Lower application rates for February 2023 BTO exercise

SINGAPORE (EDGEPROP) - The February 2023 Build-To-Order (BTO) exercise, which saw 4,428 flats launched for sale on Feb 28, closed yesterday at 11.59pm. HDB data updated as of 5pm on Mar 6 show that the number of applicants stood at 15,234. “This is the lowest number of applicants since September 2019, when the number of applicants was 7,179,” remarks Lee Sze Teck, Huttons Asia’s senior director of research.

The number of applicants works out to an application rate of about 3.44 times. This is higher than 2.5 application rate registered in the November 2022 BTO exercise, when a bumper supply of 9,655 flats was launched for sale.

However, it is lower than the other BTO launches last year in February, May and August, where application rates ranged from 5.8 to 7.8 times. “It seems like the application rates are stabilising and adjusting back to the levels seen before the Covid-19 pandemic, which should give some comfort to applicants,” notes Ismail Gafoor, CEO of PropNex Realty.

Gafoor believes the more measured response to the latest launch stems from some buyers choosing to wait for other projects that better suit their needs. “Some applicants may be eyeing flats in mature estates Bedok and Serangoon which will be launched in the May 2023 BTO exercise,” he comments. “We anticipate there’ll be pent-up demand for these upcoming flats as well as strong interest for the five-room units there.

The upcoming projects in May will mark the first BTO launches in Bedok and Serangoon in the last seven and nine years respectively.

Gafoor highlights that Budget measures targeted at helping first-time homebuyers have also had an impact. “The higher CPF housing grants for eligible first-time buyers could have channelled some demand into the resale HDB flat market, leading to what we think is a moderate application rate in this BTO exercise,” he explains.

More recently, the government announced tighter rules for buyers who do not book a BTO flat when invited, as well as greater priority for First-Timer (Parents & Married Couples) or FT(PMC) applicants. The new rules will take effect from the August BTO exercise.

Nicholas Mak, head of research and consultancy at ERA Singapore, views that the announcement has prompted buyers to be more careful about which BTO projects they apply for. Applicants that fall under the FT(PM&C) category may also be targeting future launches when they will have a higher chance of getting flats in locations of their choice.

The BTO projects under the February launch that saw the strongest demand are the two projects located in the mature Kallang and Whampoa estate, which include a Prime Location Public Housing (PLH) project. Together, the projects garnered an overall application rate of about 4.16 times for the 1,784 flats available.

The other PLH project, located in the mature Queenstown estate, saw an application rate of 3.31 times for the 732 flats available. Meanwhile, the two projects in non-mature estates – Jurong West (271 units) and Tengah (1,641 units) – had an application rate of 2.73 and 2.84 respectively.

Gafoor observes that application rates among first-timer families were relatively low, with HDB data showing a median application rate of 0.3 times for two-room flexi flats across all projects and 1.8 times for three-room and bigger flats. “Many first-timer families stand a good chance of securing a BTO flat,” he anticipates. (Find HDB flats for rent or sale with our Singapore HDB directory)

In contrast, application rates among second-timer families were much higher, especially for larger flats in the mature estates, which saw rates crossing 30 times.