Recent reports of new flat prices dropping are seemingly wide of the mark, according to National Development Minister Khaw Boon Wan. A dip in market price is not comparatively proportionate to the prices released for the recent Built-to-order (BTO) flats that were launched last week, explained Mr Khaw. The National Development Minister claimed a variety of external influences factor into the pricing of a housing unit, such as the floor of the building and the proximity to local amenities amongst other things.
(Khaw's aim is to stabilise housing prices.)
Prices for new HDB flat launches are typically linked to prevailing resale prices, but are often discounted. However, according to a comparison of the May sales prices and the prices of this month's launch, 4000 (May) BTO units and 3600 units (July), across an array of areas including Sengkang, Tampines, Jurong West, Pasir Ris and Punggol among others the price has in fact shifted. This is coupled with the recent decrease in lending interest rates by both DBS Bank and UOB Bank. It would appear that the market demand is diminishing slightly with these reports suggesting that buyers are not being drawn sufficiently to the table with an offer that enables them to purchase a new flat.
In contrast to this Mr Khaw reiterated his stance on the subject by explaining how comparisons between previous months selling points were redundant - “what I'm trying to achieve at this stage is to try to stabilise the pricing. So you can largely see that prices are not increasing but it is also not dropping sharply because there's no reason to... unless the market begins to drop.” It would seem therefore that the selling price of BTO flats is not overtly determined by market dynamics, but (at this stage at least) by a need to secure the market activity.
Another pertinent point highlighted by industry experts on the pricing market was the increase in cash premiums, paid on top of a flat's valuation. An increase of 50% to $32,000 has seen first-time buyers struggle to get on the ladder. The majority of new flat launches are set aside for first time buyers with 95% of the supply being allocated. This reflects Mr Khaw’s commitment to providing affordable housing within the guidelines of a sustainable model for the future housing market.
The difficulty in overseeing a fair distribution with the new BTO flats is evident with the over-subscription of the balloting process, whereby there are often two ballots to one property and with BTO launches in May being over-subscribed by four times there is a degree of disparity between the opportunities afforded to first-time buyers of BTO flats. To combat this the Minister has advocated the use of launching greater numbers of new flats when releasing the newest batch of HDB flats. The remaining target for the rest of the year stands at 9,500 new flats, with 15,500 already delivered for the goal of pushing 25,000 new HDB flats. “Each time you release a few hundred units, everybody rushes for these hundred units and many will get disappointed for sure,” Mr Khaw claimed, further backing up his sentiment, the need to launch larger bulks of flat numbers was imperative to future growth. This is also reflected in the additional 2,000 surplus flats that are scheduled to be launched this year.
Mr Khaw explained additionally how the income ceiling for first timers to buy BTO flats, as well as the Design, Build and Sell Scheme (DBSS) were both under review. This is seen as another indicator of the National Development Minister’s proposal to encourage Singaporeans to the market and alleviate the pressure often associated with first-time buying.
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Related Categories: HDB
Tags: BTO, Build-To-Order, DBSS, first time buyers, HDB, HDB first timer, HDB Prices, HDB Singapore, Jurong West, Khaw Boon Wan, Ministry of National Development, Pasir Ris, public housing market in Singapore, public housing prices in Singapore, Punggol, Sengkang, Tampines
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