent in 2010 to 810 sq ft across the three new condos released in the region this year, found the study by SLP Research and Consultancy.
It examined condo projects launched on Government Land Sales (GLS) sites since 2010. It derived an average unit size from the maximum allowable gross floor area (GFA) a site could yield and divided it by the number of homes to be built.
In the suburbs, where most GLS condo sites were sold over the past six years, average GFA per unit fell from 878 sq ft across six condos launched in 2010 to 811 sq ft in four launches this year.
Still, if privately owned sites are taken into account as well, the fall may have been reversed at least in the suburbs, according to Urban Redevelopment Authority (URA) data.
This follows its guidelines from late 2012 stipulating the maximum number of dwelling units for all new flats and condominium developments outside the central area, which includes the suburbs.
The median GFA per unit among new projects with planning approval went from 1,133 sq ft in 2006 to a low of 667 sq ft in 2011, but rose to 928 sq ft last year, it noted.
As for the core central region, there were not enough GLS sites sold to draw conclusive results.
Mr Nicholas Mak, SLP International executive director, said there are generally two reasons a developer would be motivated to build smaller units.
He could be trying to increase the price of the development in terms of dollar per sq ft, which would boost profit margins.
Or the decision may reflect the fact that the purchasing power of many homebuyers was curbed by a series of property cooling measures introduced since 2010.
Developers have also tended to build smaller units than that estimated by the URA when the sites were sold.In the suburbs, for example, the URA’s estimated average GFA per unit across six sites where projects were launched in 2010 was 1,194 sq ft. This fell to 934 sq ft this year.
But the actual average size of units to be built was less in both years – 26 per cent lower in 2010; 13 per cent lower this year.
Some projects did buck the trend with fewer units to be built than initially estimated, including Lakeville and Symphony Suites.