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Launch of Bukit Merah, Queenstown BTO with prime location rules unlikely to impact current resale flat prices: Analysts

SINGAPORE — The launch of new public housing projects under the Prime Location Housing Model in Bukit Merah and Queenstown is unlikely to have a direct, near-term impact on resale prices in the vicinity, analysts said.

An artist's impression of a Built-To-Order housing project in Bukit Merah that will come under the Prime Location Housing model.

An artist's impression of a Built-To-Order housing project in Bukit Merah that will come under the Prime Location Housing model.

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  • The Government launched two Prime Location Housing Model projects in Queenstown and Bukit Merah
  • While there are stricter reselling conditions for these flats, this would not affect near-term prices for resale flats in the vicinity, property analysts said
  • Buyers and sellers in the resale markets are more concerned with prevailing conditions and not future supply, they added
  • Different purchasing power and priorities also mean unsuccessful Build-To-Order flat applicants are unlikely to spill over to the resale market

SINGAPORE — The launch of new public housing projects under the Prime Location Housing Model in Bukit Merah and Queenstown is unlikely to have a direct, near-term impact on resale prices in the vicinity, analysts said.

They added that although the longer minimum occupancy period imposed on these flats would delay a supply of fresh flats entering the resale market in the future, it does not mean that resale flat sellers can set higher prices since this would turn away most buyers. 

The five analysts interviewed by TODAY further noted that even though these flats are expected to be heavily oversubscribed, unsuccessful applicants would not jump into the resale market immediately — due to the higher prices of resale flats and also because of differing housing needs.

This view was echoed by some applicants to the two prime location developments who spoke to TODAY.

The Housing and Development Board (HDB) on Friday (May 27) launched the sale of more than 2,500 Built-To-Order (BTO) housing units in Bukit Merah and Queenstown under the prime location model.

These — along with three other BTO projects in Jurong West, Yishun and Toa Payoh — will add about 4,600 new flats into the housing market. 

The prime location model was introduced last year to ensure that all HDB flats, including those in prime and central locations, remain affordable and accessible over time.

The first two projects under the new model, located in the Rochor area, were launched in November last year and were more than 10 times oversubscribed.


A new flat under the model is subjected to a minimum occupancy period of 10 years, double that of the five-year period for a typical BTO flat. Owners of flats sold under this model are also restricted to selling them to buyers with an income ceiling of S$14,000.

These conditions would effectively delay a supply of resale flats in mature estates by another five years, on top of limiting the pool of prospective buyers.

When asked if these would be factored in by a current resale flat seller when setting a asking price, Mr Lee Sze Teck from Huttons Asia said: “Some existing flat owners might have this view that, ‘My flat now is not subject to these restrictions, so I should be pricing it more than those that are (restricted by them)’.”

However, the senior director for research at the real estate firm said that not many sellers would think in this manner since sellers are well-aware that prices will be moderated by market forces.

Mr Nicholas Mak, head of research and consultancy at ERA Realty Network, echoed this sentiment, adding that the resale market is generally a buyer’s market.

He said that the future supply of flats in the estate generally would not weigh on the decision of current buyers or sellers.

“Sellers usually want to let go of their property within months. So whether a BTO flat enters the resale market in five years or 10 years down the road, it will not matter,” he said. Similarly, buyers of such flats tend to have a more urgent housing need, too.

Prices of recently transacted flats in the vicinity would be the main determinant of asking prices for resale units.

Ms Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, said: “If a current resale flat in Bukit Merah is already selling at around S$750,000, a seller probably will not raise it to ask for S$900,000 just because the prime location model flats were announced.”

Mr Lee pointed to a five-room HDB flat at City Vue@Henderson, located just opposite the Bukit Merah site for the newly announced project. The flat recently sold for a record S$1.4 million and he said that such sales would have a greater bearing on resale transactions than the development of the prime location project.


The predominantly different profiles and priorities of a BTO flat applicant compared to a potential resale flat buyer would also prevent a direct spillover from the market for BTO flats into the market for resale flats, the analysts noted.

One main consideration would be the price disparity between the two types of flats.

Mr Mohan Sandrasegeran, a research and content analyst at real estate firm Ohmyhome, noted that there are already about 15 million-dollar deals in the Queenstown area and 12 in Bukit Merah within the first five months this year.

“Buyers of such flats are generally unfazed by the high prices and have ample liquidity, as they place heavy emphasis on locational attributes and in having a spacious home,” he said.

In contrast, prices of the newly launched four-room BTO flats at the same two estates, while costlier than at other locations, begin from S$466,000 and S$495,000 after subsidies.

A BTO flat applicant also generally has a less urgent need for a flat compared to a resale flat buyer, the analysts said.

“If you are ready to wait five years, that means you're not in urgent need of a flat. Then why would you suddenly need to rush and buy a resale flat so quickly after an unsuccessful BTO application?” Mr Mak of ERA said.

Analysts also pointed out that there will be two more BTO exercises this year in August and November, including flats in Queenstown and Bukit Merah.

Mr Ismail Gafoor, chief executive of PropNex Realty, said: “We suspect that the spill-over demand (if any) is not likely to be excessive to the extent that it results in substantial price increase of existing resale flats nearby.” 


A 26-year-old communications professional who wanted to be known only as Ms Crystal, was among those who applied for the Bukit Merah project on Friday.

Speaking to TODAY, she said that the project was the closest out of the five in this BTO exercise to her parent's home in the eastern part of Singapore.

"Bukit Merah is also a really good location, and compared to resale prices, the price of a BTO is still more affordable," she said.

If her bid turns out to be unsuccessful, she would not rush into buying a resale flat in the area but will instead take time to consider other options, because both she and her boyfriend are "early in our careers", she added.

Mr Nigel Sim, an applicant for the new Queenstown project, said that he and his wife picked it due to its prime location.

“We have also shortlisted some resale flats that are about S$500,000 to S$600,000 in other locations, but those locations are not as convenient for us to go to work compared to this,” the 32-year-old entrepreneur said. He had unsuccessfully applied for three other BTO projects before this with his partner.

Despite Queenstown's attractiveness as a location, the couple decided that they would look elsewhere for a resale flat should they fail to secure a BTO flat in the area by the end of the year.

"Resale (flats) there are too expensive. We have to lower our expectations, look elsewhere for a home that better fits our budget," Mr Sim said.

Related topics

HDB flat hdb BTO Prime Location Public Housing property Queenstown bukit merah

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