The Singapore government has ramped up the building of new build-to-order (BTO) flats in the past decade, and even as more of these younger HDB flats reach the end of their mandatory minimum occupation period (MOP), more flat owners are also selling them as soon as they can.
Increase in number of young flats sold once MOP reached
Last year, the number of HDB flats aged 10 years or younger were sold upon reaching their MOP mark increased a significant 33.4%. 4,578 such flats were sold in 2019, compared to the 3,432 in the previous year. This could also be due to the fact that more HDB flats reached their MOP mark in recent years. 30,000 reached their MOP mark last year; 24,000 and 31,000 are expected to do so this year and in 2022 respectively.
New HDB flats have a minimum occupation period (MOP) of 5 years within which the buyers are not allowed to sell them on the resale market. This period is calculated from the time the owners receive their keys for the units and excludes any time the owners are not living in the unit (for example if they are working overseas and have applied to have the entire flat rented out).
The most number of newer flats sold were in younger townships such as Punggol and Sengkang. Sales in other estates such as Jurong West, Bukit Merah, and Yishun followed closely.
The motivation behind sales of younger flats?
While following the rules of the minimum occupation period, one may question the motivations behind the quick sales of HDB flats and if their purpose for providing housing to those who need them is fulfilled. Are more HDB flat buyers looking at them purely for investment purposes; and is it wrong to see them as a stepping stone into the private property market? Are executive condominiums (ECs) then still filling the gap between public and private housing?
As household incomes rise and family sizes increase or families move to be nearer their elderly parents or children’s schools, some buyers may see fit to upgrade to private properties or larger HDB units within a 5-year window. While this may increase competition within the resale HDB market and price-growth may be limited in the next few years, it could boost activity within both HDB resale and private property markets at the same time.