Huttons’ comments on the changes in housing policies announced at the National Day Rally

21 August 2023

Huttons is supportive of the change in mature and non-mature classification which is long overdue. Many non-mature estates have been well-developed and are comparable to mature estates. Furthermore, the prices of resale flats in the non-mature estates can be close to mature estates.

From 2H 2024, HDB estates will be split into 5 regions – Central, East, West, North and Northeast. This is similar to the private residential market. The Central Region will be made up of mostly Prime and Plus flats while the other Regions will be made up of Standard and some Plus flats.

The first Plus flats may be in Mount Pleasant or Bedok South.

The changes are cognisant of the fact that the popularity of a HDB flat is highly dependent on the location. This approach of introducing Plus flats across the island will be able to capture the nuances. It will not be applied retrospectively to earlier BTO or existing flats.

By offering more subsidies, the Government can ensure a good social mix, ensure affordability and fairness.

The new classification of HDB estates will have an impact on the next few BTO launches before 2H 2024 and the resale market.

The introduction of Plus flats across Singapore may see some BTO applicants trying to game the system and guess the location. They may then apply for BTO flats which are nearby and have no restrictions.

In the resale market, supply of resale flats may be reduced in the areas where Plus flats are located. These Plus flats have a longer MOP. With potentially less supply, prices of resale flats may increase. It may also push demand to standard resale flats which do not have the same restrictions as Plus flats.

With the controls and restrictions, it may lead to a stable HDB market in the long run. While desirable and ideal, it may create difficulties in moving up the housing ladder. It is taking longer for owners of HDB flats to realise substantial capital gains to be able to move up the housing ladder. The proportion of buyers with a HDB address buying a private property has declined in recent years and more are relying on intergenerational wealth transfer to do so. This may exacerbate the haves and have-nots in society.

The other key change is allowing singles to apply for 2-room flexi flats across Standard, Plus and Prime. This move is fair and inclusive and accepts that being single is a choice and there should not be differentiated policies. This is probably part of the new social compact in Singapore.

The demand from singles buying Prime flats may be high initially following the change as everyone wants the choicest location but it will stabilise over time.

There is unlikely to be an impact on the resale market as most singles are looking for larger flats in the resale market.

Singles may be disappointed as the age of 35 years old is not lowered. Also, they are offered 2-room flexi and not larger flats. However, there is a need to strike a balance between the needs of singles and families.

However, as some singles may opt for short lease flats which cannot be resold, the concern for them is when they require assistance in their golden years, how can they transit to community care apartments.