Evolving Build-To-Order (BTO) Flats
As land-scarce Singapore continues to develop and progress with time and technology, more land is being utilized. New plans are made in advance to keep up with these developments. Undeveloped areas are revitalized by new roads, rezoning of land use, and the construction of new public transportation systems. The distinction between new Build-To-Order (BTO) in mature and non-mature estates is becoming increasingly blurred. Previously undeveloped areas like Punggol and Sengkang are now equipped with well-connected roads, public bus interchanges, amenities, and high-rise buildings.
The Mature Estate & Non Mature Estate
Since 1992, housing estates in Singapore have been classified as either Mature or Non-Mature. Mature estates are areas where there is limited vacant land, and amenities are well established. These estates typically attract higher demand from new home seekers because of their comprehensive infrastructure. The transportation networks in these areas are usually well-developed.
In contrast, non-mature estates are in less developed areas. These estates may have land that is still under construction or vacant without concrete development plans. Demand in non-mature estates is slightly lower because infrastructure and accessibility are not yet fully developed. These estates are often not close to Singapore’s central business district. Meaning residents may have longer commutes to work and for daily necessities. As a result, housing in these estates is less in demand but is priced more affordably.
There is a total of 27 HDB towns and estates. Fifteen are classified as mature estates, while the remaining twelve are non-mature.
Introduction of New Build-To-Order (BTO) Housing Classification
During the National Day Rally 2023, a new BTO estate classification system was announced to be implemented in the second half of 2024. A new Build-To-Order (BTO) system will be divided into three categories: Standard, Plus, and Prime. It will replace the former mature and non-mature estate classification. This new system will better reflect the locational attributes of BTO projects.
It was also announced that more public housing will be built within existing estates and in more central areas. New flats in prime locations are expected to be more popular and priced higher. To ensure affordability, stricter purchase eligibility conditions and subsidized rates will be introduced for buyers of these choice-location flats.
Standard Flats
Standard flats will be available in most locations across Singapore and represent the majority of housing options. Eligible buyers will receive a standard subsidy and must fulfill a minimum occupancy period (MOP) of 5 years.
Plus Flats
The Plus Flats category is a new addition to the classification system, debuting in the October 2024 HDB BTO launch exercise. These flats will be located closer to transportation hubs and town centres. Eligible buyers will receive a higher subsidy compared to those purchasing Standard Flats, but these flats will also be priced higher.
Purchasers of Plus Flats will face stricter conditions, including a longer MOP of 10 years and a subsidy clawback clause upon selling the flat in the resale market for the first time. Additionally, resale buyers must meet an income ceiling, currently set at $14,000 per month. Further details about this flat type will be revealed closer to the first launch, later in 2024.
Prime Flats (PLH)
Also known as Prime Location Public Housing (PLH), this is the top-tier classification and likely the most in-demand flat type. Prime Flats are located in city centre and key transforming locations in Singapore, such as the Greater Southern Waterfront. These flats were first introduced in November 2021 with the Rochor BTO project. The last Central Area public housing launch before that was in 2004 with the Pinnacle@Duxton.
Prime locations come with higher entry price tags, but these flats will also offer the highest subsidy among the three types, ensuring affordability for eligible buyers. However, the tightest restrictions apply, even after the 10-year Minimum Occupancy Period (MOP). For instance, the entire flat cannot be rented out at any time.
Buyers of Prime Flats on the resale market must meet prevailing BTO eligibility criteria, such as household income limits. Additionally, a subsidy clawback clause applies if the owners sell these flats in the resale market for the first time. The subsidy recovery rate was initially set at 6% when the scheme was launched, then adjusted to 8% in December 2023, and most recently to 9% in June 2024.
Below is one of the Prime Flats BTO launch sites located right in front of Principal Garden, Alexandra Peaks.
Private New Launch Properties Classification
Distinct Regions and Districts
Different from Public Housing Flats (HDB), private new launch developments in Singapore are classified by regions, specifically the Central Region and the Outside Central Region (OCR). Within the Central Region, there is further differentiation into the Core Central Region (CCR) and the Rest of Central Region (RCR). The Core Central Region is highly sought after, as it typically features the most luxurious developments.
These regions are further divided into districts, numbered 1 to 28. Some larger districts may span two different regions, which can also impact property values. For instance, District 2 is partly within the Core Central Region (CCR) and partly within the Rest of Central Region (RCR). Similarly, properties in Districts 14 and 20 may fall within both the RCR and OCR.
The demand for these new launch properties is primarily driven by their regional location and property tenure. As the names suggest, CCR properties are located in the main core business area of Singapore, where transportation and infrastructure are well-developed, and amenities are readily available. Residential addresses in these areas often convey a sense of higher quality and social status.
Property Lease Tenure
Unlike public housing flats, which come with a 99-year leasehold tenure, private residential properties offer variation of leasehold tenures. These can range from 99 years, 102 years, 956 years, or even 999 years. Additionally, private residential properties are available in freehold tenure, which is highly sought after. Properties with longer tenure can be passed down through generations, making them a more attractive option for both living and investment.
Benefits of the Improved New Public Housing Framework
The new flat classification and stricter regulations will apply to BTOs launched from the second half of 2024 onwards, without affecting existing flats. These newly classified flats will only enter the resale market some years later, taking into account the time required for construction and the Minimum Occupancy Period (MOP) before owners can sell their flats on the resale market.
As Singapore continues to grow, the areas around towns and city centre will progressively improve. Both flats under the new classification and those under the old classification will benefit from these developments. Future enhancements in amenities, newly built infrastructure, and the adoption of newer technologies in established towns and centers will bring value to these areas. Prime locations will evolve and be redefined as Singapore progresses.
Ownership Mobility
The new BTO classifications may drive up prices for older flats in prime locations, as these existing flats have fewer restrictions, such as standard 5 years MOP period and fewer constraints on renting out entire units. Additionally, the availability of new flats will provide existing homeowners with an opportunity to upgrade and relocate to a new flat within the same estate. This new framework allows HDB owners more mobility within the market, enabling upgrades from Standard to Plus flats or from Plus to Prime flats.
Affordability
These new regulations could help regulate resale housing prices and discourage speculative buyers from using these flats purely for investment purposes, particularly in the case of Prime flats. This would also be fairer to those who missed out on their chance during the initial ballot.
The extended MOP will also slow down the upgrading timeline for HDB owners, who are a significant demand driver for new private home launches. This could help moderate prices in the private housing sector as well.
In the long run, the new framework aims to keep public housing prices affordable and promote a better social mix, particularly in prime locations. Different social classes and income groups will be more evenly distributed across the island.
With the new subsidies and increased opportunities for all Singapore residents to own their dream homes, public housing flats will remain a popular choice. The high homeownership rate in Singapore reflects the government’s careful long-term planning to ensure all citizens can afford suitable housing at every stage of life.
