Completed shoebox units lead price fall in 2014

in a recent news article, it was reported that prices of small units (commonly known as shoebox units) fared the worst of the 4 segments of completed non-landed private homes, according to NUS’s Residential Price Index (SRPI) series. Flash estimates or November show that SRPI for shoebox units contracted 4.4% since Dec 2013.

These show box units consists of units up to 506 sqft (47 sqm). The SRPI basket comprises of 429 private residential projects in Singapore that were completed between Oct 2003 and Sep 2013. THe subindex for Central Region dropped 4% while that for Non-Central Region dropped 3.9%, year to date. Overall SRPI slipped 4%.

According to URA circular, there will be 11,000 units of completed shoebox units (up to 50 sqm) by end 2015, a great increase from only 2400 units in 2011. On top of the possible glut and current slow rental markets, landlord can no longer claim vacancy refunds on property tax. As such, the competition will intensify and shoebox units will face pressure in both prices and rents.

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