ST : Let market forces decide prices and sizes of homes

Mar 9, 2010

budget debate

Let market forces decide prices and sizes of homes

SHOULD the Government do something about 'Mickey Mouse-size' apartments that are all the rage now?

No, said National Development Minister Mah Bow Tan yesterday, reiterating that market forces should continue to determine the prices and sizes of homes that will be developed.

He was responding to concerns raised by Dr Amy Khor (Hong Kah GRC) about the proliferation of such small units in Singapore.

'Profit-maximising developers want to push per square foot (psf) prices of every unit up,' she noted.

'The way to do so without hurting sales is to reduce unit sizes to make them more affordable on a lump sum basis.'

She also warned that such high psf prices could influence buyers in the highly sentiment-driven market and give the perception that property prices are experiencing steep price rises.

She gave the example of Siglap V, a new development comprising small units in the east, where headline prices hit $1,634 psf recently.

There is no market data on the number of these small apartments, but some projects such as Suites@Guillemard have offered units as small as 258 sq ft.

In response, Mr Mah said that 'beyond ensuring market stability, we should let market forces determine prices and the type of unit sizes that will be developed'.

But he agreed that headline prices of these units 'are indeed misleading', and suggested that 'we do more to educate consumers not to take such headlines at face value'.