Press Release
23 November 2022
FOR IMMEDIATE RELEASE
The Housing & Development Board (HDB) has launched the November Build-to-Order (BTO) sales exercise.
You can find our analyses, previous BTO launch information, past application rates, charts and analytics at our OrangeTee BTO Analytics Suite (https://www.orangetee.com/home/masV2/bto).
Overview
The November BTO sales launch is the largest sales exercise with over 9,500 flats for sale across five towns. This is probably one of the largest sales launches in Queenstown as more than 3,000 flats will be launched from three sites, beside the Dover MRT station, near Alexandra Hospital and opposite the Buona Vista MRT station. Around 3,000 flats from three projects will be launched in Yishun, while slightly more than 2,000 units will be launched in the Tengah site, which will feature new and innovative technology in the flats. Similarly, this is probably the most flats put up for sale in Yishun from a single launch exercise in recent years.
The second batch of Community Care Apartments will be launched with 240 units up for application. The first batch of 169 flats was launched in February 2021 at Harmony@Bukit Batok and was well-received, with a subscription rate of 4.2 (https://services2.hdb.gov.sg/webapp/BP13BTOENQWeb/BP13J011BTOFeb21.jsp). We expect demand to remain healthy for this second batch, given the proximity to Alexandra Hospital and nearby amenities. Moreover, this project may be more popular than the previous one as 3, and 4-room flats are offered in the same project. Families with elderly members or multi-generational families may be keen to apply together as they can stay near each other.
Impact of recent cooling measures
We do not expect a major impact from the new cooling measures implemented on 30 September 2022. Many buyers will still opt for BTO flats as they remain the most affordable housing option in the market, given their low entry prices. The prices of flats in mature estates are also not considered high when compared to private housing and prices are 'capped' to a certain level since there are no 5-room flats offered in mature estates in this sales exercise.
However, we may see more people buying flats in non-mature estates or selecting lower floor units or cheaper units in light of the measures. Some cash-strapped buyers may reprioritise their purchase decision since their housing affordability will be affected by the tightening of LTV limits and higher interest rate floor used to calculate the HDB and private financial institutions. The increase in downpayment and reduction of loan quantum may also lead to fewer people applying for higher floor units in mature estates, which tend to be pricier. Some buyers may turn to their family members for financial assistance. Those with financial support from parents or relatives may still apply for PLH flats, given their good location and long-term investment returns. Therefore, applicants who lack financial help may purchase cheaper flats in non-mature estates.
Example of calculation:
For buyers taking an HDB loan to finance their BTO purchase, their housing affordability may be reduced as the LTV (Loan-To-Value) limits will drop from 85 per cent to 80 per cent. Buyers will have to fork out more cash or CPF. For example, for a new 4-room flat costing S$600,000, the change in LTV limits would mean that the down payment will be increased from S$90,000 to S$120,000, which translates to a S$30,000 increase in cash / CPF required for the purchase.
Moreover, the interest rate floor used to calculate HDB and private financial institution loans has increased. For HDB loans, the interest rate used to calculate the maximum interest rate will be the higher of 3 per cent or 0.1% points above the prevailing CPF Ordinary Account rates. For private financial institutions, the interest rate will be the higher of 4 per cent or the prevailing interest rate. Assuming a couple has a combined income of S$7,000, the change in the interest floor rate would mean that on a 25-year loan tenure, the maximum amount they can loan from HDB decreases by around S$20,000 from S$462,892 to S$442,840, and drop by around S$19,000 from S$419,476 to S$397,850 if the loan is from a private financial institution.
Popular projects
PLH model flats will remain popular despite the recent ramp-up in supply. Although the application rates have fallen for recent PLH model flat launches, the absolute number of applicants rose from 7,843 in November 2021 to more than 10,000 in May 2022 and almost 9,000 in August 2022.
Queenstown flats – We expect healthy demand for flats in Queenstown. The flats on offer in Queenstown are well-located, close to nearby amenities and transport nodes. For the PLH model flats, young Singaporeans will be enticed by the opportunity of owning a new flat in the city fringe area at a subsidised rate, especially since prices of new condominiums in the vicinity are holding firm. Moreover, the ample supply of flats in Queenstown may attract more applicants as they may feel that they have a higher chance of success.
Kallang/Whampoa – The site at Kallang/Whampoa is excellent, just behind Kallang MRT and near the city centre. The flats are well connected to the downtown core/ CBD via both private and public transport and are also near amenities such as a market and food centre. With fewer flats launched for sale at this site, we may expect the application rate to be higher.
Other launches
Bukit Batok – This plot is well-located at around 500m away from Bukit Gombak MRT and the neighbourhood centre and a short distance away from Le Quest shopping mall for other amenities. Moreover, the project offers 2-room to 5-room flats which cater to families with different housing needs. As it is located in a non-mature estate, prices are relatively lower, hence we expect a higher number of applicants for this site.
Yishun – there may be fewer applicants/smaller application rates given the large supply of flats offered, and the location of all 3 BTO sites is not as near to major transport nodes or amenities. But these flats will be a good option for those with more urgent housing needs and are looking for more affordable flats. Residents who want a tranquil environment overlooking the reservoir may also consider these flats.
Tengah – the project at Tengah will feature beamless flat designs. Some couples may find these designs useful as they can maximise their living spaces and have more explore greater creativity in their interior designs. They can also save some money on interior design work which can be more straightforward with the beamless flat layout. This is also a larger project with 2000 units and offers 5-room flats which will be more popular among bigger families. The site is attractively located near the future MRT station along the Jurong Regional Line. The proximity to the Jurong Lake District will also be attractive to applicants who may be working in the western part of the island.