Dec 03, 2013

    Supply of new HDB flats to taper off from 2014

    The Straits Times

    THE supply of new flats will be tapered off from next year

    , Minister for National Development Khaw Boon Wan said yesterday.

    His comments came at the close of the Housing Board's largest launch of Build-To-Order (BTO) and balance flats.

    A three-year period of ramped-up supply, which has seen more than 77,000 BTO flats launched, has "begun to restore the balance in our housing market", Mr Khaw wrote on his ministry's blog.

    He noted lower cash premiums in the resale market and falling application rates for new flats as signs of this new balance.

    The average BTO application rate was 2.9 per flat this year, down from a high of 5.3 in 2010.

    Although no figure was given, he added that the tapering off will be done "in a measured way to allow the market to gradually adjust".

    ERA Realty key executive officer Eugene Lim expects the pace of building to take the cue from the marriage rate. As previously unmet demand is fulfilled, first-time married couples will once again drive demand for new flats.

    OrangeTee head of research Christine Li believes the Government will look to build around 18,000 new flats a year.

    Meanwhile, the November BTO launch met with a lukewarm response ahead of its close at midnight last night.

    As of 5pm yesterday, there were 1.2 first-timers applying for each BTO flat. The rate for second-timers was 2.4, down from a high of 25.9 in November 2011, noted Mr Khaw.

    Demand from singles remained strong, with more than 25 vying for each two-room flat.

    But Mr Khaw added that this was down from the rate of 57.5 in July, the first time singles were allowed to buy new flats.

    Analysts said the overall low demand was unsurprising, given the large joint launch, with balance flats - those remaining from previous launches - usually siphoning off some BTO demand.

    The BTO flats are also in non-mature estates and not very attractive locations, they added.

    First-timer Siti Hajaar, 26, expected little competition when she and her husband applied for a five-room flat in Jurong West. But she did not expect there to be more such units than buyers, as was the case last night.

    "Hopefully, the chances of us getting a flat are higher," she said.

    Meanwhile, there were under four applicants for each balance flat, compared to eight per flat in the previous launch in May.

    R'ST Research director Ong Kah Seng said this showed "quite keen interest" in balance flats, but this could cool further as resale prices fall.

    Mr Khaw's announcement follows figures released recently by the HDB showing that the number of Housing Board flats being sold below valuation has rocketed, as tighter mortgage rules eat into demand.