Press release
Comments on new housing policies announced during the National Day Rally 2023
20 August 2023 - The government announced several new housing policies during the National Day Rally 2023. The key changes are:
1. Reviewing the estate classification of new BTO flats. Future BTO flats will be recategorised as Prime, Plus and Standard flats instead of flats in mature and non-mature estates.
2. Enhancing access for singles to buy all 2-room flexi flats across Singapore.
3. Building more community care apartments for the elderly.
Why a review of the estate classification is timely?
A review could be timely as the line between mature and non-mature estates has gradually blurred over the years. Moreover, the price mechanism for future BTO projects should be more associated with locational attributes.
In the past, buyers were willing to pay more for flats in mature estates as they were closer to the city center. However, more flats in non-mature estates were sold at higher prices when compared to older estates in recent years. For instance, the median resale price in Punggol (S$550,000) and Sengkang (S$541,888) surpassed certain mature estates like Bedok (S$440,000) and Ang Mo Kio (S$425,000) in 2022. Even in the private residential market, the cost of some properties in the city fringe is higher than others in the prime locations.
These trends indicate that buyers are now placing a higher value on a product’s attribute (i.e. proximity to town centers, popular schools, MRT stations, design features, etc) rather than its proximity to the city center. Therefore, reclassifying flats to be more associated with locational attributes can provide a more accurate depiction of the intrinsic value of flats outside of the city center (these flats will be termed as Plus Flats).
Benefits of extending MOP for some flats (Plus Flats)
1. To reinforce the narrative that public housing is meant primarily to serve as a home for the long term and not to be used for speculative investment or treated as short-term assets.
It is a good move to extend the MOP of certain flats. The change will reinforce the message that public housing is primarily meant to serve as a home for the long term and not to be used for speculative investments or treated as short-term assets.
Moreover, many flats in mature estates are ageing and will be redeveloped into new housing units. With more prime land being free up for redevelopment, it is a good reminder to young Singaporeans to stay longer in these well-located, subsidised flats.
2. To reduce speculative activities by slowing sales of newly MOP flats
Data has shown a growing number of young Singaporeans selling their flats shortly after MOP. Based on HDB transaction data from data.gov.sg, the number of flats sold within two years of MOP or flats aged 7 years and below have ballooned 733 per cent from 743 units in 2014 to 6,189 units in 2022. (We chose a period of two years after MOP or 7-year-old flats as this is a reasonable time frame for buyers to sell their flats and find a replacement home).
These flats now constitute a bigger proportion of the total resale transactions, which rose from 4.6 per cent in 2014 to 23.2 per cent in 2022. This trend is more prevalent in non-mature estates, where transactions of flats aged 7 years and below jumped from 5.2 per cent in 2014 to 31.3 per cent in 2022. Therefore, implementing Plus Flats with longer MOP periods outside of the Central Area may slow down such transactions.