Singapore’s housing supply is poised to witness a significant influx. More new Housing and Development Board (HDB) flats will be launched in 2025 as the government seeks to address the surging demand for public housing and alleviate affordability concerns.
The Housing Board will launch over 25,000 new flats this year, including approximately 19,600 Build-to-Order (BTO) flats and over 5,500 Sale of Balance Flats (SBF). This marks the largest-ever SBF exercise. These flats will be available in various locations, such as Kallang/Whampoa, Bukit Merah, Queenstown, Mount Pleasant, Woodlands, Yishun, and Sembawang.
Homebuyers can expect a diverse selection of Standard, Plus, and Prime flats under the new flat classification framework.
This substantial increase in housing supply is a direct response to the challenges posed by the COVID-19 pandemic, which triggered construction delays and supply chain disruptions, leading to a backlog of delayed BTO completions.
Concurrently, demand intensified due to demographic shifts and pandemic-related factors, resulting in a surge in resale prices after a period of stagnation. The government is confident that the last batch of pandemic-delayed flats will be delivered to homeowners within weeks.
Some 19,600 Build-To-Order (BTO) flats will be launched in 2025. These flats will be among more than 50,000 units that the Housing Board will launch from 2025 to 2027.
The figures, revealed by Minister for National Development Desmond Lee, will mean that the authorities would have launched around 102,300 new flats from 2021 to 2025, exceeding their target of 100,000 flats.
Supply of BTO Flats
Shorter Waiting Time for BTO Flats
A key feature of the upcoming flat supply is the emphasis on shorter waiting times. Approximately 3,800 flats, nearly 20% of the total BTO supply, will have waiting times of under three years. This represents a significant increase from the 2,876 shorter waiting time (SWT) flats offered in 2024 and surpasses the government’s commitment of 2,000 to 3,000 SWT flats annually.
This initiative is expected to provide much-needed relief to first-time homebuyers eager to establish their homes.
Affordability Concerns
Despite the government’s efforts to boost supply, affordability remains a key concern. Resale flat prices continued their upward trajectory in 2024, rising by 9.6%, following a 4.9% increase in 2023. The surge in demand, coupled with limited supply, has fuelled price escalation, raising concerns about affordability, especially for first-time buyers.
To mitigate this, the government has introduced various measures, including cooling measures and enhanced grants for first-time buyers.
The government is closely monitoring the property market and is prepared to implement additional cooling measures if necessary. The goal is to ensure that the property market remains stable and aligned with economic fundamentals, preventing the formation of a property bubble.
National Development Minister Desmond Lee emphasised the government’s careful approach to market intervention, acknowledging the significant impact on people’s homes and assets.
Property Cooling Measures
Several cooling measures have already been implemented to curb price increases in both the HDB resale and private property markets. These include:
- Lowering the loan-to-value limit for HDB housing loans from 80% to 75% in August 2024 to moderate demand at the higher end of the HDB resale market.
- Imposing a 15-month wait-out period for private homeowners seeking to purchase a resale flat, introduced in September 2022.
- Raising Additional Buyer’s Stamp Duty (ABSD) rates in April 2023 for Singaporeans and permanent residents acquiring their second and subsequent properties. The ABSD rate for foreigners purchasing any residential property was doubled from 30% to 60%.
These measures aim to dampen demand and stabilise the market. The government is currently assessing their effectiveness and will consider lifting the temporary measures once the market stabilises.
Private Residential Prices Remain Elevated
In the private residential market, home prices rose by 3.9% in 2024, a slower pace compared to the 6.8% gain in 2023. This slowdown can be attributed to the cooling measures implemented and the build-up of unsold homes.
Developers are exercising greater caution in their bids for Government Land Sales sites. However, prices remain elevated compared to pre-pandemic levels, and the government continues to monitor the private market closely.
Some of the recent and upcoming private property launches include Union Square Residences, One Sophia, Elta, Parktown Residence, Aurea, W Residences – Marina View, and Arina East Residences.
Psychological Impact of Million-dollar Resale HDB Flats
The government acknowledges the psychological impact of rising resale prices on affordability perceptions.
The emergence of million-dollar resale flats, although a small proportion of overall transactions, has created a perception among sellers that they can command higher asking prices. This sentiment also fuels anxiety among buyers, driving them to secure flats despite high prices, fearing further price escalation.
New HDB Flat Classifications Seek to Ensure Fairness
To address affordability concerns and ensure equitable access to attractive locations, the government has implemented a new flat classification system.
This system categorises BTO flats into Standard, Plus, and Prime categories based on factors like proximity to the city centre, amenities, and transport connectivity.
Prime and Plus flats are subject to greater subsidies and resale restrictions, including a 10-year Minimum Occupation Period (MOP) and a subsidy clawback upon resale. These measures aim to make flats in desirable locations more affordable.
Impact of Property Cooling Measures Uncertain
Looking ahead, the government remains committed to providing affordable and accessible housing options for all Singaporeans.
The substantial hike in HDB flat supply, coupled with cooling measures and affordability initiatives, signals the government’s proactive approach to addressing housing challenges.
However, the long-term impact of these measures on the property market remains to be seen. Homebuyers and investors are advised to exercise prudence and make informed decisions considering the evolving market dynamics and potential risks associated with high prices.
