Plus flats in October BTO launch to see robust demand despite tighter rules, say analysts
"Very attractive" prices and "modest" subsidy recovery rates are among the reasons why home buyers are likely to respond positively to the debut of Plus flats, analysts said.
An artist's impression of Central Trio @ AMK, one of the Plus projects launched in the October 2024 BTO exercise. (Image: HDB)
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SINGAPORE: Plus flats, a new category of Housing and Development Board (HDB) flats launched for the first time, are likely to see robust demand in the latest Build-to-Order (BTO) sales exercise, analysts said.
Apart from good locations near the city centre, MRT stations and amenities, these flats have been priced attractively in the BTO launch that opened for applications from Wednesday (Oct 16).
Subsidy clawbacks – one of the rules imposed on the new flat category – are also set at “modest” rates of 6 to 8 per cent and will unlikely be deal breakers for aspiring home owners, analysts added.
HDB on Wednesday rolled out 8,573 new flats that are categorised as Standard, Plus and Prime for the first time, doing away with the decades-old classification of mature and non-mature estates.
Out of the 15 BTO projects, seven are under the Plus category, one in Prime and another seven given the Standard classification based on their proximity to the city centre, transport connectivity and amenities.
Key things to note for the October BTO launch
1. A new classification system
The Build-to-Order (BTO) sales exercise, which runs from Oct 16 to 23, is the first time that new flats are classified as Standard, Plus and Prime.
This marks an overhaul to the classification of estates as either mature or non-mature, and was a necessary step to ensure affordable home ownership, good social mix and a fair housing system, authorities said.
Flats are classified based on “a holistic assessment” of three key criteria – proximity to the city centre, transport connectivity and availability of amenities, such as social and commercial services that are typically found in town centres.
In general, Prime and Plus flats have superior locational attributes. They are priced with more subsidies to ensure affordability but will also come with stricter resale rules like a 10-year minimum occupation period and subsidy clawbacks.
Meanwhile, standard flats have the same subsidies and restrictions currently applied to all BTO flats, such as a five-year minimum occupation period.
2. Most number of BTO projects
HDB will offer 8,573 flats across 15 projects in nine HDB towns.Â
This marks the largest number of projects launched in a BTO exercise to date, according to National Development Minister Desmond Lee.
The number of new flats launched will also account for more than 40 per cent of the new flat supply for 2024.
3. More options for Singles
This is the first time that singles are allowed to apply for two-room flexi flats in all locations across Singapore. Previously, eligible singles above 35 could only apply for such flats in non-mature estates.
Nearly 2,000 two-room flexi units are on offer across 10 projects this time.
4. The launch of “white flats”
In another first, a new type of HDB flat without partition walls and beams will be offered to flat applicants as an option.
HDB said this will offer buyers a "white canvas" to design the flat according to their needs and preferences.
These “white flats” will be piloted at Crawford Heights, the only Prime project in this sales exercise.
Prices for these “white flats” will be reduced by S$6,000 for a three-room flat and S$8,600 for a four-room flat to take into account the non-provision of internal partition walls and some electrical points.
5. Grants, loan rule changes
Eligible first-time flat buyers will be able to tap on more financial support.
To provide further support for lower to middle-income home buyers, the Enhanced CPF Housing Grant was in August raised to provide up to S$120,000 in grants for families.
Another change to note is the lowering of the maximum loan that home buyers can take from HDB.
Also from August, the loan-to-value limit for HDB housing loans was tightened from 80 per cent to 75 per cent - a cooling measure aimed at encouraging more prudent borrowing and dampening demand at the higher end of the public housing resale market.
“VERY ATTRACTIVE” PRICES
Selling prices for the 3,273 Plus flats on offer range from S$187,000 (US$142,000) for a two-room flexi unit at Central Trio @ AMK to S$727,000 for a four-room unit at Towner Breeze.
ERA’s key executive officer Eugene Lim described these as “very attractive” prices that are set at a “significant discount off the market price in the resale market”.
For example, prices for four-room flats at the new Towner Breeze in Kallang/Whampoa range from S$522,000 to S$727,000 without grants. By comparison, comparable four-room resale flats nearby have been sold at prices ranging from S$955,000 to S$1.2 million.
Some of the Plus flats are also “priced very close” or even lower than those offered in Standard projects, said Huttons Asia’s senior director of data analytics Lee Sze Teck.
Take the Costa Riviera I and II in Pasir Ris which are classified as Standard flats. Four-room units there are going from S$481,000 to S$595,000 excluding grants, similar to the prices of Plus projects in Ang Mo Kio and more than those in Kembangan.
Four-room flats at Central Trio @ AMK are priced from S$481,000 to S$603,000, while those at Kembangan Wave start from S$453,000 to S$592,000.
“This may entice some buyers to consider Plus BTOs because for a similar price, buyers get to stay in a centrally located area,” Mr Lee said.
“PALATABLE” SUBSIDY CLAWBACKS
Analysts also described the subsidy recovery rates of 6 to 8 per cent for Plus flats, and 9 per cent for the sales exercise’s only Prime project as “reasonable”.
As Plus and Prime flats are priced with more subsides to ensure affordability, clawbacks are in place to “maintain parity with other BTO flat buyers who are not accorded additional subsidies”, HDB said.
A subsidy recovery rate – derived as a percentage of the flat’s resale or valuation price, whichever is higher – is also imposed on flats under the Prime Location Public Housing model. It started with 6 per cent in 2021 before being raised to 8 per cent in late 2023 and 9 per cent in June.
Taking that as reference, the rates for projects in the October BTO launch are “relatively modest and may still be palatable to prospective flat buyers”, said PropNex chief executive officer Ismail Gafoor.
ERA’s Mr Lim cited the example of a Plus flat with an 8 per cent subsidy clawback.
“Assuming an eventual resale price of S$1.3 million, an 8 per cent clawback is S$104,000,” he said.
“But with the current BTO price of these ... flats at S$300,000 to S$400,000 cheaper than resale flats in the vicinity, the BTO purchaser is enjoying significant market price discount for a new brand flat in the same location. So, the clawback amount should not be a deal breaker.”
Also noting that buyers are likely to respond positively to the Plus flats, Singapore Realtors' head of research Mohan Sandrasegeran said having tiered subsidy recovery rates “allow for greater diversity in housing options” and will help home buyers to better select flats that are suitable for them.
Meanwhile, keen interest is also expected from singles who, for the first time, are allowed to apply for two-room flexi flats across Singapore. Previously, singles were limited to BTO flats in non-mature estates.
Towner Breeze, which offers 139 two-room flexi units, may be a hot favourite for this group of flat applicants given its proximity to the city centre, said Ms Christine Sun, chief researcher and strategist at OrangeTee Group.
DEMAND FOR OTHER PROJECTS
The October BTO launch also consists of one Prime project – Crawford Heights in Kallang/Whampoa – where 312 flats are available. Prices, excluding grants, range from S$390,000 to S$523,000 for a three-room unit, and S$568,000 to S$759,000 for a four-room flat.
This means a price difference of “less than 10 per cent” when compared with the two Plus projects in the same town, said Ms Sun.
She added that some buyers may hence see the Prime flats as a “better deal” due to the “potential to yield a higher price premium” when they can sell their flats.
Crawford Heights is also where a new “white flat” concept will be piloted, which Ms Sun and several analysts said will be a draw for those who prefer more flexibility in designing their homes.
Prices for these “white flats” will be reduced by S$6,000 for a three-room flat and S$8,600 for a four-room flat, respectively, to take into account the non-provision of internal partition walls and some electrical points, HDB announced on Wednesday.
That said, buyers have different housing needs and not all will be comfortable with the tighter restrictions in place for Plus and Prime flats.
A longer minimum occupation period of 10 years, for one, will be a concern for some.
“Job changes or expansion of family, or caregiving duties for elderly parents might trigger the need to shift homes. So, buyers (will be concerned) about how their housing needs may evolve overtime and choose not to be locked into a prolonged minimum occupation period,” said Mr Lim, adding that these buyers may be drawn to conveniently located Standard flats such as those in Pasir Ris and Sengkang.
Echoing a similar view, Ms Sun said there will be buyers who do “not see a huge difference in locational benefits” and instead favour Standard projects with shorter waiting times.
Given how Standard flats come with the typical five-year minimum occupation period, owners “can sell their flats and upgrade to another home earlier,” said Ms Sun.
“For example, they may sell their flats approximately seven to eight years from application, in contrast to the 15 to 17-year wait for Plus and Prime flats,” she added.
The October BTO launch is offering 2,085 new flats with shorter waiting times of 24 to 33 months across three projects in Bukit Batok and Sengkang.Â
Describing this as a “good strategy” that will meet the needs of those who need a flat sooner, Ms Sun said this may also be a “strategic” move aimed at “having a more equitable distribution of applicant interest”.
“This way, more buyers will have a higher chance of success in their ballot,” she said.
