October 2024 BTO sales exercise will comprise 1 Prime project, 7 Plus projects, and 7 Standard projects; first BTO launch under location-based classification
By Timothy Tay
/ EdgeProp Singapore |
HDB projects under construction. The new location-based classification will focus on attributes such as city center proximity, transport connectivity, and surrounding amenities and services. (Picture: Samuel Isaac Chua/The Edge Singapore)
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The Housing and Development Board HDB) will launch 15 Build-To-Order BTO) projects when the October 2024 BTO sales exercise is launched next week. It will be the first BTO sales exercise to feature flats that are categorised under the new location-based classification framework.
Of the 15 projects that will be available, the 312-unit Crawford Heights in Kallang/Whampoa will be the only Prime project on offer. Meanwhile, there will be seven Plus projects spread across four towns and seven more Standard projects located in five towns.
Standard projects will form the largest category of BTO flats each year, while Plus projects will be in “choicer” locations with good transport connectivity as well as proximity to amenities and the city centre. Meanwhile, Prime flats are in “exceptionally good” locations, often centrally located and near major town centres that support a wide range of amenities and transport options.
In total, the October BTO sales exercise will offer 8,573 flats and it is the most number of BTO projects that the government has released in a single BTO sales exercise to date. The flats offered in this sales exercise make up more than 40% of the new HDB supply this year.
Wong Siew Ying, head of research and content at PropNex, reckons that the October BTO sales exercise may be a "litmus test of sorts" that will allow the government to gauge flat buyers’ receptiveness to Plus flats while subject to the tighter conditions and a longer MOP period, especially for projects that are not in traditional prime central locations but boast other attractive attributes, she says.
The location of Crawford Heights, the only Prime BTO project available during this month's BTTO sales exercise. (Map: HDB)
The location-based classification is a significant policy shift by the government following decades under the town-based framework, where HDB towns were categorised as either mature or non-mature areas.
But Lee Sze Teck, senior director of data analytics at Huttons Asia, cautions that as HDB moves towards locational attributes to classify BTO flats, it risks creating a more stark "delineation of expensive and affordable flat clusters".
Future BTO sales exercises will categorise projects as either Standard, Plus, or Prime. According to HDB, each upcoming BTO project will be evaluated based on a “holistic assessment” of their locational attributes – proximity to the city centre, transport connectivity, and availability of amenities such as social and commercial services.
This opens the possibility of BTO projects with different classifications located within the same town.
Source: PropNex Research, HDB (*Figures by flat types in red will not add up to total as they are pre-BTO launch estimates only; actual number of units will be announced when the BTO exercise is launched / #Total figures provided by HDB on 9 October 2024)
For example, the October BTO sales exercise will see the launch of Crawford Heights, located between North Bridge Road and Crawford Street, in the Kallang/Whampoa. But two Plus projects will also be offered – the 355-unit Towner Breeze, and the 271-unit Kallang View.
"Though these three projects are technically within the same HDB Town, Crawford Heights is classified as Prime as it is closer to the City and just minutes away, masterplans are in the making to transform the Kallang Sports Hub locale into a dynamic, lifestyle, events, sports and recreational precinct," says Eugene Lim, key executive officer of ERA Singapore.
Meanwhile, Bedok will see three BTO Plus projects – the 734-unit Bayshore Vista, the 710-unit Bayshore Palms, and the 348-unit Kembangan Wave. Pasir Ris will see two BTO Standard projects – the 276-unit Costa Riviera I and the 491-unit Costa Riviera II.
The location of Bayshore Plams, one of two Plus projects in Bedok. (Map: HDB)
Plus and Prime flats will be priced with additional subsidies, on top of existing ‘market discounts’ applied to all BTO projects, says HDB. This is in line with the government’s ongoing policy of keeping public housing affordable.
However, buyers of Plus and Prime flats will be required to return a percentage of the resale price of valuation of the flat (whichever is higher) when the unit is sold on the resale market. HDB says that this subsidy clawback will vary from project to project. Lee of Huttons notes that key differentiating factors between a Plus flat and a Prime flat is the clawback subsidy and resale restrictions.
"The clawback subsidy for Prime flats will be higher than Plus flats. It may be raised to 10% to 12% from the current 9% while the clawback subsidy for Plus flats may start at 6% which was the same as the first PLH flats’ clawback subsidy," says Lee, adding: "The income ceiling on buyers of resale Plus and Prime is not fair to singles. For singles whose income exceeds $7,000 per month, they can only buy either a standard or Plus resale flat. They are not able to buy a Prime resale flat".
The location of Costa Riviera II, one of the seven Standard BTO projects that will be launched next week. (Map: HDB)
The government says that details like purchase price and scope of subsidy recovery will be made known to buyers during the BTO sales exercise next week. Standard flats will not face any subsidy recovery. Plus and Prime flats will also face a ten-year minimum occupation period (MOP) compared to the usual five year MOP that Standard flats will face.
Lee reckons that the starting price of a four-room flat at Crawford Heights could start from $540,000, which is close to the starting price of a four-room flat in Tanjong Rhu Riverfront I/II, a project that was launched during this years June BTO sales exercise. Meanwhile, the starting price of a four-room flat in Kallng View and Towner Breeze, both Plus projects in the same Kallang/Whampoa town, could start from $540,000, says Lee.
"In pricing BTO flats, the HDB has to take into account what buyers with a maximum household income ceiling of $14,000 can afford to pay for within a Mortgage Servicing Ratio of 30%," says Lim. "So price differences between Prime and Plus categories within the same HDB town may not differ much; even though there will still be a price difference due to their respective locational attributes".
He adds that Prime category flats will enjoy a higher subsidy and market price discount compared to Plus category flats. "Thus, the subsidy recovery upon resale for Prime category flats will be higher than for Plus category flats; even though they are within the same HDB town," says Lim.
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