SINGAPORE — Attractive locations and quicker completion times comparable to pre-Covid-19 days are among factors driving the popularity of two public housing developments in Yishun and Jurong West for the latest Build-To-Order (BTO) flat application exercise, real estate analysts said.

At the same time, the weaker-than-expected demand seen at the Bukit Merah and Ghim Moh projects, under the Prime Location Public Housing scheme, may be due to the greater distance from the city centre compared to previous launches in other areas under the same scheme.

The smaller sizes of the flats compared to those in Yishun and Jurong West is another possible factor, along with the larger number of units in the latest prime location offerings, as well as the quick succession of prime location project launches, the analysts added.

About 1,900 four-room flats under the prime location scheme are up for grabs this time, compared to under 700 at the Rochor Road district and 300 at Kallang-Whampoa, which were the first two launches under the scheme in November last year and February this year respectively.

As of 5pm on Thursday (June 2), the last day of the latest BTO application exercise, four-room flats at Bukit Merah Ridge and Ghim Moh Ascent were subscribed 4.9 and 3.9 times respectively, in contrast to more than 10 times for the first flats in Rochor under the new scheme.

DEMAND FOR NON-PRIME LOCATION HOUSING

Housing and Development Board (HDB) figures showed that demand for four-room flats was higher across all three non-prime developments in terms of application rates compared to the two under the prime location scheme.

Four-room flats at Lakeside View and Yishun Beacon saw application rates of 6.8 and 11.5 times respectively. Similar flats at Kim Keat Heights, located at the mature estate of Toa Payoh, were 9.7 times subscribed.

Mr Nicholas Mak, head of research and consultancy at ERA Realty Network, said that one key reason would be the shorter completion time for the development.

“This could be due to a shorter waiting time of only 39 months, which is comparable to the pre-Covid waiting time for BTO projects,” he said, referring to Yishun Beacon as an example.

In contrast, projects under the prime location rules have a waiting time of up to about five years.

Public flats under the new prime location model are regulated by stricter criteria, for instance, they must be occupied for at least 10 years before owners can sell them, unlike the prevailing condition of five years for HDB flats. 

Owners of these prime-location flats will also not be allowed to put the whole flat up for rent after 10 years, unlike other HDB flats that can be leased after five years. 

The analysts also said that the relatively lower prices for Lakeside View and Yishun Beacon flats, especially considering that both are located near MRT stations, further augment their appeal.

Five-room units, available only at Lakeside View and Yishun Beacon, were the most over-subscribed, with application rates of 14 times and higher. The other three projects in Bukit Merah, Ghim Moh and Toa Payoh do not offer five-room flats.

Mr Mohan Sandrasegeran, a research and content analyst at real estate firm Ohmyhome, said that the demand likely came from subscribers who have “bigger family sizes, as there was a lack of five-room flats offered in the mature estates”.

Mr Lee Sze Teck, senior director for research at Huttons Asia, said: “Besides the general desire for larger units, it could be due to the lack of affordable larger units in the resale market.”

He noted that the application rate for five-room flats in Yishun at an earlier launch just three months back was around 2.1 times. This was for a project called Grove Spring@Yishun.

However, for the latest launch this month at Yishun Beacon, it is located much nearer to Yishun and Khatib MRT stations than the earlier projects, further adding to the demand.

Another analyst, Ms Christine Sun, senior vice-president of research and analytics at property firm OrangeTee & Tie, said that prices of resale flats are rising, "so it makes sense to buy a bigger unit now so homeowners don't have to upgrade so soon”.

PRIME-LOCATION FLATS ALREADY LOSING THEIR SHINE?

The distance from the city centre may be one reason that the new HDB prime location BTO projects are seeing less demand this time round, Mr Lee of Huttons Asia said.

“The further from the city centre, the lower the applications. This is consistent with land rent theory that price and demand decrease as the distance from the central business district increases.” 

The analysts also said that the presence of alternative housing options may have contributed to the weaker subscription numbers for the prime location flats.

For one thing, Mr Lee pointed to the “availability of newer resale flats without the prime location restrictions in the vicinity”.

Mr Mohan of Ohmyhome said: “Furthermore, the offerings of completed Sale of Balance flats (SBF) in both Bukit Merah and Queenstown could have enticed some of the potential buyers to throw their name in the hat for the SBF flats instead.” 

The four-room SBF units in Bukit Merah saw an application rate of 14.4 times. Similar units in Queenstown were subscribed 22 times, he noted.

In an upcoming BTO exercise in August, a Bukit Merah housing project located next to Redhill MRT Station, as well as one development in Queenstown for the November BTO exercise, also offer alternatives for buyers-to-be in a relatively short time frame.

The launches of flats in quick succession, particularly those under the prime location scheme, also take away from their “exclusivity” in the eyes of prospective buyers.

Ms Sun of OrangeTee & Tie said that buyers previously may not have minded the more stringent criteria of the prime location rules due to their potentially “good capital appreciation or rental returns”.

However, the launch of multiple such projects in quick succession means more competition when they try to resell them 15 to 17 years down the road.

“This may mean that the flats may not fetch as high a price as they would like,” she added.

Overall, however, the demand for housing under the new scheme can be considered as “healthy”, she said, if one considered the overall applicant numbers.

The two Bukit Merah and Ghim Moh projects attracted more than 9,500 applications in total as of 5pm on Thursday. 

This is compared to the 7,843 total applicants for Rochor and 5,801 applicants for the Kallang-Whampoa flats previously, she noted.