HDB may change the demand for existing resale apartments

According to government data, the number sold in two years after MOP for flats aged seven years and under, increased 733 per cent from 743 units in 2014 to 6,189 in 2022. In 2022, the number of apartments sold within two-years after the MOP (aged seven years or younger) will increase by 733 percent to 6,189 units from just 743 units in 2014.

Christine Sun said that the longer MOP may temper speculation. She is senior vice president at OrangeTee & Tie.

Lee Nai Jia is the PropertyGuru head of real-estate intelligence, data, and software solutions. It is possible that some applicants may gravitate to Standard flats.

In 2022, this group accounted for 63 million-dollar deals or 17 per cent.

Plus flats are a new class of properties located near transportation hubs and town centres. They will have more subsidies available, but stricter restrictions on resale.

Prime flats will retain the same 10-year Minimum Occupancy Period (MOP) for Plus flats as the Prime Location Housing Model Projects. Standard flats will keep the current 5-year minimum occupation period (MOP). A ceiling will be set for the resale price of Plus flats, and this is also a requirement for resale prices of Prime flats.

The 1992 classification was based on the availability of land to develop. Choa Chu Kang Estate, Jurong West Estate, Sengkang, Woodlands and others were classified as non-mature while others, such as Ang Mo Kio estate, Marine Parade, Serangoon, Clementi and Marine Parade, were designated as mature.

HDB data shows that median resale values of four-room units in Sengkang, Serangoon and other areas in Singapore will be around S$560,000 by the second quarter in 2023. This was more than a four-room resale in Ang Mo Kio which cost S$520,000.

OrangeTee & Tie conducted an analysis that showed 17 out of the 26 HDB towns had record prices in 2018. Prices for resale increased from 2020 onwards, when they grew by 5 per cent as opposed to just 0.1 percent in 2019.

HDB continued to heat-up from 2021. Resale prices soared by 12,7% and climbed another 10,4% in 2022. Prices have dropped since then due to tighter loan limit restrictions. They rose by 1% in Q1 and 1.4% in Q2.

Buyers of Plus flats will also have to wait between 14 and 15 years to sell them, starting from the moment they apply until the end of MOP. Families may find it hard to “climb the next step” on the property ladder.

Analysts say that HDB’s new framework on Build-to Order (BTO), which was long overdue, could boost demand for existing apartments and eat up the pool of upgraders in the private housing market.

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The framework was announced by Prime Minister Lee Hsien Loong in his National Day Rally. It differentiates BTO Projects based on locational attributes, rather than the age of an estate. It is designed to make new flats more affordable in attractive locations while reducing the windfall profits that are associated with high resale price of flats on mature estates.

Lee believes that the launch Plus and Prime flats may have less impact than expected on the resale segment, as most potential buyers are “driven by immediate requirements” or macroeconomic factors. Demand for resale properties has already been slashed due to a flood of BTO supply, and high resale values.

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