October 2024 BTO Launch: Standard, Plus and Prime Flats, Which Should You Buy?

With so many projects to choose from, which is the right one for you? Whatever your choice may be – may the odds be ever in your favour.

The Housing & Development Board (HDB) has officially launched 8,500 Build to Order (BTO) flats on 16 October 2024. This rounds up the 19,600 BTO flats promised in 2024.

This exercise features a total of 15 projects—a record number—comprising 7 Standard projects, 7 Plus projects, and 1 Prime project.

A diverse range of flats, including 2-room Flexi, 3Gen flats, and Community Care Apartments, are available under the new flat classification system of Standard, Plus, and Prime categories.

The reclassification of flats might sway some first timers away from the Plus and Prime flats, balance demand across the board.

Plus Flats Make Their Debut

Plus flats are the one of the three new classifications for BTO flats. This is the first time that they are being launched for sale.

Plus flats launched this round can be found in Ang Mo Kio, Bedok, and Kallang/Whampoa.

These flats are characterised by their ‘choicer’ locations, which are near MRT stations, as well as existing and/or future town centres and amenities.

Bayshore Palms (Source: HDB)

Plus flats in Bedok (both Bayshore and Kembangan) are expected to be popular as they will be in walking distance of an MRT station. Bayshore will be a new precinct near East Coast Park, which is a popular area; the development also features units with full-height windows that open to a sea-view. Meanwhile, Kembangan, which is a developed estate, will see its first flats launched since the late 1980s.

Kembangan Wave (Source: HDB)

We expect the Plus project at Ang Mo Kio to see strong demand, since it’s located within a short walk to Ang Mo Kio’s town centre and AMK Hub. The last BTO in Ang Mo Kio in 2022 saw an application rate of 13.5. However, the new project is likely to fall within 1-2km of CHIJ St. Nicholas, which is slightly out of priority enrolment distance, and could balance out demand.

So – how do they differ from the already existing Prime flats?

In the last two years, new flats in Kallang/Whampoa have fallen under the Prime category, due to their strong locational attributes. However, with the introduction of the Plus category, we are seeing two Kallang/Whampoa projects being classified as Plus for the very first time. These Plus flats also cost up to $60K less than the Prime flats at Crawford Heights.

Let’s take a case study of the trio of Kallang/Whampoa project offerings, comparing their prices with what is available on the resale market.

Source: HDB, ERA Research and Market Intelligence

As we can see, the BTO prices for these flats are very attractive as they are sold at significant discount off the market price in the resale market.  This is because BTO prices are delinked from resale market prices and HDB prices BTO based on what household incomes up to $14,000 a month can afford to pay based on a Mortgage Servicing Ratio that is below 30%.

The price difference is very marginal; the starting prices (excluding grants) are just $46,000 more for Prime flats in Kallang Whampoa. As resale restrictions of Plus and Prime are largely similar, we can foresee most buyers gunning first for the Prime flats at Crawford Heights as they are nearer to the city, facing a waterway and have a more attractive façade and architectural design.

Stricter restrictions for Plus/Prime Flats

Resale subsidy clawback

Both Plus and Prime flats will feature tighter resale restrictions such as a 10-year MOP, a resale income ceiling of $14,000 and 6-9% subsidy clawback.

These subsidy clawbacks will be based on the eventual resale price; which may not be too high as there will be an income ceiling cap on the eventual resale purchaser.  Assuming an eventual resale price of $1.3 million, a 8% clawback is $104,000.

But with the current BTO price of these plus and prime flats at 300-400K cheaper than resale flats in the vicinity, the BTO purchaser is enjoying significant market price discount for a new brand flat in the same location. So, the clawback amount should not be a deal breaker.

The reclassification of flats might sway some first-timers away from Plus and Prime flats, balancing demand across the board. Despite the subsidy clawback, we did see robust demand for Prime flats under the previous BTO sales launches.

Minimum Occupation Period (MOP)

In addition to this, Plus and Prime flats will feature a 10-year MOP period, double that of standard flats.

This could be a cause of concern for potential homebuyers. For example, job changes, expansion of family, or caregiving duties for elderly parents might trigger the need to shift homes. So buyers are concern about how their housing needs may evolve over time, and may choose not to be locked in over a prolong MOP.

As a result, some buyers might be drawn toward conveniently located Standard flats. We anticipate that Pasir Ris and Sengkang flats will be popular, given their shorter construction time, proximity to MRT or LRT stations and the availability of amenities in the area.

Other Resale Restrictions

These Plus and Prime flats can only be resold to Singaporean citizens with an income ceiling of $14,000.

It is also worth noting that the 15-month waitout period for eligible private property downgraders will be doubled to 30 months for Plus and Prime resale flats.

Consequently, private property downgraders may consider alternatives to Plus and Prime resale flats. Such downgraders typically have more generous housing budgets and are willing to pay a premium for their ideal HDB home.

Prime flats to pilot the ‘White Flat’ program

Crawford Heights in Kallang/Whampoa represents the first time that HDB will be piloting the option to purchase a ‘white flat’.

Coincidentally, this will be the only project in the Prime category, wrapping up the year which saw Prime projects launched in areas such as Tanjong Rhu, Tanglin, and Holland Village.

‘White flats’ are an opt-in where applicants can choose for their flat to come in a beamless, open-concept layout, where living and bedroom spaces are not separated by walls. The ‘white flat’ concept will be popular among young couples who are looking to extensively renovate their units. However, these buyers should be mindful that excessive renovation works could make it less appealing to future buyers.

Crawford Heights (Source: HDB)

Standard Flats still make up the majority of flat supply, with some projects expected to see stronger demand

As defined by HDB, standard flats will be found across the greatest variety of locations, and make up the majority of new flat supply. Standard flats will also be the most affordable option with the fewest resale restrictions, essentially making them the most accessible form of housing for Singaporeans.

In June’s BTO exercise, only the Woodlands and Tampines projects had a shortened waiting time of under 3 years. The number of flats offered at these projects total up to about 1,352 units.

In contrast to this, 2,085 flats across three projects in Sengkang and Bukit Batok will be launched with expedited waiting times – about 1.5 times that of the previous launch.

The project in Bukit Batok (West Brickville @Bukit Batok) features a brief 2-year wait time, one of the shortest ever for HDB flats.

These launches with shorter wait times, combined with the 5-year MOP creates the some of the shortest runways available for asset progression today, and should be a popular choice.

Costa Riviera I & II (Source: HDB)

In particular, the twin projects at Pasir Ris are located within walking distance of an MRT station, which could be a major selling point for many interested applicants – especially those with family living in the area. We expect the 4- and 5-room flat options to be among the most popular choices for first-timer applicants.

This is followed by Sengkang which is near LRT stations and amenities such as Seletar Mall, and are priced more attractively. The Bukit Batok project is located across from Tengah, and residents will be able to enjoy the fist-mover advantage by staying near a rapidly-developing estate, which will see a future MRT station along the Jurong Regional Line.

West BrickVille @ Bukit Batok (Source: HDB)

The Jurong West Project is located far away from the nearest MRT. However, with over 1,800 units available and 4-room prices starting from $290,000, this project looks to be the most affordable and accessible option for budget-conscious applicants.

2-room flat availability for Singles across all housing models

Application rates for 2-room flats among singles remains high, particularly in popular housing estates. In June’s sales launch, the 2-room application rates for Singles reached 7.0 for the Yishun project and 6.4 for the Jurong East project.

Giving singles the chance to buy 2-room flats in mature estates allows them to live closer to their parents and makes it easier to manage caregiving needs.

Conclusion

Here are a few key takeaways that we have learned from the launch of this BTO exercise:

• Standard flats provide the most flexibility. They are the most affordable flats with the fewest resale restrictions, and would appeal especially to those looking to upgrade to a private property after the 5-year MOP.
• Plus flats create good and convenient homes for people that are not looking to upgrade their property in the medium term. They feature homes in established estates like Ang Mo Kio and Bedok, allowing people to stay near their parents. They could also be a popular option for singles as previously their BTO options were oversubscribed.
• Prime flats are still the go-to option for owner-occupiers. They feature the best locations close to the city centre, and close to amenities and transport notes.

Looking forward to 2025

In February 2025, HDB will offer about 5,000 flats in Kallang/Whampoa, Queenstown, Woodlands, and Yishun. The launch would focus on creating more housing in up and coming areas such as Chencharu, Woodlands North, and Tanjong Rhu.

However, in terms of diversity for the projects offered, the current October launch has a wider variety across more popular and attractive locations. Therefore, we do not forsee the upcoming launch affecting the current demand.

Disclaimer

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