More Build-To-Order units in non-mature estates will be set aside for first-time applicants to help more of them get a flat, but this is not enough to move the needle overall.
The third time may well be the charm for associate engineer Muhammad Afiq Baharudin, 35, and his fiance, who hope to secure a four-room Build-To-Order (BTO) flat in Woodlands from the latest launch in August, after failing to receive a ballot number in their previous two attempts.
Their optimism is fuelled by the Housing Board’s announcement last month that at least 95 per cent of the four-room and larger flat supply in non-mature estates will be set aside for first-time applicants like them, up from 85 per cent.
The quota of three-room flats set aside for first-timers in non-mature estates will also go up – from 70 per cent to at least 85 per cent.
The move, the HDB said, is to give this group of home seekers “greater certainty” in securing their first homes.
Demand for housing among young people is high, as the need for privacy and freedom – which may be lacking when living with one’s parents – spiked during the Covid-19 pandemic as many worked from home.
Smaller household sizes and the increasing reluctance to live in multi-generation homes among this group of home seekers, born in the 1980s and 1990s, have also increased housing demand.
Speak to any couple ready to settle into married life and it is not uncommon to hear anecdotes of failing to get a BTO ballot number even after five or six tries. On the flip side, there are those who manage to get a ballot number on their first or second try.
Many have accepted that when it comes to the BTO ballot system, it simply comes down to the luck of the draw. With BTO sales launches consistently oversubscribed, the odds are not in their favour.
Setting aside more BTO units for first-time applicants will help more of them get a flat, but the move is not enough to move the needle overall.
To put things into perspective, a non-mature BTO project with 300 four-room flats will now have an additional 30 units set aside for first-time applicants – not a large number given that demand at popular sites may well exceed that.
The recent BTO allocation adjustment must thus be viewed together with the HDB’s commitment to ramping up overall flat supply, which would help more Singaporeans get their first home.
The HDB has said it is prepared to launch up to 100,000 flats from 2021 to 2025, which would increase the overall number of flats set aside for first-time applicants. This year, it is on track to launch 23,000 new flats, up 35 per cent from the 17,000 flats launched last year.
There are several considerations that could have prompted the HDB to set aside more flats for first-timers in non-mature estates.
First, the increased quota could help take the heat off the bullish HDB resale market, which saw prices climb for the 26th straight month in August, even in the face of rising interest rates.
The number of million-dollar HDB resale flats has also not let up, with 33 changing hands for at least $1 million in August, similar to the month before – fanning further discontentment over the affordability of public housing when left to market sentiments.
The increased chance of landing a new flat due to the higher quota could nudge more first-time applicants back to BTO launches, which in turn would ease some pressure on the HDB resale market.
Second, the increased quota could be a move to draw demand away from more attractive mature estates to non-mature estates, where application rates are lower.
The introduction of prime location public housing (PLH) projects in November last year has served to increase demand for BTO flats in more centrally located, mature estates, as such launches have proved popular among first-time home seekers despite the stricter selling and buying conditions. Each BTO launch since then has had at least one PLH project.
With the recent adjustment, the allocation quotas for first-time applicants in non-mature and mature estates are now on a par – a change that could entice more first-timers who want a home more urgently to consider applying in non-mature estates.
The Government has consistently encouraged home seekers to apply for flats in non-mature estates to have a higher chance of getting a flat.
But the HDB is now stressing this point even more strongly, after overall BTO application rates jumped in the last two years due to a longer flat booking period during the pandemic and an increase in the number of attractive BTO projects in mature estates.
According to the HDB, “virtually all” families who are first-time applicants have managed to get a BTO flat in non-mature estates within their first three tries over the past few years.
Flats in non-mature estates also typically take a shorter time to build, as construction tends to be faster due to the less dense site area, compared with a more built-up site in mature estates.
The HDB’s message is clear: If you want to get the keys to a new flat as soon as possible, apply in non-mature estates. For those who apply in popular mature estates, be prepared to wait.
One point to note about the higher quota for first-time applicants, however, is that it comes at the expense of second-timers. Second-time applicants will now find themselves further squeezed out of the BTO market, and may have to turn to either the HDB resale or private market to get a home.
The implicit message is that second-time applicants – those who have bought a subsidised flat before – have had their bite of the cherry and the priority is for first-timers to get their share.
The Government’s move to prioritise first-time applicants could assuage any unhappiness felt by this group of home seekers, who are often vocal about their disgruntlement.
But as with any tweak to public housing policies, it will often take years before the full effects of the changes are felt.
In the meantime, a hurdle remains for the Government: Convincing Singaporeans to opt for flats in non-mature estates around the island, instead of those that are more centrally located and hence regarded as more attractive.
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