Newly launched BTO projects with under 4 years’ waiting time and ‘attractive’ locations may help cool HDB resale market: Analysts

SINGAPORE — Nearly 7,000 flats have been launched for sale by the Housing and Development Board (HDB), and some property analysts foresee that the Build-to-Order (BTO) flats this round will be attractive to buyers due to a reduced waiting time and their locations. 

They said that this may help cool down the HDB resale market. 

The sales exercise this month offers 5,495 BTO flats in Bedok, Kallang-Whampoa, Serangoon and Tengah, as well as 1,500 units from the Sale of Balance Flats (SBF) scheme, which offers flats not taken up from earlier BTO launches and surplus flats from other housing schemes.

In a press statement on Tuesday (May 30), HDB said that there are two BTO housing developments in Tengah and the other three are in Bedok, Kallang-Whampoa and Serangoon.

About 90 per cent of the BTO flats have a waiting time of below four years.

“This makes the May 2023 BTO sales exercise one of the BTO launches with the highest proportion of flats to be completed in less than four years in recent years,” the agency added.

In comparison, the median waiting time for the flats launched in February's sales exercise was about 4.4 years.

People who are looking to move into their flats sooner may consider applying for the flats at Parc Meadow@Tengah, which has a waiting time of between three years one month and three years four months. 

The waiting times for the other four projects — Plantation Verge, Bedok South Blossoms, Serangoon North Vista and Farrer Park Arena — range from three years five months to four years.

Farrer Park Arena, with a total of 569 three-room and four-room flats, is offered under the Prime Location Public Housing scheme. These are new public housing built in prime, central locations such as the city centre and the Greater Southern Waterfront and the flats have a longer minimum occupation period of 10 years and stricter rental conditions.

HDB said that 20 per cent of the flats in Farrer Park Arena will be set aside for first-time applicants who are families and 2 per cent for second-timer families under the Married Child Priority Scheme, which helps a married child and the parents to live with or close to each other.

These are two-thirds of the usual quotas. The priority quotas for other BTO flats in mature estates are 30 per cent for first-timer families and 3 per cent for second-timer families.

A wide selection of flats, ranging from two-room flexi flats to 3Gen flats, are offered to meet diverse housing needs, HDB said.

Two-room flexi flats cater primarily to senior citizens but are also open to singles or families buying flats for the first or second time, subject to qualifying criteria, while 3Gen flats are for multi-generational households and they come with four bedrooms, two of which have attached bathrooms.

Five-room flats will be offered in the mature towns of Bedok and Serangoon, which make up more than 40 per cent of the total five-room flat supply in the current launch. 

“With significant market discounts, the new flats will be priced considerably lower than the transacted prices of comparable resale flats,” HDB said. 

Eligible first-timer applicants who are families may benefit from the Enhanced Central Provident Fund (CPF) Housing Grant of up to S$80,000. 

Including the grant, flat buyers may pay as little as S$163,000 for a three-room flat and S$290,000 for a four-room flat in the non-mature estate of Tengah, HDB added.

They may also repay their housing loan through CPF. 

In the mature estates such as Bedok where rates are higher, the prices after grant start from S$260,000 for a three-room flat and S$403,000 for a four-room flat. 

Strong demand for flats at Bedok South Blossoms and Serangoon North Vista can be expected because it has been several years since the last BTO launch in Bedok and Serangoon, HDB said.

“Applicants who wish to improve their chances of securing a flat are encouraged to apply for a flat in the non-mature town of Tengah, where at least 95 per cent of the four-room and bigger flats are set aside for first-timer families,” it added. 

To further increase their chances, applicants may also look out for projects with application rates of around 1.7 and lower, meaning that there are fewer than two applicants vying for a flat. This information for each BTO project is available on HDB’s website.

Applicants of such projects stand a good chance of selecting a flat because the BTO rejection rate is about 40 per cent, HDB suggested.

WHAT ANALYSTS SAY

Mr Lee Sze Teck, senior director of research at real estate firm Huttons Group, said that the BTO launches this round are "very attractive". 

He cited various factors, such as their proximity to MRT stations and amenities such as food centres and malls. 

He added that the first-timer application rates for Farrer Park Arena, Parc Meadow@Tengah and Plantation Verge may be between 1.0 and 3.0, meaning that one to three applicants may be vying for one flat.

Mr Nicholas Mak, chief research officer of property portal Mogul.sg, said that out of the five projects, the most attractively located one is Farrer Park Arena. 

"It is at the city fringe and only about five minutes’ walk to either the Farrer Park MRT Station or the Little India MRT interchange. Therefore, it is not surprising that it is launched under the Prime Location Public Housing model," he said. 

The second most attractively located project in his view is Bedok South Blossoms.

"Although the price of the five-room flats in Bedok South Blossoms are also the most expensive flats in this BTO launch, the prices may not deter some buyers because it is rare for the HDB to offer BTO flats in Bedok," he said. 

In terms of the impact of this sales launch on the resale market, Mr Lee from Huttons Group said that HDB resale prices are estimated to rise up to 5 per cent this year due to price resistance and more BTO launches. 

This is less than half of the 10.4 per cent increase in 2022 as well as 2021’s record growth of 12.7 per cent. 

Mr Lee's projection is also similar to Mr Mak's estimates of about 3 to 6 per cent growth for the whole of this year. 

Mr Mak noted that the prices of HDB resale flats are already showing signs of slower growth compared to last year.

If the Government were to shorten the waiting time further for the upcoming BTO flats, it could draw more buyers from the HDB resale market to apply for the flats, Mr Mak said. 

The lower demand in the HDB resale market may therefore further slow down the price increase of HDB resale flats. 

"A large supply of attractively located BTO flats with reasonably shorter waiting time is more effective in cooling the HDB resale market than any property market curbs introduced so far," Mr Mak added. 

Agreeing, Mr Luqman Hakim, chief data and analytics officer at property portal 99.co, said that the unique locations in this month's exercise may spur resale homebuyers to change their plans and apply for BTO flats instead. 

"For example, Parc Meadow@Tengah has waiting times of between 37 and 40 months," he added. 

When asked why prices of flats at Serangoon North Vista differed from those at Central Weave@AMK, which had starting prices of S$720,000 before grants, even though they are relatively close locations, the analysts gave a few reasons. 

Mr Mak said that the location of Central Weave — which was launched last August, is better because it is near the Ang Mo Kio MRT Station. 

Although the two BTO projects are close to each other, this does not mean that the prices of the Serangoon BTO flats must be similar to that of the Ang Mo Kio one.

Mr Luqman said that the BTO flat prices of these areas are usually a reflection of the prices of resale flats around the area, with adjustments based on a renewed 99-year lease and some discount factor priced into them.

"In that respect, the price per square foot of the HDB flats around Central Weave are much higher than the ones in Serangoon North Vista though they might be relatively near," he added. 

SALE OF BALANCE FLATS 

As for the Sale of Balance Flats, there are 1,500 units at various locations.

About 61 per cent of the flats are already completed and the rest are in various stages of construction, HDB said. 

The price for a four-room flat in a non-mature town starts from S$223,000, while a four-room flat in a mature town starts from S$293,000. These are before the Enhanced CPF Housing Grant. 

For the next BTO launch in August, around 6,700 BTO flats will be offered in areas such as Chua Chu Kang, Kallang-Whampoa, Queenstown and Tengah.

In November, HDB will offer about 6,300 flats in estates such as Bedok, Bukit Merah, Bukit Panjang, Bishan, Jurong West, Queenstown and Woodlands.

However, these will be subject to review closer to the launch date. 

Flat applications for this latest round can be made online via homes.hdb.gov.sg from May 30 to June 5.