Distortion of Market Prices Given Minimum Built-up Area Requirement for Private Properties
Ministry of National DevelopmentSpeakers
Summary
This question concerns whether the 85 sqm minimum built-up area guideline for private properties causes market price distortions. Minister for National Development Lawrence Wong clarified that guidelines limit the maximum number of units rather than stipulating a minimum unit size. To manage infrastructure and livability, the average unit size used for calculations was increased to 85 sqm generally, or 100 sqm in selected locations. Minister for National Development Lawrence Wong noted that concluding on price impacts is premature as changes take effect in January and depend on various market factors. The government will continue monitoring unit size distributions and reviewing guidelines periodically to align with infrastructure load and evolving housing needs.
Transcript
51 Mr Ong Teng Koon asked the Minister for National Development whether stipulating a minimum built-up area of 85 sqm for private properties will distort market prices.
Mr Lawrence Wong: To clarify, our guidelines do not stipulate a minimum built-up area for private properties. Instead, we impose a limit on the maximum number of units that developers can build in a development, to manage potential strains on local infrastructure and safeguard the livability of residential estates. Within these limits, developers still have the flexibility to provide a range of unit sizes to meet the diverse needs of home buyers.
To calculate the maximum number of units that developers can build in each development, the maximum permissible gross floor area of the development is divided by an average unit size. In the recently announced changes to the guidelines, this average unit size was increased from 70 sqm to 85 sqm for all private properties outside the Central Area, and to 100 sqm for selected locations.
As the guideline changes were only announced last month and will only take effect in January next year, it would be premature to conclude whether the changes have had any impact on market prices. Moreover, property prices depend on many factors beyond the guidelines. These include developers' bidding behaviour for land, homebuyers' evolving demand for units of various sizes, as well as how developers adjust the mix of unit sizes for upcoming projects to cater to demand, just to name a few.
We will continue to monitor the distribution of unit sizes in residential developments, and review the guidelines periodically, taking into account factors such as infrastructure load, as well as changes in lifestyle and housing needs.