Will private home prices rise as ‘shoebox’ supply falls?

By
/ EdgeProp
|
October 25, 2018 6:24 PM SGT
Shoebox units need no introduction and have been subject to much public attention in recent times. By definition, they are private residential units that typically span 47 sq m (506 sq ft) or smaller.
Also referred to as “Mickey Mouse units” for their miniature layouts, they began to crop up in bigger numbers circa 2007/2008. Previously confined within the Central Area, they have since made their way into various mass market districts.
Price-wise, shoebox units are typically sold at a 20% to 30% per square foot (psf) premium compared to larger units. But because they have a lower overall quantum due to their smaller sizes, they remain a popular investment option.
What are shoebox units and why are authorities so concerned?
In a move to check the “excessive development of box units”, the Urban Redevelopment Authority (URA) had announced new guidelines on unit size to reduce the maximum number of units allowed in private homes.
With the new guidelines, the maximum number of residential units allowed in a non-landed residential development outside the Central Area will be derived by dividing the Gross Floor Area (GFA) by 85 sq m, up from the previous 70 sq m.
Source: EdgeProp.sg
According to the authority, the changes are aimed at curbing the ever-shrinking sizes of private homes.
Nine areas have also been identified where the new developments could pose a strain on local infrastructure. In these areas, the maximum number of units allowed will be derived by dividing the GFA by 100 sq m.
The nine areas are: Marine Parade, Joo Chiat-Mountbatten, Telok Kurau-Jalan Eunos, Balestier, Stevens-Chancery, Pasir Panjang, Kovan-How Sun, Shelford, and Loyang. Currently, only four areas - Telok Kurau, Kovan, Joo Chiat and Jalan Eunos - are subject to stricter guidelines.
In addition, URA also wants developers to cater to the diverse needs of homebuyers,...