The Surprising Reasons Some Singaporean Buyers Are Choosing Smaller Condo Units (Even When They Can Afford More)
Whether it’s an HDB flat or a condo, the Singaporean mentality is to grab the biggest possible unit in budgetary range. Chalk it up to the lingering paranoia that – if we don’t seize every square foot we can get now – it will just cost us more tomorrow. So it’s always a surprise when some homebuyers, despite being able to afford a larger unit, decide to keep it modest. In the following, we talk to some realtors about these rare cases, and why it could make sense for the buyer:
1. Sometimes it’s about layout and location, over square footage
One agent shared that in a recent transaction, the clients were torn between a three-bedder (around 1,200 sq.ft.) and a two-bedder (around 700 sq.ft.). It was clear, from the earlier budget, that the client had the means to purchase the three-bedder.
Instead however, the client eventually opted for the smaller unit. According to the agent:
“For the project they wanted, there was nothing bigger than 700 sq.ft., so we looked at other projects within the same idea. We found another three-bedder that was around 1,000 sq.ft., but after the viewing they rejected it. The three-bedder unit was further from the MRT station, and the layout was not as good: no enclosed kitchen, quite stuffy inside, and no proper-sized service yard.
The other alternative was to expand the search radius, but they didn’t want to go further beyond the neighbourhood. So in the end, they still bought the 700 sq.ft., even though they could have bought a bigger one elsewhere.”
These cases are also becoming more common in 2025, due to tighter resale supply. Buyers sometimes find an ideally positioned resale project; but then they find there’s no availability of three-bedders, four-bedders, or larger sizes. This can pressure them into buying a smaller two-bedder unit, while they pocket the savings and look for another upgrading opportunity later.
2. Preparing for changes to the family structure
Another reason for picking a smaller unit is a step toward right-sizing. Some agents said that, among older homebuyers, there’s a possibility the children will soon be moving out. One example of this was a couple who recently sold a terrace house, where they’d been living with two of their children.
The sale of the landed property left them more than enough to purchase a three or four-bedder condo unit. Instead, they rejected the recommendations and sought out a two-bedder unit. The agent said that:
“One child was getting married and moving out within a year or two, the other child already had his own place. And one of their reasons for moving from landed was that they were older, and it was harder to upkeep a bigger home. So instead they went for a smaller unit, within walking distance to one of their children.”
From the couple’s financial planning, opting for a two-bedder also helped to build a bigger retirement account. This made them confident enough to buy a condo, instead of right-sizing to a flat.
3. Getting a new launch instead of a resale unit
One agent shared a case of a couple who opted for a new launch two-bedder at ELTA, instead of a three-bedder at the resale Clement Canopy.
In this instance, both projects were quite close in the Clementi area, so location was not a key differentiating factor. The key difference was that the two-bedder ELTA unit was around $1.94 million, whereas the three-bedder Clement Canopy unit was around $2.18 million; a difference of around $240,000.
For paying $240,000 less however, they got:
- A more efficient layout, as ELTA is a post-harmonisation project
- Better potential appreciation, as ELTA is a newer project by about six years
- No need to worry about renovation costs, as the savings from the price gap more than covers that need
There’s also fewer issues involving valuation. For new launches, the developer’s price is taken to be the fair valuation. For resale, there’s a possibility that the valuation may fall below the asking price, thus prompting a cash top-up.
Coupled with the lack of urgency (the couple had a place to stay until ELTA would be completed), the smaller but newer two-bedder was the better choice.
4. For landlords, a smaller unit improves yields and lowers capital commitment
An agent told us about a “sell one, buy two” scenario, where a couple were deciding on the second property. The sale proceeds, coupled with their savings, were enough to let them purchase a three-bedder (approx. 1,050+ sq.ft.) at DUO Residences.
Upon further viewings nearby however, they changed their minds and opted for a smaller two-bedder (approx. 678+ sq.ft.) at The M.
The reasoning was that the DUO Residences three-bedder cost about $2.1 million; and with projected rental income of $6,000 to $6,500 a month, it was a gross rental yield of 3.4 to 3.7 per cent.
Conversely, the two-bedder at The M would only have come up to about $1.4 million. With projected rental rates of $5,200 to $5,800 per month, this is a higher yield of 4.4 to 4.9 per cent.
Furthermore, the loss of living space was not a real issue to these buyers. They had already decided that the second unit was to be rented out for income; so it made no difference to their personal comfort.
On top of the higher yields, the lower capital commitment also meant lower risk. This was a significant benefit, as the couple were nervous about each party taking on a separate mortgage.
In these cases, foresight and clear intent – rather than an impulsive grab at the biggest unit – served the buyers’ benefits. This is why it’s important to talk through your intentions for the property.
If the goal is long-term rental income, flexibility, or simply a lower-risk entry point, a smaller unit may serve you better even if it means giving up some space. Rather than just ask “What can I afford?” We suggest you ask: “What am I trying to achieve by buying this property?”
Don’t maximise square footage over maximising comfort or returns. Reach out to us at Stacked so we can walk you through the numbers, and help you make a better long-term decision.
