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Stricter criteria for public housing in prime areas could deter some new families, say property analysts

SINGAPORE — Newly announced conditions for the purchase of public housing in prime locations are meant to encourage Singapore residents to live in these homes for the long term, but they could deter some new families wishing to have children from buying such flats, property analysts said.

Land in Rochor (right) to be used for a new Build-To-Order project by the Housing and Development Board; an artist's impression (left) of the project.

Land in Rochor (right) to be used for a new Build-To-Order project by the Housing and Development Board; an artist's impression (left) of the project.

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  • The Government is tightening criteria for public housing in prime locations such as the Greater Southern Waterfront 
  • Property analysts said the longer minimum occupation period of 10 years could deter new families from applying
  • Singles are not eligible for these flats now but this could be reviewed in future
  • Demand for such housing will be strong and will spill over into nearby estates, the analysts said


SINGAPORE — Newly announced conditions for the purchase of public housing in prime locations are meant to encourage Singapore residents to live in these homes for the long term, but they could deter some new families wishing to have children from buying such flats, property analysts said.

This is especially so for couples considering three-room flats since such homes “would be quite tight, even for a family of four”, Mr Ismail Gafoor said. The chief executive officer of property agency PropNex Realty pointed to the new criterion of a minimum 10-year occupancy and said that children would likely have been born well before that period had passed.

This means that as a family grows and requires more space, such households would not have the option of upsizing after five years but would have to wait a full decade, thus deterring some people from buying such flats.

And although singles are not eligible to buy these flats for now, the Government may also review the policy in future if the number of singles rises, the analysts said.

The Government on Wednesday (Oct 27) announced stricter criteria for ownership of new Housing and Development Board (HDB) flats to be built in prime locations such as the Greater Southern Waterfront and the city centre and surrounding towns.

The minimum occupation period of 10 years is twice the period for existing HDB's Built-To-Order (BTO) flats.

Owners of these new flats in prime and central districts will also not be allowed to put the whole flat up for rent after 10 years, even though flat owners are permitted to do so after five years under current rules.

The Government is also going to provide more subsidies for homebuyers in these areas, but it will claw back these subsidies when owners sell after 10 years.

HDB will limit the sale of such flats to those living in an eligible family nucleus such as a married couple.

The conditions are intended to ensure that housing at attractive locations remains affordable for Singaporeans and that distinct enclaves between wealthier households and average-income families do not form, National Development Minister Desmond Lee said in a media briefing on Tuesday.

The first public housing project to be launched next month under this new Prime Location Public Housing scheme will be at the Rochor Road district.


The restrictions on singles have already received a backlash online, with people stating that this will prevent those who are caregivers from living near their older parents. They may also not be able to live near their workplaces, they argued.

Property analysts who attended a briefing on the latest scheme by the Ministry of National Development (MND) on Wednesday said that the restrictions reflected the Government’s pro-family stance.

Mr Lee Sze Teck, senior director of research at property firm Huttons Asia, said that the Government may prefer for families to live in prime locations because singles “are more footloose and may move more easily”.

However, Mr Ismail of PropNex Realty said that the Government could review this option down the road as the number of singles in the population increases.

Professor Sing Tien Foo, who heads the real estate department at the National University of Singapore, said that singles will have other options for housing on the city fringe and in central areas, such as resale flats or private property. They also have the option of applying for HDB's two-room flexi flats outside the central areas.

National Development Minister Lee said on Tuesday that singles are excluded from buying public housing in prime areas because there are very few flats in these locations to start with, and the Government wants to cater to families first.

However, he added that the eligibility criteria will be reviewed.


Across the board, property analysts agreed that the longer 10-year minimum occupation period and restrictions on rent will curb purchases of flats in these areas for investment or speculative purposes and encourage home ownership for the long-term instead.

Ms Christine Sun, senior vice-president of research and analytics at property firm OrangeTee and Tie, said that the duration could deter financially savvy young buyers looking for investment opportunities.

Mr Lee of Huttons said that the longer occupancy will encourage families to build bonds within the neighbourhood.

Mr Nicholas Mak, head of research and consultancy at ERA Realty, said that conditions to make these flats more affordable, such as limiting sales to those with a household income ceiling of S$14,000, will also limit the number of million-dollar HDB flats.

Since the onset of the Covid-19 pandemic, the number of HDB resale transactions above the million-dollar mark has been on the rise, and these flats are usually concentrated in the city centre.


Mr Ismail of PropNex said that extra subsidies provided for BTO flats in prime locations will make them affordable to bigger groups of Singaporeans.

“On that basis, we think it is only fair that a percentage of the resale flat value is recovered in order to curb the 'lottery effect',” he added.

The lottery effect refers to how some people manage to successfully ballot for and buy a flat at a prime location, through BTO sales exercises, and then sell the property on the resale market at a hefty profit once they fulfil the minimum occupation period.

Mr Ismail also said that the subsidy recovered under the newly announced rules should come from the profits of the resale of the flat.

Mr Lee of Huttons described the clawback of the subsidies as “probably the first capital gains tax on properties in Singapore”.

The Government has yet to announce how much of the subsidy will be recovered, only to say that it will be commensurate with the extent of the initial added subsidy provided for the purchase of these homes.

Mr Lee estimated that the amount to be recovered will be set at between 3 and 5 per cent of the resale price.

Assuming the income ceiling is adjusted upwards by S$2,000 every four years leading to a maximum increase of 3.5 per yearly annually in the price ceiling, this would result in a price gain of between 2.25 per cent and 2.75 per cent a year for flats in these locations after subsidies have been clawed back, he calculated.

“This appears to be a sustainable price increase for HDB flats. It will also keep the prime location public housing flat prices sustainable for future buyers.” 


Ms Sun of OrangeTee is expecting strong demand for flats in these areas, similar to that of BTO flats located in mature estates.

The upcoming project at Rochor to be launched next month will have 960 three-room and four-room units, as well as 40 rental flats.

Several analysts also expect a spillover in demand for BTO flats in areas such as Telok Blangah or Redhill near the city.

This is because flats in these areas have a shorter minimum occupation period and there is no cap on price increases.

“The 10-year period may deter some buyers from buying the new flats with a 10-year occupancy period either from the Government or from the resale market.

“This could increase the demand for HDB flats with a five-year occupancy period in the areas or neighbourhoods near the prime location public housing flats,” Mr Mak of ERA Realty said.

Related topics

HDB BTO MND Rochor property family singles

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