DEMAND for homes under $1.5 million is expected to increase thanks to recent cooling measures aimed at preventing buyers from over-extending themselves.
Property consultancy Knight Frank said in a report that demand for lower-priced, non-landed private homes is likely to be healthier as the measures restrict the maximum term of loans.
It offered some examples to show the impact of the latest cooling measures on affordability.
For instance, a home buyer aged 35 with a monthly household income of $12,000 can now afford a residential property with a maximum value of $1.5 million to $1.6 million on a 30-year loan period.
This assumes a debt-servicing ratio - a buyer's total monthly debt payments divided by net income - of 35 per cent, which is the recommended position of affordability, the report noted.
An older home buyer aged 40 years with a similar monthly household income can now afford a home that costs $1.3 million to $1.4 million. This takes into account a 25-year loan term under the new rules.
These buyers could look to District 19 - comprising Hougang, Sengkang and Punggol - to meet their housing needs.
The area has the highest concentration of homes of at least 70 sq m in size sold for under $1.5 million in the past four months, Knight Frank said.
It is followed by District 18, which includes Pasir Ris, Tampines and Simei.