Conditions attached to the sale make the purchase of such homes onerous.
If you are 35 years old and buying a two-room flexi Build-To-Order (BTO) Plus or Prime flat when these are launched in 2024, odds are high that you will be able to sell that flat only when you are 50 years of age.
This is because a new public housing framework that will take effect from the second half of 2024 mandates that BTO flats in choicer locations that fall under the Prime and Plus categories will come with stricter resale conditions such as a 10-year minimum occupation period (MOP) and a subsidy clawback.
This will replace HDB’s current framework of classifying estates as mature or non-mature. Standard flats, which will form the bulk of the housing supply, come with the standard five-year MOP.
Stricter buying and selling conditions are necessary to keep public housing in prime areas or choice locations affordable and curb excessive windfall gains when these flats are resold.
But this new framework also allows, for the first time, singles aged 35 and older to apply for two-room flexi flats across all BTO projects islandwide.
Currently, they can buy new two-room flexi flats only in non-mature estates, or a resale flat, which will be more costly. They are also barred from buying new prime location public housing (PLH) flats directly from the Housing Board as well as from the PLH resale market.
This has been a sticking point for many singles, already facing limited new flat options under the current public housing policy which prioritises the traditional nuclear family and married couples – many of whom qualify for new flats from age 21.
More housing options for singles
That the Government appears to have heard the call for more equitable access for singles to housing types across mature and non-mature estates and prime locations in the Forward Singapore exercise is heartening to many singles aged 35 years and older.
Those who wish to live closer to their ageing parents or workplaces have cheered the policy changes, but others who have long argued for the right to buy flats of larger sizes directly from HDB will probably not be satisfied.
Still, it is a step in the right direction, given a growing proportion of singles across all age groups here in the past 10 years – a trend that is unlikely to slow down.
But before succumbing to the lure of a two-room Plus or Prime flat which is located close to town or has superb views, eligible singles who still plan to get married should realise that the 10-year MOP plus a wait of up to five years for the flat to be built can be very restrictive.
If they decide to get married before the 10-year MOP is served, they may have to appeal to HDB to sell the flats back to the public housing authority before applying for bigger flats after marriage. When singles get married, most intend to have children and therefore need a larger home.
As at 2020, the proportion of one-person households residing in one- to two-room flats was 16.8 per cent, while two- or more person households living in such flats was a mere 4.5 per cent, according to Singapore’s Department of Statistics.
On top of the long 15-year commitment to a small flat, owners of Prime and Plus two-room flats will not be allowed to rent out the entire one-bedroom unit, even after the MOP.
So renting out the entire flat for long-term yields is out. And how many here will really be willing to share a 36 sq m or 45 sq m space with tenants?
Furthermore, the older the buyers are when they book their Plus or Prime flats, the more disadvantaged they may be should they plan to upgrade after the 10-year MOP, Mr Eugene Lim, ERA’s key executive officer, said.
A 35-year-old single who books a Plus or Prime flat may take possession of the flat at age 40. He will have to be 50 years old before he can sell the flat and upgrade.
That means the bank loan tenure for his next property purchase will be trimmed to 15 years, compared with 20 years for a 35-year-old single who booked a Standard flat with a five-year MOP. Typically, the shorter the loan tenure, the higher the monthly loan instalment, Mr Lim said.
But not suitable for everyone
Given these considerations, it appears that the two-room Plus and Prime housing model may not work for younger singles who still plan to get married and have children, and seems to be targeted at ageing singles with no intention of starting a family.
Perhaps the sad reality is that the Government really expects more older singles to stay single and is therefore planning ahead for the housing needs of this growing group.
This may not be such a bad thing because older singles, especially those in the lower-income category, now have a fair shot at ageing in place in a Prime or Plus location flat.
This is a timely move, as there are already signs that more singles are applying for two-room flexi flats but are unsuccessful even as the number of singles staying unmarried increases.
OrangeTee & Tie senior vice-president of research and analytics Christine Sun noted that the number of two-room flats launched for sale rose 5.1 per cent from 4,194 units in 2018 to 4,408 units in 2022.
But the number of applicants for such flats more than doubled – up 108 per cent from 7,145 to 14,864 over the same period. More than three applicants have been vying for each two-room unit since 2021, indicating that demand for such flats remains strong, she added.
Citing an HDB update in February 2022 in online real estate firm PropertyGuru, Professor Sing Tien Foo, provost’s chair professor of real estate at the National University of Singapore, noted that 16,169 two-room flexi flats have been taken up since these flats were first introduced in 2015. Two-room flats are typically sold to singles, seniors and low-income families.
Of this, 54 per cent were purchased by those aged 55 and above, and a big majority of this age group opted for two-room flexi flats with shorter leases ranging from 15 to 45 years due to the significant savings they offer, Prof Sing said, citing the update.
The remaining 46 per cent could be taken up by singles and families, especially the lower-income groups, with singles accounting for the majority, he added.
Given rising demand from this group, should the age of singles allowed to apply for two-room flexi flats be lowered from 35?
This could go against Singapore’s family-centric housing policy and will likely result in more competition from younger singles for already oversubscribed two-room flats, Prof Sing said.
“The cutoff age of 35 will likely stay for the moment. The Government will need to weigh the fiscal resources required to increase the supply of two-room flats to meet the housing needs of singles below 35 years old,” he said.
Another key consideration is that the long MOP of 10 years may also mean delayed child-bearing for singles who plan to get married, if they opt to serve out the MOP in a tiny flat.
So, before rushing to commit to a two-room flexi Plus or Prime flat in a central location with amazing views, eligible singles should seriously weigh the pros and cons of being locked in for at least 15 years to such flats, or whether they are better off getting a resale flat or a standard flat with fewer restrictions.
“Source:[HDB housing for singles: A two-room Plus or Prime flat may be a bane] © Singapore Press Holdings Limited. Permission required for reproduction”