Launch of new flats marks record supply: Nov 2012 BTO

New projects raise supply this year to 27,084; HDB underlines affordability

By Daryl Chin, The Straits Times, 22 Nov 2012

THE Housing Board has launched almost 6,500 new Build-To- Order (BTO) flats in five towns, making this another record year in terms of public housing supply.

The offerings announced yesterday are in three mature estates - Ghim Moh, Toa Payoh and Bedok - and the two newer estates of Choa Chu Kang and Sengkang.

With the rollout of 6,463 new units, the total number of BTO flats made available this year will reach 27,084 - the highest since the system was introduced in 2002.

Together with another 7,153 unsold "balance flats" that were relaunched for sale, this year's total supply comes to 34,237 flats.

Prices for a three-room flat start from as low as $146,000 - excluding housing grants - in Choa Chu Kang.

Yesterday, the HDB highlighted the affordability of these and other flats on offer.

It said that a typical applicant, who has a monthly household income of $4,000 and qualifies for a $15,000 housing grant, will need pay just $11 in monthly cash instalment for a $275,000 four-room flat at Keat Hong Mirage in Choa Chu Kang - after deductions from the Central Provident Fund.

National Development Minister Khaw Boon Wan said in Parliament last week that new flats - the bulk of which are reserved for first-time applicants - were still affordable for them.

He noted that the prices for new HDB flats had risen by 12 per cent, compared to the 34 per cent rise in the HDB resale price index since 2009.

Buyers will have to pay more, however, for flats in mature estates, with the cost of a four- room flat in Ghim Moh ranging from $450,000 to $594,000. A five-room unit in Bedok costs between $471,000 and $537,000.

Still, property analysts said the latest prices in this launch showed the HDB's consistency in keeping prices relatively stable. ERA Realty key executive officer Eugene Lim said the new flats are priced at a considerable discount, given the upbeat property market which has seen some resale units fetching up to a million dollars.

He said a resale four-room flat in Ghim Moh, which is about a decade old, can fetch $600,000 to $670,000 now.

"Although buyers have to wait about three years for their flats to be completed, they will get a brand new flat and skip paying a cash premium, which has to be paid upfront," he said.

Data collated from various agencies showed that these premiums - known as cash-over-valuation or COV - have now climbed to a median of $33,000 nationwide, up from $30,000 in the third quarter of this year.

PropNex chief executive Mohamed Ismail said, however, that buyers should also spend within their means.

"HDB prices are affordable only if one decides to pick up a unit in outlying estates. The message is this: HDB does provide affordable homes if one is realistic in the choice of location," he said.

Dennis Wee Group spokesman Lee Sze Teck said the ramped-up flat supply will divert some attention from the red-hot resale market which has achieved record highs this year.

"Prices will be further moderated in the coming years, given the number of flats that are expected to hit the market," he said.

The HDB launched 25,000 BTO flats last year, and plans to offer at least 20,000 more next year. Applications close next Tuesday.