SINGAPORE, July 26 — Demand for new public housing flats in mature estates is likely to remain strong, which could lead to the prices of resale units in these areas trending upwards, some property experts have said.
Yesterday, the Housing and Development Board (HDB) said that the number of new public housing projects in mature estates increased by almost 50 per cent, from nine in 2017 to 13 in 2020.
The proportion of these new flats 一 known as Build-to-Order (BTO) 一 in mature towns increased from 44 per cent to 55 per cent over the same period.
This is because of the strong demand for housing in older residential areas of Singapore, which include estates such as Queenstown, Clementi, Bukit Merah, Bishan, Ang Mo Kio, Toa Payoh and Tampines.
While BTO projects are usually oversubscribed, with more than one household applying for one unit, HDB revealed that the application rates for projects in mature estates are not only higher, but have increased more than those in non-mature estates.
Between 2017 and 2020, the application rates for BTO projects in mature estates increased from 2.8 times in 2017 to 6.7 times in 2020. For non-mature estates, the application rates rose from 2.1 to 4.8 over the same time period.
Despite the Government trying to cater to that demand by launching more BTO projects in older residential estates, Ken Low, managing partner of real estate agency SRI, said that future BTO launches in these areas will “still be hotly contested”.
“Those who are unable to secure a unit will spill over to resale HDB flats in these areas or resale or new private residential with support from parents,” he said.
Low said such a trend has driven up HDB resale prices, especially those in mature estates, and led to an increase in the valuation of these areas.
On Friday, flash estimates from the housing agency showed that resale prices climbed 3 per cent in the second quarter of this year, its fifth consecutive quarter of increase.
“BTO prices will inch up higher in line with the increased valuation of the surrounding resale flats, but they will still remain as the most attractive option for these buyers,” said Low.
Property experts generally agree that it will be very challenging for the Government to meet the demand for flats in mature estates, in the short term at least.
How demand can be met
One way is to redevelop older housing estates through the Selective En bloc Redevelopment Scheme, but there is a limit to how much land can be recycled through this programme.
Nicholas Mak, head of research and consultancy at ERA Realty, said redeveloping older estates also opens up another issue of relocating existing residents.
However, Lee Sze Teck, director of research at real estate firm Huttons Asia, said the popularity of public housing in mature estates seems to be only apparent for BTOs.
Based on his research, the picture is more mixed for HDB resale transactions.
In the last quarter, Punggol, Sengkang and Woodlands were among the top five housing estates for resale transactions. All three are non-mature estates. The other two are Tampines and Bedok.
Lee suspects that one reason BTO projects in mature estates are more popular is an increasing number of resale homes in mature estates transacting at over a million dollars.
“It could be why it got people gravitating, hoping that theirs could be the next million dollar flat,” he added.
Property experts noted that the authorities have put in a significant amount of effort to attract home buyers to non-mature estates.
This includes incorporating smart features, such as the smart car park in Punggol and the centralised cooling system in Tengah, said Lee.
Mak said more MRT lines are being built to improve accessibility to these non-mature estates.
However, the environmental impact of these train lines crops up, such as the Cross Island Line having to cut across the Central Catchment Nature Reserve.
One way to drive more demand to non-mature estates is to move popular schools to these areas, said Lee.
For example, Mee Toh School moved from Kallang to Punggol in 2005, while Nan Chiau Primary School shifted from River Valley to Sengkang in 2001.
Another way, said Mak, is to widen the price difference between BTO projects at mature and non-mature estates.
However, this poses problems as well. If prices of BTO flats in non-mature areas are lowered, this means taxpayers monies are being spent on higher subsidies. The public would also complain about high prices in mature estates, he said.
“There will always be a price to be paid for any of these methods,” said Mak.
Low said the Government releasing concrete development plans of non-mature estates for the next 10 to 15 years could help give confidence to buyers on the upcoming resale potential of these areas.
“The current generation of buyers are often knowledge-seeking and well informed. They tend to look into potential areas even though they may yet to be developed,” he said.
Knowing about the potential higher resale prices of flats in non-mature estates may serve as a motivation for some buyers to forgo the benefits of living in mature estates, he added.
However, Ismail Gafoor, the chief executive officer of real estate agency PropNex, said no matter how much the authorities develop non-mature estates, one thing deterring home buyers is the time spent travelling due to its distance from the city centre.
“Whatever you provide, it still doesn’t provide the convenience of (living in) Toa Payoh, Telok Blangah and Bukit Merah. That is something you can’t solve,” he said. — TODAY
