Personally, I also don’t see it as a problem. After all, the role of the HDB is to provide affordable housing. Better to have excess supply than shortfall.

More HDB BTOs: Too Much Of A Good Thing?

The Singapore government has been determined to ensure that first-home buyers are able to realise their dream of procuring a HDB unit to call their own, at an affordable price. To a large extent, they have succeeded in doing so.

In an effort to address the issue, the government has been committed to constructing over 90,000 HDB BTOs till 2016. This injection of new supply is an increase of 50 percent – as compared to the number of units which were released for sale in the last three years. However, in spite of good intentions behind the announcement, there is a real risk of oversupply in the HDB BTO residential market as a consequence of the slow population growth of Singapore Citizens. Currently, the Singapore Citizen population increased at its slowest pace in nine years, reaching more than 3.3 million in 2013, up 0.65 percent from 3.29 million the year before.

If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built,  there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole by 2016. This slowdown in population growth could lead to higher vacancy rates, placing a strain on public resources.

Application rates from first-time buyers for new BTO flats taking a tumble – from 2.4 in January 2013 to 1.3 in November 2013 – suggest that demand itself is already slowly being rectified. Does this, coupled with more than 28,000 HDB units planned for completion in 2014, signal a real danger that the HDB market is heading for a supply glut? According to analysts, this scenario is unlikely to occur.

Getty Goh, Director of real estate research firm Ascendant Assets said, “Even though 28,000+ flats due to be completed in 2014 may seem like a large number, if we take a long term view, the demand for housing will be spread out – given the fact that the government is trying to increase the overall population figure to 6.9 million by 2030.”

Alan Cheong, Head of Research for Savills, added, “New BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand. Most of these will go towards newly-formed families; therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issue.”

Citing alternative measures the government can take to alleviate concerns of oversupply, Christine Li, Head of Research and Consultancy for Orange Tee mentioned, “The government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a risk. As public housing is mainly for owner occupation, it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years. The government can have the option to extend the MOP further if an oversupply is imminent,” she said.

Should We Be Worried?

The government will pay close attention to both the demand and supply of public housing – implementing strategies to tackle the delicate act of balancing the two. By virtue of their commitment towards building more BTOs, we have seen the government begun taking steps to address the short-term deficit of residential units over the course of the next few years.

In the same vein, should these additional units prove to be more than what the market needs, the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market. This is already evident from Minister Khaw Boon Wan’s recent mention of cutting back on the construction of larger, three or more bedroom HDB units by about 18 percent, in response to fewer applicants.

More For Singles In The City

With plans to reduce the supply of BTO units for newly married couples and families, the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2,600 to 5,000 units in 2014. This will aim to re-distribute the allocation of resource from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications – which will likely remain in the double digits in 2014.

Goh said: “This is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home. In the bigger scheme of things, this policy is not going to have any significant impact on the HDB market, as there are more than 900,000 HDB units in total and 2,500 units make up less than 0.5% of the overall HDB stock.

While singles could consider buying resale HDB units in the past, prices of resale flats have gone up significantly in the last few years; many singles are presently finding it a challenge to afford something from the resale market. Hence, allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of people,” he quipped.

Li added: “The new ruling allowing singles to purchase two-room Build-to-Order (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home. While the intention is to look after the needs of those who have been previously sidelined, the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a family.”

*The above article is published from the recently launched PropertyGuru Market Outlook 2014 eBook which is downloadable for free and can be viewed exclusively at PropertyGuru.com.sg/propertyoutlook2014.

To leave your comments, please go to : Has HDB BTO Supply Been Overdone?

In this latest exercise HDB BTO, a total of 5,293 flats for available for sale.

This comprises 4,156 new BTO flats in Punggol and Yishun, including 84 units of 3Gen flats, which is being introduced for the first time. The 3Gen flats will be located in Saraca Breeze @ Yishun.

The 3Gen flats cater to multi-generation families who want to live together. Each 3Gen flat will feature four bedrooms and three bathrooms (two en-suites), with an internal floor area of about 115 sqm.

Only applicants with a multi-generation family comprising at least a married/courting couple and their parent(s) listed in the application, will be eligible to purchase these 3Gen flats.

To address the strong demand from singles, another 1,137 units of 2-room flats which are unsold from previous BTO exercises will be included in this BTO exercise.

Based on the response from the earlier BTO exercise for the units meant for singles, I expect the take-up for these 2-room units to be very high.

Application and more details on the September 2013 BTO exercise can be found here:

HDB September BTO

To leave your comments, please go to : HDB BTO and Pioneer Launch of 3Gen Flats

It’s about time such targeted HDB cooling measures are implemented as the HDB resale market prices had been on a relentless uptrend for the past few years.

The first cooling measure impacts new Permanent Residents (PRs).

Previously, a couple of two new PRs would be able to buy a HDB resale unit as soon as they receive their PR status. With the new regulation, they will need to wait three years before they can buy a resale HDB flat.

This change will help to reduce some of the immediate demand for HDB resale property.

The second and more significant cooling measure affects the mortgage servicing ratio and maximum loan duration for HDB units.

The maximum tenure for HDB housing loans will be reduced from thirty years to twenty-five years.

For loans granted by banks, the maximum tenure of new housing loans and re-financing for the purchase of HDB flats (including DBSS flats) will be reduced from thirty-five years to thirty years.

New loans with tenures exceeding twenty-five years and up to thirty years will be subject to tighter loan-to-value (LTV) limits of 60%. Previously, this tighter LTV limit applied to loan with durations of between thirty and thirty-five years.

The Mortgage Servicing Ratio (MSR) limit will also be reduced from 35% to 30% of the borrower’s gross monthly income.

By tightening the screws around the financing, buyers will be less able to pay a premium price for a HDB resale unit.

Besides the cooling measures, MND also announced the enhancement of some schemes for buyers of HDB units. These include:

• Enhancement of the Special CPF Housing Grant
• Step-Up CPF Housing Grant
• Enhancement of the Multi-Generation Priority Scheme
• Launch of Three-Generation (3Gen) Flats

For more details, you can read :

More Help, Stronger Support, Better Homes (HDB)

While these changes are good, it is getting increasing tougher and tougher for a layman to keep up with all the regulations and benefits. Looking at how fast the changes had been implemented, I dare to say that even some of the HDB officers will find it hard to remember them. After all, it takes time to build familiarity.

To leave your comments, please go to : Cooling Measures for HDB Resale Market

While singles can start cheering the move, the chances of getting a unit  can be actually quite low. While a total of 519 new 2-room flats in Seng Kang and Yishun are available in this BTO exercise, a limit of 30% of these units will be for singles. That works out to be around 173 units.

However, a significant change is that the monthly household income ceiling for families for 2-room flats in non-mature estates will be increased from $2,000 to $5,000. This is also the income ceiling for singles who are applying. This might very well pull some potential condominium shoebox buyers to HDB instead.

The Government will also extend the Additional CPF Housing Grant (AHG) and the Special CPF Housing Grant (SHG) to eligible singles buying BTO flats.

The full announcement by HDB also includes some other rules refinement affecting married couples and can be found here:

Meeting Diverse Housing Needs – 4,079 New Flats for Families and Singles

To leave your comments, please go to : BTO for Singles Launched

What are your views?

If you like to be a part of the Singapore conversation on housing, you can sign up at this page:

Singapore conversation on Housing Registration

The first session starts on 20th April 2013.

Alternatively, you can also take part in the online surveys. Just click on the particular topic at this page:

Singapore Conversation on Housing

To leave your comments, please go to : Singapore Conversation on Housing