Just what could a ramp up in the supply of Built-To-Order (BTO) flats do for Singapore’s housing market? On one hand, it is likely to result in greater HDB flat availability for locals, and on the other, it could also lead to further price appreciation.
Earlier in January, it was reported in mainstream media that 19,600 BTO flats will be launched in 2024, including 2,800 units with shorter wait times of under three years. This echoes the past where a similar ramp up in supply took place between 2011 to 2013, which saw about 26,000 flats being launched yearly to address a “temporary demand-supply imbalance”.
As an outcome of this injection of approximately 115,000 new homes from 2011 onwards, this resulted in an uptick in the number of BTO flats reaching the end of their Minimum Occupation Period (MOP) since 2019. In turn, this caused the HDB resale price index to rise sharply, owing to the fact that these recently MOP-ed BTO flats had longer remaining leases, and thus commanded better prices than older resale HDB flats.
While it is expected that history will repeat itself in the coming years, with resale HDB prices trending higher over 2029 to 2033, this growth in prices will likely be less pronounced than the previous cycle.
This can be largely explained by more recent public housing measures, such as the longer MOP for both Prime and Plus BTO flats, as well as the $14,000 income ceiling on resale buyers, which are likely to put downwards pressure on future price growth.
