Good move to curb growth in small flats

The Real Estate Developers' Association of Singapore (Redas) asserted that developers are building fewer smaller flats as the demand for these has reduced over the years (Affordability for home buyers may be affected as developers have to build bigger units: Redas; Oct 18).

Yet, a recent property launch along Grange Road comprising only small units of less than 65 sq m sold like hot cakes.

So when Redas says that developers build based on market demand, which segment of the market is it referring to? The investor-speculator segment or the owner-occupation-investor one?

In a nutshell, Redas' claim that the market demand and supply of small units has reduced over the years flies in the face of evidence, and inadvertently shows its lack of concern that the Urban Redevelopment Authority's (URA) revised curbs on the growth of the small-flats market will adversely impact housing affordability.

According to some estimates, the number of unsold units in the private property market is expected to rise from the current estimate of close to 30,000 units, on top of the growing vacancy rates for sold apartments.

The latter scenario is increasingly evident in the downtown core area, where shoebox and small apartments tend to form a higher proportion of developments.

Hence, URA's decision to exclude the central region from its latest market cooling exercise is baffling, even though its attempt to address this unhealthy growth trend of "small flats" is most welcome.

In fact, there ought to be some more tools in the authorities' arsenal to judiciously smoothen out any further supply side price distortions and facilitate the most productive use of land space here.

These could range from tightening up land sales in districts that appear to be undergoing an oversupply and high vacancy rates, to right-sizing plot ratio increases.

It should also consider setting up an independent panel to rate all private property developers according to a broad set of criteria to heighten public education about the market as well as to enhance industry transparency and accountability.

Much more must be done to ensure that only world-class developers that understand the virtues of sustainability, liveability, lifestyle and workplace trends, and good and inclusive design get to invest and operate here.

We must raise industry standards even further as property makes up a disproportionate percentage of the average Singaporean's asset portfolio.

Toh Cheng Seong

A version of this article appeared in the print edition of The Straits Times on October 23, 2018, with the headline 'Good move to curb growth in small flats'. Print Edition | Subscribe