Analysts said that the Housing and Development Board (HDB)’s new framework for build-to-order (BTO flats) has been in development for a while, but it could increase demand for existing flats and reduce the pool of private housing upgraders.

The framework, announced by Prime Minister Lee Hsien Loong at his National Day Rally in May 2018, differentiates BTO project by their locational attributes and not by the age of the estate. The framework aims to offer new flats at more affordable prices in desirable locations and reduce windfall gains from high resale values of mature estates.

Plus flats will be introduced, a new category of apartments located in desirable areas near transport hubs or town centres. These properties will receive more subsidies, but there are strict restrictions on the resale.

Prime flats, the new name for the Prime Location Housing Model project, will have a 10-year MOP. Standard flats retain their current MOP of 5 years. The resale of Prime flats and Plus flats is also subject to a ceiling on income.

The land available for development was the determining factor in 1992. The classification began in 1992 and depended on the availability of land for development.
HDB data showed that the median resale price of four-room apartments in Sengkang or Serangoon was around S$560,000 in the second quarter 2023. This was higher than the S$520,000 price of a four room resale apartment in Ang Mo Kio.

OrangeTee & Tie’s analysis showed that this year, 17 of 26 HDB townships hit record prices. The resale price has increased since 2020 when it rose by 5 percent compared to just 0.1 percent in 2019.

HDB prices continued to rise from 2021 onwards, increasing by 12.7%, and then another 10.4% in 2022. Since then, prices have decreased due to the tightening of loan limits. Q1 saw a rise of 1% and Q2 showed a rise of 1.4 %.

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Similar to PLH, Plus flat buyers will have to wait 14-15 years from the application date to the end MOP to be able to sell the property. It could be difficult for families “to climb up to the next step on the property ladder”.

Christine Sun, senior Vice-President of OrangeTee & Tie, suggested that a longer MOP could temper speculation.

Data from the government showed that, in 2022, the number of apartments sold within two-years of MOP and aged seven or less, grew 733 percent to 6,189 units, up from 743 in 2014, according to data. The number of flats sold within two years after MOP, aged seven years or less, increased 733 per cent to 6,189 units in 2022 from 743 in 2014.

In 2022 they accounted for 17 percent, or 63 deals, of the million-dollar transactions.

According to Lee Nai Jia of PropertyGuru, the head of data, software and real estate intelligence solutions, certain homebuyers might avoid Plus flats due to its restrictions. Some applicants will gravitate towards Standard flats.

Lee thinks the launch of Plus flats and Prime apartments might not have as much impact as anticipated on the resale sector, because most homebuyers “are driven by immediate needs” and macroeconomics factors. The flood of BTOs and high resale price have already sucked demand out of the resale market.