Analysts say too soon to tell if BTO applications dip means stabilising demand, as projects may have been less attractive

SINGAPORE — It may be too soon to tell if new figures showing low application rates for the latest Build-to-Order (BTO) sales exercise mean that demand for BTO flats is stabilising, property analysts said on Monday (March 6).

The dip in application numbers in the February BTO exercise could be explained by the latest project locations not being as attractive as those in the last November 2022 exercise, the analysts added. 

They also said that it will be possible to better assess the true state of the BTO market after the launch of the August sales exercise, when several policy measures announced by the Government kick in with the aim of giving some groups of applicants a better chance of securing a unit. 

Before that happens, the coming May BTO sales exercise may even see a resurgence in applications, with launches in popular estates that have not been included in BTO launches in several years, such as Bedok and Serangoon. 

One prospective applicant, Ms Low Wei Xin, a 23-year-old university student, told TODAY that she and her partner chose to sit out the February exercise because they preferred to save their application for May to try for a unit in Serangoon. 

The Housing and Development Board (HDB) said on Monday that the lower application numbers during the February BTO sales exercise are among several "early indications" that BTO application rates have reduced and are stabilising. 

WHY FEBRUARY EXERCISE HAD FEWER APPLICANTS 

Property analysts said that as of 5pm on Monday, the current BTO sales exercise had the fewest number of applicants in the last three years, with just 15,234 buyers making applications.

The last time there was a lower figure was during the BTO exercise in September 2019, with 7,179 applicants. 

Mr Lee Sze Teck, senior director for research at real estate firm Huttons Asia, said: "This means that most buyers will stand a good chance of selecting their flats." 

However, analysts also noted that the past BTO sales exercises may have featured more attractive offerings, which led to fewer applicants for the current sales exercise. 

The attractive BTO listings coming up in May were among the reasons that Ms Low and her boyfriend, 24, have given the current sales exercise a miss.

She said that she did not like the location of the BTO projects in the February exercise, because most of them felt “too ulu (Singlish for ‘remote’)”.

She added that the launch in May at Serangoon, which the couple is eyeing, is a better fit for them because it will be within 4km of her boyfriend's parents' home.

Mr Nicholas Mak, head of research and consultancy at ERA Realty Network, said that for BTO projects launched in non-mature estates, there were fewer applications in this exercise than in previous ones.

This was largely because the locations of the non-mature estate BTO projects in the February 2023 exercise were "not as attractive" as past projects that were launched in 2022 in or around the same town.

For example: 

• The location of the Jurong West Crystal project launched this February is not as attractive as the Lakeside View BTO project launched last May. The Lakeside View project is located near to Jurong Lakeside Garden, with some flats that offer good views of the Jurong Lake and surrounding gardens
• The location of the current BTO project in Tengah called Brickland Weave is at the edge of Tengah town and not within comfortable walking distance of the nearest MRT station, while the project Garden Waterfront@Tengah launched last November is next to an upcoming MRT station on the Jurong Regional Line

EFFECTS OF RECENT POLICY MEASURES

Other than past BTO sales exercises having more attractive offerings, prospective homeowners may also be looking to defer their applications to take advantage of the upcoming policy measures that favour certain applicants. 

For instance, starting from the August BTO exercise, flats will be set aside for a new first-timer (parents and married couples) category to be introduced to the scheme, comprising families with children, and married couples aged 40 and below.

Mr Ismail Gafoor, chief executive officer of PropNex Realty, said that such measures may prompt couples to wait for the August BTO exercise to apply for a flat.

"Some couples who fit the new category... could be waiting to put in their application later this year as it gives them a higher chance of getting their flats in more attractive locations of their choice." 

From August, the Government will also be tightening rules for the non-selection of flats to bring down the rate of rejections by applicants invited by HDB to book a new flat, ensuring that genuine applicants are favoured.

Ms Christine Sun, senior vice-president of research and analytics at real estate agency OrangeTee & Tie, said that this could mean more "serious" applicants might defer their applications till then. 

"Those applicants who are really serious about getting a unit, they just want to try for August instead, because their chances of getting (a unit) will be much higher." 

The recent move to provide bigger grants for eligible buyers of resale flats could have also diverted some of the prospective BTO applicants to try for a resale flat instead, rather than wait several years for the completion of the BTO flats, Ms Sun added.

"More people have decided not to wait... since they have the grant, they might as well pay while (the Government) allows them to top up some money." 

For instance, for first-timer families looking to buy a two- to four-room resale flat, the grant will be raised to S$80,000, up from S$50,000.

Indeed, Ms Low said that she and her boyfriend are applying for a BTO flat largely to see if they even get a slot, since they have not decided if they want to commit to choosing a flat, given that both of them are not working yet.

Thus, from August onwards, she will no longer apply until she has secured a job upon her graduation next year, which will give other applicants a better chance.

“We do not want the situation where we don’t have enough to pay and we have to forfeit,” she said.

LOOKING AHEAD

Experts said that the BTO sales exercise in May could see a potential spike in application rates. 

In particular, that exercise will feature "more attractive" launches in Bedok and Serangoon, Mr Lee from Huttons Asia said. 

"Bedok and Serangoon are going to have their first BTO launch in about seven and nine years respectively."

He also said that the May exercise features another project in Tengah, which is "right beside" the planned site for Anglo-Chinese School (Primary). 

"Buyers may be holding back for these more attractive launches," he added. "In May, the (BTO application rates) could shoot up again." 

Ms Sun from OrangeTee & Tie said that it is only after the new policy measures take effect in August that a truer picture of the BTO market may come to light. 

"We have not even seen what is going to be the impact of the non-selection (policy), because that is quite a major change," she added. "So we will need to at least see the next two to three applications after this rule kicks in."