Smaller HDB flats still in big demand

Source : Straits Times - 14 Jan 2009

Two- and three-roomers draw over 11 applications each in latest exercise

RED-HOT demand for Housing Board homes, especially smaller flat types, has not been dampened by the gloomy economic outlook.

In fact, the recession seems to have added to their allure. The HDB’s latest quarterly sales of three-room and smaller flats this month received more than 11 applications for every flat on offer.

This month’s balloting exercise received 1,692 applications for 150 two- and three-room flats in mature estates.

Such flats have generally been popular because they are ready to move into, and are located in established towns.

But new flats are proving popular too. HDB’s late-December build-to-order (BTO) sales at new projects Punggol Regalia and Sunshine Court in Choa Chu Kang also enjoyed robust demand.

This is despite the fact that such BTO flats - built only when a certain level of demand is reached - typically take three years or more to be ready.

HDB’s latest figures, on its website yesterday, showed 4,381 applications were received for the 1,181 flats on offer, ranging from studio apartments to five-roomers.

The most popular, however, were the 171 four-room flats in Choa Chu Kang - ranging from $202,000 to $236,000 - which attracted 1,400 bids.

A similar trend was seen in the HDB’s BTO sales launch for Dew Spring @ Yishun last month. The 864 two- to four-room flats received 2,289 applications, with four-roomers being the most popular, getting 1,579 applications for 504 flats.

Analysts say that recent sales trends were not surprising, given that home buyers tend to favour smaller flats in gloomier times and four-room flats are best suited to most families.

Property agency PropNex’s CEO Mohamed Ismail said that demand for small flat types ‘will be sustained as long as the economy is in the doldrums’. He added that ‘people generally don’t want to over-commit, but still need homes. So smaller flats are highly sought after’.

One emerging trend he identified was the narrowing of the price gap between four- and five-room flats.

More executive and five-room units will sell below value, so prices for these flat types will come down sooner or later.

But as small flat types enjoy great demand, he does not anticipate price drops despite the current recession.

Mr Ismail recalled that during the 2003 recession, a four-roomer in Woodlands cost about $270,000 to $280,000 - only $20,000 to $30,000 less than a five-room home. This gulf, in good times, is typically at least $70,000, HDB data shows.

ERA Asia-Pacific associate director Eugene Lim reckons HDB prices will hold for some time, as ‘its price movements move slowly and marginally’. He said: ‘It took some time to go up, so similarly, it will also take some time before it goes down. If the downturn drags on, then yes, we will see a quicker pace of decline.’