SINGAPORE — The Build-to-Order (BTO) sales exercise for October saw an overall application rate of about 1.4 times its available supply, a few hours before applications for flats were slated to close on Tuesday (Oct 10) night.
As of 5pm on Tuesday, 9,848 potential buyers had applied for the 6,800 new public housing units on sale, data released by the Housing and Development Board (HDB) showed.
Applications for the month’s BTO exercise opened on Oct 4, and will close at 11.59pm on Tuesday. The number of applications received is updated on the HDB website four times a day — at 8am, 11am, 2pm and 5pm — during the application period.
Property analysts have described the application rate of 1.4 as “underwhelming” and one of the lowest for a BTO exercise in recent years.
They attributed this chiefly to a new penalty for non-selection of flats that came into place in August. This penalises first-timer applicants who would be invited to book a flat at a later stage but failed to do so.
Mr Ismail Gafoor, chief executive officer of PropNex Realty, said: “The last time that overall BTO application rates fell below two times was in November 2017 where the application rate came in at 1.7 times for the 4,829 flats launched then.”
He added that subscription rates for BTO launches had been “relatively healthy” over the past two years — between February 2021 and May 2023 — ranging from 2.5 to 8.1 times the available supply of flats.
FEAR OF BEING PENALISED
Under the new rule, first-timer applicants who later reject HDB’s offer to book a flat would be considered as second-timers for subsequent BTO applications, after they have chalked up their first “non-selection count”.
Second-timers get lower priority than first-timers in their applications for flats.
Before this policy change, first-timer applicants would get such a penalty after they had rejected HDB’s offer twice.
The move, announced in March by HDB and the Ministry of National Development, was introduced in a bid to reduce the rejection rates for BTO flats.
Commenting on this, Mr Ismail noted that October’s BTO exercise would be the first since the stricter rules for non-selection took effect.
“With the implementation of this new policy, applicants would need to be more prudent with their applications. There may be applicants who do not wish to incur a non-selection count and they could have held back on applying for a new flat,” he added.
Agreeing, Mr Lee Sze Teck, senior director of data analytics at real estate firm Huttons Asia, said that applicants may have stayed out of October’s exercise for fear of being penalised.
Mr Eugene Lim, key executive officer of real estate agency ERA Singapore, said that with the new rule, flat applicants “will need to discern on which sales launch to apply for to secure the highest chance of securing their dream home”, adding that previously, some applicants put in applications at several BTO exercises to increase their chances of securing their ideal home.
Beyond these factors, the property analysts said that the attractive projects expected in the upcoming December BTO exercise may be another reason why people may have held back in October.
“Some applicants may be waiting for the December BTO, where there is a long-awaited BTO at Bishan (Sin Ming) and one at Bukit Merah (Alexandra),” Mr Lee of Huttons Asia said.
“Some applicants may not have their HFE letter in time to apply for the BTO. The long wait between the May and October BTO (exercises) may have seen some demand diverted to the resale HDB market,” he added, referring to the HDB Flat Eligibility letter that flat applicants must obtain from HDB before applying for a flat.
The new HFE letter has been a requirement since May 9 and CNA reported in July that system glitches were behind longer processing times of up to 31 working days for flat buyers who applied for an HFE letter. The glitches have since been resolved.
Last week, Ms Sim Ann, Senior Minister of State for National Development, told Parliament that about 31 per cent of applications for the HFE letter up until Sept 25 were processed within the “service standard” of 21 days.
The October BTO exercise was postponed from August due to delays in the ballot results for the May BTO exercise. The postponement would also give the housing authority more time to finalise changes that would take effect from this month’s sales exercise.
The property experts said that the lower application rate this month was not all bad.
“The flipside of fewer applicants for the October BTO exercise is that almost all first-timers will get to select their flats,” Mr Lee said.
APPLICATION RATES COULD ‘VARY’
The 6,800 flats in the October BTO exercise are spread across six projects in Chua Chu Kang, Kallang-Whampoa, Queenstown and Tengah.
Data released by PropNex Research and HDB showed that as of 5pm on Tuesday, the projects in Tengah had recorded the highest subscription rates, with an application rate of 2.1 times.
The flats in Chua Chu Kang had the second highest overall application rate of about 1.6 times.
As for the Verandah@Kallang and Tanglin Halt Cascadia projects, they had overall application rates of about 1.3 times and 1.1 times respectively.
Mr Ismail of PropNex Realty said: “Looking at the application rates over the past recent BTO exercises — in November (2022), February (2023) and May — it seems like the demand for BTO flats has largely stabilised.”
He expects the overall application rates of BTO launches to “range between two and three times” moving forward, but the actual application rates may fluctuate depending on the supply and location of flats launched.
The December BTO exercise, for example, is expected to potentially have a higher application rate due to the projects on offer.
“For the December BTO exercise, I expect that the application rate could be higher since HDB will be offering about 6,000 flats in a good spread of locations — Bukit Panjang, Jurong West, Woodlands, Bedok, Bishan, Bukit Merah and Queenstown,” Mr Ismail said.
Mr Lim of ERA Singapore said: “Bishan, in particular, is close to popular schools such as Ai Tong and Catholic High and will be popular among young couples.”
Asked if the lower-than-usual application rate in October’s exercise may motivate more potential buyers to try their luck in the December launch, Mr Lee of Huttons Asia said that he does not believe buyers would be so enticed.
“If that is the case, (the) October 2023 BTO should have seen a surge in last-minute applications but that did not happen.”
Still, should the BTO application rates remain subdued for the next few launches, it could mean that the new policy was working, because less serious applicants were deterred by the penalties.
Alternatively, the application rate for this month’s BTO exercise could also reflect the “true demand for homes”, Mr Lee added.
“If this is the true demand for BTO flats, the question is whether the Government should continue to provide this supply of BTO flats. With every BTO flat built, there is a drain on state coffers since the flat is heavily subsidised.”