HDB changes can divert demand towards resale properties

The number of flats that were sold within 2 years of the MOP to those aged 7 years or younger, rose 733 percent from 743 to 6,189 by 2022. Data from the government shows that in 2022, there will be 6,189 flats for sale within two years of MOP. In 2014, only 743 were sold. This is a 733 percent increase.

In 2022 these deals will make up 17 percent, or about 63 units.

Lee Nai Jia said that some homebuyers will avoid Plus flats because of the restrictions. This will likely lead to some applicants gravitating toward Standard flats.

Lee believes Plus and Prime will have a less significant impact on the market for resale than originally anticipated. This is because many potential homebuyers rely more on macroeconomic and immediate factors. BTO floods and high prices for resale have already reduced demand in the resale sector.

This classification was introduced in 1992, and it is based on land availability for development. Choa Chu Kang and Jurong West were designated as non-mature estates, whereas Ang Mo Kio and Serangoon as well as Marine Parade and Serangoon are mature estates.

HDB’s data revealed that in the second half of 2023, the median price for four-room flats was S$560,000. The median resale price for a four bedroom flat in Ang Mo Kio was S$520,000.

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OrangeTee & Tie found that 17 out 26 HDB cities hit records this year. In 2020, resale prices increased by 5 percent as compared with 0.1 in 2019.

HDB’s market has continued to grow since 2021. Resale price increases have risen by 12.7% in 2021 and 10.4% more in 2022. Prices have since cooled with the introduction tighter lending limits.

Plus flats are also subject to a 14-15 year wait from the date of application until the completion of the MOP. This may make it harder for families to “climb on the next rung of the ladder”.

Christine Sun is the senior vice-president of OrangeTee & Tie.

Analysts believe that HDB’s new framework of Build-toOrder (BTO), a system for building flats on demand, has been in the works for some time. However, it may drive up-graders to upgrade their existing flats and could reduce the number of people upgrading private homes.

The framework announced by Lee Hsien Loong, Prime Minister of Singapore during his National Day Rally differentiates BTOs projects based on their locational characteristics rather than by estate age. It aims at providing new flats that are more affordable and in attractive areas, while reducing windfall gains associated with the high prices of resale flats within mature estates.

The new Plus classification of flats in prime locations near transport centres or towns will see more subsidies but also stricter limits on resale.

Prime flats – plus flats – will have the exact same minimum occupancy period (MOP), which is 10 years, as Prime Location Housing Model’s current projects. Standard flats keep their current 5-year MOP. For Prime flats as well, the income ceiling for Plus flats resale will also be a criterion.

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