'Not fair' to compare median prices of BTO flats over time; median grants up by a third since 2015: HDB

SINGAPORE — It is “not fair” to compare the median starting prices of Build-To-Order (BTO) flats over time because prices can vary across different years based on location, attributes, and the year and prevailing market conditions at the time of their launch, the Housing and Development Board (HDB) said on Wednesday (Oct 5).

The public housing agency was responding to queries by TODAY for its article on Sept 23, which reported that prices of BTO flats have picked up pace over the last three years, and that property analysts expect Singapore to see its first million-dollar BTO flat in “a matter of time”.

The article quoted data from real estate technology firm 99.com, which showed that the median starting prices of BTO flats across all room types have been on the rise since 2015, with steeper increases posted since 2019.

Property analysts said that the spike in median prices of BTO flats could be due to several reasons, including more launches in central, pricier areas and increased construction costs. They also noted that prices of these flats depend on many other factors including location, floor levels, size and the direction in which the flat faces.

In its queries to HDB on Sept 9, TODAY had asked if it had observed the prices of BTO flats going up, particularly during the Covid-19 pandemic, as well as for details for the last few times record-high prices were observed for BTO flats. TODAY had also asked HDB about its measures to keep such flats affordable.

On Wednesday, HDB said: “We would like to clarify that the ‘median’ BTO starting prices quoted in the article are not fair comparisons, as the prices quoted were based on projects sited in different towns and flats with different attributes.

“In fact, the ‘median’ prices could vary across different years, depending on the project locations and attributes offered in the year, as well as the non-mature estate or mature estate supply and the prevailing market conditions at each BTO launch.”

Acknowledging that analysts in the report had pointed out that HDB was providing higher amounts of housing grants over the years, the public housing authority said that the median grant disbursed for BTO flats across all flat types had increased by about a third — or 33 per cent — from S$30,000 in 2015 to S$40,000 last year.

Similarly, the median grant amount disbursed for resale flats has also doubled, from S$35,000 in 2015 to S$70,000 in 2021.

HDB said that the Government is committed to helping Singaporeans own their first homes, and that it offers a wide range of flat types in different locations to meet differing budgets of buyers.

“Today, most first-time flat buyers purchasing a new flat use less than a quarter of their monthly income to pay for their loan instalments, and will be able to service their mortgage using their monthly Central Provident Fund contributions, with minimal or no cash outlay,” it added.

PRICING OF BTO FLATS

HDB also said that affordability is a key consideration when pricing new flats.

It establishes the market value of the flat by considering the prices of resale flats nearby, individual attributes of the flat as well as the prevailing market conditions. It also applies a “significant subsidy” to the assessed market value of the BTO flat so that it is affordable.

It said that among BTO flats launched this year, the average price of a four-room unit in a non-mature estate was about S$348,000.

Rising construction costs, which have gone up by about 30 per cent over the last two years during the Covid-19 pandemic, have also “been largely absorbed” by HDB in the form of larger subsidies for its housing programme, it added.

HDB also does not price flats to recover costs, with its deficits from the yearly sale of flats widening over the past two years due to significant subsidies extended for new flats and the disbursement of housing grants for eligible BTO buyers.

MORE NEW FLATS IN MATURE ESTATES

Giving some figures, the authority said that it has launched more BTO flats in mature estates, from about 30 per cent in 2015 to between 45 per cent and 55 per cent of the BTO supply over the last three years.

Such flats are generally priced higher to reflect their more desirable attributes such as being located near existing transport nodes.

Even then, the selling prices of these flats are also below the transacted prices of comparable resale flats, it added.

It said that it has been increasing its supply of BTO flats in the last few years, including in more affordable non-mature estates, so that buyers can secure a unit from a larger pool and from a wider range of locations.

"We are also prepared to launch up to 100,000 flats in total from 2021 to 2025, if needed. We will continue to monitor the housing market conditions closely and ensure that Singaporeans have access to affordable public housing," HDB added.