HDB rolls out increased BTO supply amid moderation in resale market

SINGAPORE: The Housing Development Board (HDB) of Singapore, in a recent press release, shared their plans for the upcoming supply of flats for the second half of 2023, as well as crucial updates on the HDB resale and rental markets for Q2 2023.

To address the mounting housing demand, the HDB has augmented the Build-To-Order (BTO) flats supply by 35% over the years – it has risen from 17,100 flats in 2021 to a robust 23,000 flats in 2023. Of the total BTO flats for 2023, approximately 10,000 have been rolled out in the first half, with an additional 13,000 planned for launch in H2 2023.

The next sales exercise will be postponed to late September or early October 2023 from the usual period of late August/early September.

This change in schedule accounts for the ballot results of the May BTO and Sales of Balance Flats exercise, enabling applicants to better understand their queue position before deciding to apply for a flat in the next launch.

Additionally, the delay allows HDB more time to finalise the system changes required for the new First-Timer (Parents & Married Couples) priority category.

For the upcoming BTO sales exercise, HDB will offer around 6,700 flats across multiple locations including Choa Chu Kang, Kallang Whampoa, Queenstown, and Tengah.

The final 2023 sales exercise in December will make available about 6,300 flats in areas such as Bedok, Bishan, Bukit Merah, Bukit Panjang, Jurong West, Queenstown, and Woodlands.

From the 3Q 2023 sales exercise onwards, it is mandatory for flat buyers to possess a valid HDB Flat Eligibility (HFE) letter. As the HFE letter has a validity period of six months, HDB encourages prospective buyers to apply for their HFE letter by mid-August 2023 to prevent any possible delays for their flat application in the next sales exercise.

Moving onto the HDB resale market, the board has observed a slight moderation in the rate of increase in resale prices.

This is attributed to the Government’s proactive measures in ensuring a steady supply of flats, in addition to the implementation of measures to promote a stable and sustainable property market.

These measures include a wait-out period of 15 months for private property owners before they can purchase a non-subsidised HDB resale flat, as well as the lowering of the Loan-to-Value (LTV) limit for HDB housing loans from 90% to 85%, and then to 80%.

The HDB Resale Price Index (RPI) for Q2 2023 is reported as 176.2, a rise of 1.5% over Q1 2023. This indicates a moderate growth as compared to the average quarterly growth of 2.5% in 2022. Resale transactions fell by 6.7% from 6,979 cases in Q1 2023 to 6,514 in Q2 2023.

On the HDB rental market front, the number of approved applications to rent out HDB flats increased by 1.9% from 9,657 cases in Q1 2023 to 9,842 cases in Q2 2023.

As of Q2 2023, a total of 56,858 HDB flats were being rented out, marking a 0.4% growth from the previous quarter.

Reacting to the released data, Dr Tan Tee Khoon, Country Manager – Singapore, PropertyGuru, highlighted that the persistent demand for larger flats in the post-pandemic period continues to fuel the HDB resale prices’ rise.

The growth in prices was driven predominantly by 4-room and 5-room HDB resale flat transactions, which made up 45.8% and 23.4% of the overall transactions in Q2 2023, respectively.

Despite the consecutive growth, Dr Tan noted a slowing in price growth and a dip in transaction volumes, which could suggest that the HDB resale market may be nearing its peak.

He also credited the property cooling measures introduced in September 2022 with moderating the number of million-dollar HDB flats by deterring more private property owners from ‘rightsizing’ to HDB flats.

However, as the BTO supply is reinstated and more BTO flats are launched, Dr Tan expects that buyers will shift their focus away from the resale market. Furthermore, an influx of resale flats is anticipated as approximately 16,000 flats are projected to meet their Minimum Occupation Period (MOP) in 2023. This increase in supply is expected to reduce pressure to match high asking prices and further moderate HDB resale flat prices.