Maybe it's because of my age, but I prefer space over convenience these days; and that sets me apart from recent homebuyers. 

I'm talking about the number of homebuyers who are interested in living within the Core Central Region (CCR), where prices typically require a compromise.

Quite often, that compromise is having to own a two-bedder first, and then hoping everything works out well enough to upgrade. But here's the tough, chewy bit that's hard to digest:

Going from a two-bedder to a three-bedder, in the prime CCR districts, is a big challenge. The median asking prices for a two-bedder in the CCR right now are about $2,900+ psf for a new launch, or about $2,450 psf for resale.

So, assuming a two-bedder is about 700 sq ft, you'd usually be looking at prices of around $1.8 million; possibly more than $2 million for some fancier new launches. 

Now, what does it cost to add another bedroom?

For three-bedders, you can expect about $2.7 million to $3 million to be the norm. Case in point: One Marina Gardens had prices reaching from $2.57 million to over $3 million for three-bedders, ranging from 904 to 1,012 sq ft. 

This is around an extra $1 million just for that one added bedroom; and barring a windfall, it's not something many two-bedder owners can comfortably envision. For example:

Current situation:

• Couple owns a two-bedroom CCR condo.
• They sell it for $2 million (typical resale value for a CCR two-bedder)
• Outstanding loan: $800,000 (assume they've paid down some over time)
• Net proceeds from sale: $2 million - $800,000  = $1.2 million (let's loosely assume this is any combination of cash or CPF, available for the next property)

Target upgrade:

• A new three-bedroom in CCR costs about $3 million (based on recent launches like One Marina Gardens)
• Downpayment: 25 per cent minimum ($750,000), and the rest via loan ($2.25 million).
• Stamp duties & legal fees: Approx. $120,000 (Buyer's Stamp Duty alone on a $3 million property is already about $114,600)

Couple's combined income:

• Let's assume both earn around $8,000 a month each (it's reasonable to assume it's above median income, as they're already living in private property in the CCR)
• Given the Total Debt Servicing Ratio (TDSR) of 55 per cent, this means a monthly loan repayment limit of $8,800 per month (assuming no other debts)
• At a rate of four per cent per annum, on a 25-year loan tenure, this is a loan quantum of between $1.75 million to $1.8 million. 

Shortfall calculation:

• Required loan: $2.25 million
• Eligible loan: Approx. $1.75 million to $1.8 million
• Loan shortfall: Approx. $450,000 to $500,000

Even with $1.2 million in sales proceeds, the couple cannot borrow enough to finance the remaining amount, and must cover the $250,000 to $300,000 gap to make up the shortfall. 

Bear in mind that these are already optimistic calculations, with assumptions that the couple have no other loans, have steady incomes of $8,000 per month each, already have a two-bedder in the CCR, etc. 

Nonetheless, the CCR is where the majority of new launches will be

We go over some of the main reasons here; but just to recap, 14 of the roughly 22 remaining new launches this year are in the CCR.

Coupled with the limited supply of resale units, some buyers may not have much choice; they may have to settle for two-bedder layouts, or some compromises on space. 

Weekly sales roundup (May 5 – 11)

Top 5 most expensive new sales (by project)

Top 5 cheapest new sales (by project)

Top 5 most expensive resale

Top 5 cheapest resale

Top 5 biggest winners

Top 5 biggest losers

Transaction breakdown

This article was first published in Stackedhomes.