The October 2024 Build-to-Order (BTO) sales exercise attracted over 35,600 applications, marking the highest number since August 2022. This overwhelming response underscores the continued robust demand for public housing in Singapore, even under the newly implemented Plus and Prime HDB flat classification framework. Despite stricter restrictions, buyers remained undeterred, signalling that these factors have not diminished the appeal of these highly sought-after flats.
This exercise has reignited discussions about Singapore’s housing affordability and accessibility, with the new framework aiming to strike a balance between maintaining affordability and ensuring equitable access to quality housing across different income groups. The sustained demand reflects not only the resilience of the public housing market but also the effectiveness of measures designed to mitigate speculative activity while catering to genuine homeowners.
Understanding The Plus & Prime Framework
The introduction of the Plus and Prime classification framework for HDB flats represents a significant shift in Singapore’s public housing landscape. Designed to provide greater subsidies while maintaining affordability, these flats come with tighter resale and rental restrictions, aimed at discouraging speculative activity and ensuring the integrity of public housing as a means of homeownership rather than investment.
Key among the restrictions is a 10-year Minimum Occupation Period (MOP), double the standard MOP for most other HDB flats. After this period, owners can only sell their flats to families with at least one Singapore citizen or singles who are Singaporeans, and buyers must meet specific household income ceilings. For Plus and Prime flats, the income ceiling is capped at $14,000 per month for families. For singles, the ceiling is $14,000 for Plus flats and $7,000 for Prime flats. Additionally, there will be a subsidy clawback of between 6% to 9% for Plus and Prime flats upon resale.
On top of resale restrictions, rental limitations are also imposed. Owners are prohibited from renting out their entire flat even after fulfilling the MOP, though renting out individual rooms is still permitted. This measure ensures that these highly subsidised flats remain primarily for owner-occupation rather than being used as rental assets.
These controls aim to mitigate speculative behaviours, particularly among buyers who might view these highly subsidised flats as a means to generate substantial profits in the resale market. The phenomenon of “lottery flats,” where buyers reap significant windfalls from reselling subsidised housing in desirable locations, has been a contentious issue. The Plus and Prime framework seeks to maintain stability in the resale market, reduce housing price volatility, and uphold the principle of housing as a social good rather than a speculative asset.
Plus & Prime Flats Oversubscribed in October 2024 Launch
The October 2024 BTO exercise indicated a strong interest in Plus and Prime projects, particularly in well-established areas like Ang Mo Kio, Bedok, Geylang, and Kallang/Whampoa. Despite stricter resale and rental restrictions tied to these classifications, demand surged, reflecting the enduring appeal of strategic locations and affordability.
The standout project of the launch was Central Trio @ AMK, which garnered 1,763 applications for just 267 4-room units, resulting in a robust first-timer application rate of 4.1. This meant that approximately four first-timer families were competing for each unit, underscoring the high desirability of the Ang Mo Kio area. Other Plus and Prime projects offered 4-room units with first-time application rates ranging between 2 and 3, maintaining strong competition for these coveted flats.
However, not all unit types saw the same level of enthusiasm. For instance, the 146 3-room flats in Kallang/Whampoa experienced a comparatively lukewarm response, with a first-timer application rate of just 0.9. This hesitancy may reflect the mindset of young families who are reluctant to commit to a smaller flat under a prolonged 10-year Minimum Occupation Period (MOP), given their plans for future growth in family size.
Kallang/Whampoa, which offered two Plus projects and one Prime project in this exercise, garnered an application rate of 2.8 for its 4-room flats. This exceeded the 2.4 first-timer application rate recorded for Tanjong Rhu I and II, two Prime Location Public Housing (PLH) projects launched in the June 2024 BTO exercise. Similarly, the Plus projects in Bedok performed better than nearby February 2024 BTO projects like Bedok South Bloom and Bedok North Springs, which had garnered a first-time application rate of 2.8.
The sustained enthusiasm for Plus and Prime flats indicates that buyers are prioritising location and affordability over concerns about resale restrictions and extended MOP requirements. For many, the opportunity to secure a home in a mature estate or central area outweighs the limitations associated with these classifications.
This trend also highlights a broader willingness among both first-time and second-time applicants to commit to long-term homeownership. Projects in choice locations, especially those offering strong connectivity, established amenities, and vibrant communities, continue to attract significant interest. The October BTO exercise is a testament to how well-designed frameworks, coupled with desirable locations, can maintain robust demand even in the face of tighter regulations.
Location Still King
The dominance of mature estates and central locations in the HDB resale market trends underscores a longstanding truth: location remains the most critical factor in Singapore’s property landscape. The Central Area consistently recorded the highest number of million-dollar resale flat transactions, with other mature towns such as Ang Mo Kio, Bishan, Bukit Merah, Kallang/Whampoa, Queenstown, and Toa Payoh also leading the charge in high-value deals.
However, the introduction of the new Plus and Prime framework offers a transformative opportunity for average-income families. Aspiring homeowners looking to live in these desirable locations have to contend with skyrocketing resale flat prices, often exceeding the $1 million mark in today’s context. Now, with the new classifications, families no longer need to stretch their budgets for resale flats in these areas. Instead, they can opt for Plus and Prime BTO flats, which are more heavily subsidised and specifically designed to improve affordability.
This shift holds significant societal implications as well. By offering reasonably priced options in coveted locations, the framework promotes a more inclusive and less segregated housing landscape. Residents from various income levels can now access centrally located homes, fostering diverse and vibrant communities.
Financially, the framework is bolstered by increased government grants, such as the Enhanced CPF Housing Grant (EHG). For first-timer families with an average household income below $9,000 per month, the EHG now provides up to $120,000 in support. This grant not only reduces the financial strain of purchasing a Plus or Prime flat but also makes long-term homeownership more achievable.
Closing Thoughts
In essence, the combination of strategic subsidies, targeted grant support, and location-centric projects ensures that homeownership remains within reach for average-income families. This rebalancing of affordability aligns with Singapore’s vision for sustainable urban planning and an equitable housing market. With Plus and Prime flats, buyers no longer have to compromise on location, creating new pathways for families to settle in central and choicer estates while strengthening community ties.
With more factors to consider now, prospective buyers need to think carefully about their long-term plans before committing to a BTO flat. If you are exploring your options in the market and would like a second opinion, do not hesitate to reach out to us here!
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