HDB offers 9,655 BTOs in largest sales exercise to combat soaring resale prices and rents

/ EdgeProp Singapore |

November 23, 2022 4:02 PM SGT

An artist impression of Kallang Horizon, one of three PLH projects launched as part of the Nov 2022 BTO sales exercise. (Picture: HDB)

SINGAPORE (EDGEPROP) - In its November 2022 Build-To-Order (BTO) sales exercise, HDB is offering 9,655 flats for sale. The public housing board says that this is the largest BTO offering it has ever offered in a single launch.

The number of BTO flats on offer is a 94.3% increase compared to the August 2022 BTO sales exercise, which saw 4,993 flats launched. This also surpasses the previous record set by the August 2020 BTO exercise which saw 7,862 flats launched, says Mohan Sandrasegeran, senior analyst, research and content creation, at One Global Group.

“The government has been ramping up the supply of new flats in a bid to meet the strong demand for public housing,” says Ismail Gafoor, CEO of PropNex Realty. “We believe this is a move in the right direction, given the high oversubscription rates of BTO flats over the past launches, soaring resale prices and escalating rentals of HDB flats — indicative of pent-up demand for housing that has yet to be quelled.”

The flats for sale are spread across 10 projects in mature and non-mature estates in Kallang/Whampoa, Queenstown, Bukit Batok, Tengah, and Yishun. HDB says that 5,861 flats (60%) are in non-mature estates.

Table: HDB

60% in non-mature estates

The number of flats in this sales exercise that are located in non-mature estates is “bigger than the total flat supply in a typical BTO sales exercise, thus offering a wide range of affordable flats for home buyers”, says Tan Meng Dui, CEO of HDB.

“With 95% of four-room and larger flats in this (November 2022 BTO exercise) bumper crop set aside for first-timer households, and additional ballot chances for them, we encourage first-time applicants to apply for flats in the non-mature estates to increase their chances of securing a new BTO flat,” adds Tan.

This is echoed by Sandrasegeran, who says that BTO hopefuls should seriously consider the developments in the non-mature estates if they are concerned with the success rate of balloting. “The flats there provide hopeful applicants a higher chance of successfully securing a flat. With the recent revision in BTO allocation quota, first-time applicants have a higher chance in securing three-room and larger flats,” he says.

The emphasis on available flats in non-mature estates comes as the government is reviewing the current grouping of public housing into mature and non-mature estates.

“The review of mature and non-mature estates classification may possibly see some non-mature estates like Bukit Batok, Jurong East and Hougang shift to the mature estate category,” says Lee Sze Teck, senior director, research at Huttons Asia.

He notes that the average age of flats in these three HDB towns are more than 25 years old, and the neighbourhoods are well-developed in terms of infrastructure and amenities. The upcoming town of Jurong East has been identified as a new CBD for Singapore.

“If the perception of some of these non-mature estates change, demand may be diverted to them and push up prices of homes. We may see a new HDB town classification, ‘emerging’, that could be applied to towns like Tengah and Paya Lebar,” says Lee.

Launches in prime locations

Three BTO projects that fall within the Prime Location Public Housing Model (PLH) are also included in this sales exercise, namely Kallang Horizon in Kallang/Whampoa, as well as Ghim Moh Natura and Ulu Pandan Banks in Queenstown.

A four-room flat at Kallang Horizon is priced from $509,000 (excluding grants), while a four-room flat at both Queenstown projects is going for $516,000 (excluding grants).

“Kallang Horizon is probably the best (BTO) launch in November. It is next to Kallang MRT Station and the Kallang River. A parcel of land opposite Kallang MRT Station is zoned commercial so residents may see more amenities in the future,” says Lee Sze Teck, senior director, research, at Huttons Asia.

Buyers will also notice that Kallang Horizon has a similar price range to the other two PLH projects. Thus, this project could see application rates of 2 to 5 times, says Lee.

artist impression of Queensway Canopy - EDGEPROP SINGAPORE

An artist impression of Queensway Canopy. (Picture: HDB)

The first PLH model project in Queenstown was Ghim Moh Ascent, which was part of the May 2022 BTO exercise. That project saw an overall application rate of 1.5 and 4.4 times for the three-room and four-room flats respectively.

In the latest BTO exercise, there are three BTO projects offered in Queenstown. Besides the two PLH projects, the third is Queensway Canopy, a non-PLH development. “Subscription rates are expected to remain elevated, given the robust demand for public housing. PropNex expects subscription rates for the Queenstown projects to exceed 3 times for the three-room flats and 5 times for the four-room flats,” says Gafoor.

The continuous placement of BTO developments under the PLH model will become the norm moving forward, says Sandrasegeran. He adds that the application rates for BTO projects under the PLH model are “a form of benchmark and a gauge for the relevant authorities to determine the positioning of such flats in the future”.

Intended effect of cooling measures

The launch of this BTO exercise comes amid concerns among HDB home buyers regarding relatively longer waiting times for some projects, as well as the rising prices for some four- and five-room flats in recent months.

According to Nicholas Mak, head of research and consultancy at ERA Realty, the government has two ways to cool the rising prices of HDB flats. They can either curb home-buying demand, or increase housing supply, he says.

“The intended effect of the latest round of cooling measures introduced on Sept 30 this year is to partially curb demand, such as the 15-month wait-out period for people who sell their private housing to buy a HDB resale flat,” says Mak. (Find HDB flats for rent or sale with our Singapore HDB directory)

He adds that heavily curbing demand is a challenge because “HDB flats are the most affordable housing for a large majority of local residents”.

This was echoed by Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, who says that many buyers will still opt for BTO flats as they remain the most affordable housing option in the market, given their low entry prices.

She adds that the prices of flats in mature estates are not considered high when compared to private housing and prices are “capped” to a certain level since there are no five-room flats offered in mature estates in this sales exercise.

artist impression of Garden Waterfront I & II @ Tengah - EDGEPROP SINGAPORE

An artist impression of Garden Waterfront I & II @ Tengah. (Picture: HDB)

However, in reaction to the latest cooling measures, Sun expects more buyers to opt for flats in non-mature estates or select lower-floor units. “Some cash-strapped buyers may reprioritise their purchase decision since their housing affordability will be affected by the tightening of LTV limits and higher interest rate floor used in calculations by the HDB and private financial institutions,” she says.

Strong BTO launch pipeline in 2023

Another 1,071 flats are also being offered under the Sale of Balance Flats (SBF) exercise. This brings the total number of flats offered in this sales exercise to 10,726 units.

HDB reiterates that applications for these new flats are shortlisted using a computer ballot and not on a first come-first served basis. Thus, applicants do not need to rush to make their flat applications.

The application window for this sales exercise is open from Nov 23 to Dec 1.

It is important to note that HDB intends to launch between 8,200 and 9,200 flats in the upcoming February and May 2023 BTO sales exercises, says Mak. “The combined effects of the cooling measures and the strong supply of flats will flatten the upward trajectory of the HDB resale price trend,” he adds.