[Increasing BTO Supply] – What Is the Impact on Future HDB Resale Prices?

What impact will the ramp-up in Built-To-Order (BTO) flat supply have on the Singapore property market? On one hand, it provides more public housing options for Singaporeans; on the other, it could also drive prices even higher.

Source: The Straits Times report "'We will turn the corner soon': Desmond Lee says nearly 100,000 homes (private condos and public housing) slated for completion by 2025; HDB to launch 19,600 BTO flats across three sales exercises in 2024"

In early January this year, mainstream media reported that 19,600 BTO flats would be launched in 2024, of which 2,800 units will have shorter waiting times of under three years. This echoes past trends: between 2011 and 2013, a similar supply ramp-up saw around 26,000 homes launched annually to address a "temporary demand-supply imbalance".

Source: HDB, ERA Research & Market Intelligence

The injection of roughly 115,000 new homes into the market since 2011 led to an increase in the number of BTO flats reaching their Minimum Occupation Period (MOP) from 2019 onwards. In turn, this contributed to a significant rise in the HDB Resale Price Index, as these newly MOP-ed BTO flats boast longer remaining leases and thus command higher prices than older resale HDB flats.

While history is expected to repeat itself in the coming years, with resale HDB prices trending upwards between 2029 and 2033, this price appreciation may not be as pronounced as in the previous cycle.

This can largely be cushioned by recent public housing measures, such as the longer MOP for Prime and Plus BTO flats, alongside the $14,000 income ceiling for resale buyers, both of which are likely to exert downward pressure on future price growth.

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