SINGAPORE — On Tuesday (28 February), the Housing and Development Board (HDB) launched 4,428 Build-To-Order (BTO) flats for sale, including two projects under the Prime Location Public Housing (PLH) model in Dover Forest and Farrer Park.
These two projects, situated in the mature estates of Queenstown and Kallang/Whampoa, have stricter buying and selling conditions, including a 6% subsidy clawback upon their sale.
Along with the two PLH projects, there are three other BTO projects in the first sales exercise of the year, including one in Kallang/Whampoa, not under the PLH model, and two in the non-mature estates of Jurong West and Tengah.
The median waiting time for these five projects is about 4.4 years. HDB has stated that all four-room flats offered in the two non-mature estates are below $400,000 before grants.
The first BTO project under the PLH model, Ulu Pandan Banks, was launched in the November 2022 sales exercise. Demand was low, and most first-time applicants will likely have a chance to select a unit. The project’s prices ranged from $362,000 to $725,000.
The second PLH project in the current sales exercise is Farrer Park Fields, which offers 1,274 two-room flexi, three-room, and four-room flats on a site between Little India and Farrer Park MRT stations. The prices for this project range from $356,000 to $631,000.
The other BTO project in Kallang/Whampoa is Rajah Summit, which provides 510 three-room and four-room flats on a site in Jalan Rajah, next to Kallang River. The prices for this project range from $326,000 to $631,000.
Flat owners in the two PLH projects will have to pay 6% of the resale price or valuation, whichever is higher, to HDB when they sell their homes on the open market for the first time.
Owners bound by a 10-year MOP
The clawback applies only to the first resale transaction and not to subsequent sales. Owners are also bound by a 10-year minimum occupation period (MOP) before they can sell their flats, and they are not allowed to rent out their whole unit, even after the MOP is over.
The HDB MOP is five years for most flats.
In Oct 2021, HDB introduced a new Prime Location Public Housing scheme (PLH) with an unprecedented MOP of 10 years, double the duration of regular Build-to-Order (BTO) flats.
The PLH model aims to keep future HDB flats in prime, central locations affordable and inclusive.
Applications for these BTO flats will close at 11.59 pm on March 6 on the HDB flat portal. Flats will be allocated through balloting.
In May 2023, about 5,400 BTO flats in towns such as Tengah, Bedok, Kallang/Whampoa, and Serangoon will be launched.
At the August launch, HDB will offer between 5,200 and 6,200 flats in Choa Chu Kang, Tengah, Bukit Merah, Kallang/Whampoa, and Queenstown.
HDB said that it will closely monitoring housing demand and is prepared to launch up to 100,000 flats in total from 2021 to 2025.
Would 10-year MOP bring down resale prices?
In the past five years, the prices of larger resale flats, particularly five-room and executive flats, have increased even faster than those of 4-room resale flats. Million-dollar HDB flats no longer make the news.
The prices of HDB BTO flats, resale flats, and private condominiums usually move in sync. Resale prices have gone up due to the high demand for housing and the insufficient number of BTOs constructed by HDB. This should have been known and anticipated, even with COVID-19-related delays.
According to local property information portal Homy, HDB flats usually fetch the highest returns once they reach their five-year Minimum Occupancy Period (MOP).
Typically, 15% to 20% of BTOs will sell or rent within two years after MOP, and HDB owners are advised to consider selling their flats to obtain the highest returns.
Even with a ten-year MOP, it is believed that owners can still receive a substantial return by selling their HDB flats on the market after completing the MOP.
For example, a 1,001-sqft 4-room (Type S1) flat at the 46-48th floor of Blk 1D of [email protected] – with 87 years lease – was sold for S$1.37 million (S$1,369 psf) in October last year. The 4-room flats were sold at S$289,200 to S$380,900.