BUYERS of new Housing and Development Board (HDB) flats in sought-after locations will be subject to stricter resale conditions from next year, under a new framework designed to ensure affordability and cap resale prices of public housing.

HDB will do away with its current classification by mature and non-mature estates. Instead, it will designate flats as Standard, Plus or Prime, differentiating projects by locational attributes. The changes apply to build-to-order (BTO) projects starting from the second half of 2024.

The new framework has three objectives in mind: “One, to keep home ownership affordable to all income groups. Two, it has to maintain a good social mix in every town and region. And three, it has to keep the system fair for everyone,” said Prime Minister Lee Hsien Loong at the National Day Rally on Sunday (Aug 20). 

Plus flats will be housed in desirable locations – mostly in what are now termed mature estates such as Toa Payoh, Bishan, Ang Mo Kio, Bukit Merah, Queenstown, Kallang/Whampoa and Marine Parade, where current resale prices are highest. These estates also chalk up the highest number of million-dollar-flat deals. 

Standard flats will account for the bulk of supply and Prime flats will fall under the existing Prime Location Housing (PLH) model. Plus flats could also be offered at some locations elsewhere.

Buyers of Plus flats will get more subsidies than those of Standard flats, but less than those of Prime flats. “This will moderate the prices of Plus flats and put them within reach of more households,” said PM Lee. 

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But new restrictions on Plus BTOs will include a 10-year minimum occupation period (MOP) and a clawback of the subsidy. The pool of resale buyers will also be cut down to those who meet certain BTO eligibility conditions, such as a household income ceiling. 

“This will moderate resale prices and help to maintain a better social mix, even in the resale market in the longer term,” said PM Lee. 

Flats near MRT stations or town centres see the highest demand during BTO exercises, PM Lee noted.

“People know that HDB is offering a good deal, because these flats will fetch much higher resale prices afterwards,” he said. “This turns the BTO exercise into a lottery. Those who are lucky enough to ballot such a flat stand to reap a windfall upon resale. This will not be fair to the many more who miss out.” 

He gave the example of Central Weave in Ang Mo Kio, a BTO project where prices for the biggest flats ranged from S$713,000 to S$877,000 before grants. 

“Some people complained that these prices were exorbitant and unaffordable. Yet these units were heavily oversubscribed,” he said, with more than 6,500 applications for the 372 units. 

“Clearly, these applicants must have found this Central Weave project affordable, and thought that the prices offered them good value. And no doubt many hoped their flats would fetch strong resale prices later on.” 

Pricing these flats higher would cool demand and reduce the windfall gains on resale. “But there will be sticker shock – these flats will become expensive and unaffordable to most families.” And pricing them lower would only exacerbate the lottery effect: “It’s not tiok beh pio, it’s tiok tau pio.”

Hence, the new Plus model, “with stricter sale conditions so that we can moderate the prices”, said PM Lee.

A longer MOP of 10 years will “favour buyers who are planning to stay there for the longer term, and discourage those who may be thinking of flipping the property and moving out as soon as they can”.  

PM Lee noted that the Covid-19 pandemic had disrupted the public housing programme. BTO projects were delayed and the ensuing shortage of new flats pushed up resale prices.  

With supply now ramped up, “the market is calming down”. “First-timer BTO application rates are lower. Waiting times are shorter. Resale prices are gradually stabilising,” he said.  

As Singapore’s housing landscape evolves, there will be fewer large tracts of undeveloped land left to build new estates where prices can be kept lower. Non-mature estates, such as Jurong East and Punggol, have also become more developed and resale prices are catching up with flats in mature estates. 

New HDB flats will have to be built within or near existing estates, and will be more centrally located, such as at Mount Pleasant where the former Police Academy site will see 5,000 new homes. Plus flats would come up in Bayshore, for instance, where a new precinct is planned. 

If the Central Weave BTO in Ang Mo Kio had been sold as a Plus project, with the tighter restrictions and additional subsidies, “would HDB have priced it lower than it actually did? The answer is yes”, said PM Lee. 

“In time to come, we will no longer refer to new projects as mature and non-mature,” he said. “Instead, we will build a good mix of projects within and across regions to cater to different needs and budgets. And that is how we can fulfil our commitment to keep high-quality HDB flats accessible and affordable to you and your children.” 

More options for singles and seniors

More housing options will be available for singles and seniors as well. Starting from H2 2024, eligible first-timer singles aged 35 and above will be allowed to apply for two-room flexi BTO flats in all locations across the three classifications of flats.

In the resale market, eligible singles will also be allowed to buy two-room Prime flats, as well as Standard or Plus flats of any size except for three-generation ones.

Previously, this group of buyers was only allowed to apply for two-room flexi BTOs in non-mature estates and were not allowed to purchase any resale PLH flats.

The government will also work to make HDB homes and precincts more liveable and senior-friendly. This includes expanding the suite of fittings offered under HDB’s Enhancement for Active Seniors (Ease) programme, while neighbourhoods will be upgraded with more senior-friendly amenities and roads made more pedestrian-friendly.

More community care apartments – with senior-friendly designs and fittings, bundled with care services – will also be introduced.