HDB change may cause demand to shift from existing resale units

HDB change may cause demand to shift from existing resale units

Christine Sun, OrangeTee & Tie’s senior vice-president, believes that a MOP of longer duration could help temper speculation.

Government data revealed that in 2022 the number flats sold within a two-year period of MOP (aged seven years or under) increased by 733 % to 6,189 from 743. Government data showed that the number of flats, which were aged less than seven years and sold within two year after MOP, increased by 733 percent to 6,189 in 2022. That’s up from 743 back in 2014.

In 2022 the deals worth more than a million dollars will be made up of 63 units or 17 percent.

Lee Nai Jia from PropertyGuru said that, despite the restrictions, some buyers may choose to avoid Plus apartments. This may lead some applicants to gravitate toward Standard flats.

Lee believes Plus Prime flats will not have the impact that was anticipated as the majority of potential homebuyers tend to be “driven” by macroeconomic factors and their immediate needs. BTO flooding and high resale costs have already taken demand away from the resale section.

HDB data indicated that the median resale value of four room flats in Sengkang & Serangoon in the 2nd quarter of 2023 was approximately S$560,000. This was higher compared to a resale four-room flat in Ang Mo Kio that stood at S$520,000.

OrangeTee & Tie revealed that 17 HDB towns have hit new records in this year. Resale values increased in 2020. They rose by 5% compared to 0.1% in 2019.

HDB market prices continue to increase from 2021. Resale values are up 12.7%. Then, they rise another 10.4% by 2022. The introduction of stricter loan limits has cooled prices since then. In Q1 and Q2, the price rises were only 1 per cent.

Plus flats must be sold 14 to 15 year after the project is completed. This could make it more difficult for people to “climb” the next step in the property ladder.

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Prime flats and Plus flats have the same 10 year minimum occupation period (MOP). Standard flats are to retain the 5-year MOP. Additionally, the sale of Plus apartments will be subject to income limits. This is also applicable to Prime apartment resale.

The classification started in 1992 and was determined by the land that could be developed. Choa Chu Kang estates like Jurong West, Sengkang Estates, Woodlands, and Sengkang were all classified as non mature, while others like Ang Mo Kio Estates, Marine Parade Estates, and Serangoon were all designated mature.

Analysts claim that HDB’s Build-toOrder framework has been in place for quite some time, but the new framework could push demand to existing units and reduce private housing’s pool upgraders.

The framework was introduced by Prime minister Lee Hsien Loong as part of his National Day Rally. This framework distinguishes BTOs by locational factors rather than estate age. It aims for more affordable flats to be built in attractive places, and to reduce the windfall gain that comes with high resale rates of flats located in mature estates.

The introduction of the Plus flats, which are located in locations that are near to transport nodes and towns, will bring with it more subsidies. However, there will be strict limits on resale.

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