Singapore may introduce measures to regulate the sale of smaller-sized residential units after developers sold a record number of so-called shoebox apartments in the first quarter.
The increase in the sales of such homes is a concern and the government has asked developers to provide more details, Khaw Boon Wan, Singapore’s National Development Minister, said in Parliament today. Shoebox apartments are those smaller than 50 square meters (538 square feet).
“We are monitoring the trend of shoebox units in Singapore,” Khaw said. “If additional regulations are necessary, we will consider them.”
Developers sold 1,764 shoebox apartments in the three months ended March 31, the most since the Urban Redevelopment Authority began collating the data in 2007. The smaller units accounted for 27 percent of new sales in the first quarter when private home prices fell for the first time in almost three years following curbs including more stringent mortgage requirement and higher taxes.
Singapore’s property market is heading for a soft landing and the government’s cooling measures are producing results, Khaw said. Concerns remain as prices in some districts are still rising, he said.
Developers will be required to provide more information including floor plans that reflect the actual size of the apartments, Khaw said. Model homes should also depict the apartments “accurately,” he said, adding that the changes will be introduced in the second half when the law is passed.
Singapore has been attempting to rein in prices since 2009, when it barred interest-only loans for some housing projects and stopped allowing developers to absorb interest payments for apartments still being built. Analysts at Jones Lang LaSalle Inc., CLSA Asia Pacific Markets, Nomura Holdings Inc. and Bank of America Corp.’s Merrill Lynch unit all forecasted last month that the government will introduce further measures to curb price increases.
Home sales climbed to 6,458 units in the quarter, according to the data. Developers are increasing sales by offering smaller units, according to CBRE Group Inc., the Los Angeles-based property broker. The median size of units declined 24 percent to 667 square feet in the quarter ended March from the previous three months, while the median price slid 18 percent to S$786,340, according to CBRE.
Developers completed 2,500 shoebox apartments and such units will increase to 9,700 by 2015, Khaw said.