Mass-market units average $1 million
According to a new study, the average price for mass-market flats in suburban Singapore has surpassed the $1 million mark.

(Mass-market units average $1 million - image courtesy of thinkstock)

Data compiled by Mr Ku Swee Yong, chief executive of International Property Advisor and the Singapore Condo agency, shows that values for new as well as resale private homes in the three months leading up to June 30 averaged $1 million, up from $970,000 in the same period last year. During this quarter, 3,931 sales were made, with the average size spanning 1,157 sq ft and the average price hitting $880 per sq ft (psf).

Head of research at Chesterton Suntec International Mr Colin Tan observed that the million-dollar mark is a psychological threshold, and that developers have been reluctant to push prices above that limit for fear of not being able to sell homes at that price.

That being said, Ku let on that with prices of suburban properties inching upwards in recent quarters, crossing $1 million was a “foregone conclusion”. He added that as prices of Housing Development Board (HDB) flats continue increasing, the sizeable percentage of home-seekers looking to upgrade are more willing to spend on their new flats.

Mr Ong Kah Seng, senior manager for Asia Pacific research at Cushman and Wakefield explained, “One factor could be that developers have already paid out a certain amount for land and that's why they are pegging their prices at that level. Also, the new homes could be built with more premium features to justify the increased price.”

While Singaporeans still make up a huge percentage of suburban homebuyers, things look set to change as Tan revealed a growing interest on city-outskirt units from foreign buyers. “Singapore is becoming a well-established safe haven for people looking to invest their money. But with the strengthening of the Sing dollar, it could mean that foreign investors who would typically have their eye on mid-market homes are now also considering mass market suburban homes too,” he told The Straits Times.

The other psychological barrier is the $1,000 psf mark, which analysts consider to be one of the final frontiers left to cross in the suburban property front. In fact, prices of new suburban projects like euHabitat (at Eunos) and The Luxurie (at Sengkang) have either barely reached the mark or slightly surpassed that threshold. However, insiders dismiss those as outliers, and say it is unlikely that $1,000 will become the new average psf across the board.

According to Ong, buyers will still be keen in projects with unique selling points, but there may be a mismatch between the expectations of sellers and the willingness of buyers to shell out such amounts of money. The current economic uncertainty is also deterring homebuyers from doing so, but Ku said that if the Singapore economy continues growing (and the global situation continues with its current stability), average psf prices could rise. On suburban areas like Punggol, Sengkang and Pasir Ris – which will herald some 28,000 new public and private homes over the next five years – analysts do not expect prices to soften much in response. “I don't think we will see the average transaction price and average psf prices come down, especially when interest rates are so low and there's still liquidity in the market,” said Ku.

Ong he added that suburban mass-market units are generally considered the most affordable among private homes, so crossing the $1 million barrier could raise more concerns about affordability among buyers.