Why I Chose a Standard BTO Flat?

It’s that time of the year again: Chinese New Year, where relatives suddenly grow an interest in your personal and love life. And for attached twenty-somethings like us, it’s also the time of the year when they suddenly become real estate analysts: especially regarding your Build- to-Order choices.

You start to hear takes like:

“Eh, last year the Holland V one like not bad eh!” or “February got one Queenstown one, near MRT and school, why not apply that one?”

Which are valid takes – but you see, the thing is both of us decided to apply for a standard flat instead. Knowing well and fully the outstanding benefits of the other Plus and Prime flats, we decided it was in our best interest to choose a Standard flat.

The two writers today, Egan Mah and Ethan Hariyono, applied for the projects in towns that we grew up in – Pasir Ris and Serangoon/Sengkang respectively. These are satellite housing towns and are therefore Standard projects, as compared to the centrally located, city fringe towns that often fall under the Prime or Plus category – and here’s why.

Standard, Plus, Prime: What’s the Difference?

Before we dive into the details, here’s a quick overview of how the current BTO system works.

From October 2024, HDB Build-to-Order (BTO) flats were reclassified into three categories – Standard, Plus and Prime flats. Plus and Prime flats are those located in ‘choicier’ (e.g. good connectivity, proximity to amenities, and the city centre. Some may come with unique features, such as waterfront living, and ‘choiciest’ locations (e.g. centrally located, well-served by comprehensive amenities and have excellent transport connectivity) respectively.

However, these two flat classes differ from Standard flats, which hold restrictions that we are most familiar with (when it comes to BTO flats). Plus and Prime models come with more stringent resale conditions such as a 10-year Minimum Occupation Period (MOP) rather than the conventional five years, a subsidy recovery upon resale, and owners are not allowed to rent out the whole flat.

New Standard flats in Pasir Ris, launched in Oct 2024

Uncertainty of what can happen in 10 years

A 10-year MOP means that you are ‘stuck’ living in the same place for 10 years. While this may bring about conveniences as it could be near your current workplace or family now, but these could change in future. Spatial, household, and lifestyle needs could change too.

Egan: While you do not have to sell after the MOP, that option and flexibility to do so is worth having. 10 years is a long time and many things could change. You may have additional household members or want to live nearer your future workplace. These are factors that may be beyond your control. I may be working in the east now but possibly in the west in future so there may be some inconveniences.

Ethan: At my current age (25), I do not currently have plans to have children in the next five-plus years. Therefore, distance to a school, or being in the most optimal central location is not my priority. I would rather be able to save more money in the short term and use it for other purposes (travel, renovation, etc.) while still having the flexibility of relocating or upgrading in five years if my lifestyle choices happen to change. This is why I felt like I should go with a Standard flat.

Not just about location (centrally located)

Egan: They say for real estate, location is key. However, HDB has defined choice locations as those being centrally-located (i.e. near the city centre/CBD). Especially today, where most if not all HDB towns are self-sufficient towns. The internal public transport networks such as feeder bus and the Light Transit Rail (LRT) will get residents around and to the MRT station. Most needs can be met by the amenities the town has. Thus, there is no need to live near the CBD if you do not mind the daily commute to work. Even more so when Singapore have been decentralising workplaces. To me, familiarity to the place I grew up in and living near my parents is more important.

Ethan: There is an element of familiarity and comfort when choosing to stay in an environment you grew up in, and it makes the whole prospect of dropping half a million dollars into your first home a lot less daunting.

Prime flats located in Tanjong Rhu

Exclusive: 5-room size and shorter wait times

Ethan: As with Egan, I applied for a 5-room flat, which was only offered as part of the Standard housing model. 5-room flats are getting increasingly rarer, which would come to play if I ever choose to sell the house. Furthermore, there is little to complain about when it comes to having extra space to live (other than the extra cleaning required). It grants a degree of flexibility when it comes to designing your house, regardless of your needs. It is a more comfortable space for a growing family, and it also offers more room for your hobbies or other lifestyle needs – like if you enjoy hosting people.

Egan: Another thing to take note is also the project-specific traits. For both projects that I applied for, the waiting times were less than three years (possibly why they were so popular as well).

Affordability

Standard flats also come with a lower price tag. While we both applied for a 5-room flat, we did compare prices of a 4-room Standard and a Prime flat.

Table 1: Price of BTO flats launched in October 2024

Source: HDB

Of the BTO projects that we both considered, the price range of those in Plus and Prime areas are considerably more expensive. It would have made more financial sense to apply for a larger standard flat rather than a smaller ‘Plus’ or ‘Prime’ flat.

“The Next Step”

Egan: Of course, many Singaporeans aspire to own and live in a private property, me included. This would mean embarking on this path of ‘Asset Progression’, where we upgrade to the next higher tier of property when we have the chance to. For a young couple, it would mean selling your BTO flat upon reaching the Minimum Occupation Period, when flats are still new. Cashing out on the profits made, we would then go on to buy a condominium.

Ethan: Hence, HDB introduced Prime and Plus flats, that come with more stringent resale conditions that eventually caps the prices of HDBs in future. This is done to ensure that HDBs continue to be affordable public housing. The conditions include a 10-year minimum occupation period, rather than standard flat’s 5-years. Resale buyers of these flats also have a household income ceiling of $14,000.

Egan: The opportunity cost of the five additional years could make it more difficult for potential upgraders. Firstly, the private property prices may become out of reach. Secondly, upon fulfilment of the MOP, most buyers would be in their mid-forties. (Considering a couple at 28 successfully getting a BTO flat, 4 years of construction and 10 years of living there). Furthermore, there are subsidy claw back on the future selling price of Prime and Plus flats (currently up to 9% and 6% respectively)

Parktown Residences – New launch condos are an option for HDB upgraders when they fulfil the 5-year MOP

Conclusion

Ultimately, property – especially your first home is an important and crucial milestone in one’s life. Each flat type comes with their own clear advantages and differences. Given that HDB flats require you to occupy them for at least 5 years, it is in your best interest to select a flat that is best suited for your lifestyle, and in a location that you are okay with.

At the end of the day, given the heavily subsidised nature of HDB flats, the majority of BTO homes have been profitable in recent years.

However, as twenty-somethings and analysts working in the real estate industry, we have purposefully opted for a Standard flat, given the flexibility it offers.

Need professional advice to help you weight the pros and cons between a BTO and resale flat? Reach out to an ERA Trusted Adviser today!

Disclaimer

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