Hot HDB resale market, higher building costs pushing BTO prices closer to million dollar mark: Analysts

SINGAPORE — On the rise since 2015, prices of Built-to-Order (BTO) flats have picked up pace over the last three years in light of a hot Housing and Development Board (HDB) flat resale market, growing construction costs and more BTO project launches in pricier, central areas.

It is only “a matter of time” before Singapore sees its first million-dollar BTO flat, property analysts told TODAY, although this is unlikely anytime soon and is contingent on how long the Government wants to keep BTO prices below market value with subsidies.

BTO flats are newly launched flats that are generously subsidized by HDB to cater to first-time home buyers.

In setting BTO flat prices, the HDB looks at comparable resale prices in the area, as well as factors such as market conditions, then applies a significant subsidy to ensure these flats are affordable.

New BTO flats have seen strong demand in recent years and have also boasted high launch prices. The recent Central Weave @ Ang Mo Kio BTO, launched last month, saw BTO prices almost touch S$900,000, with its maximum price for a five-room flat costing S$877,000.


Data from real estate technology firm showed that the median prices of BTOs across all room types have been on the rise since 2015, with steeper increases posted since 2019.

For example, the median starting price of a four-room BTO flat was S$272,000 in 2015, S$309,000 in 2019 and S$381,000 this year so far.

The trend is similar for five-room BTO flats, with the median starting price at S$370,500 in 2015, S$412,000 in 2019 and S$420,000 as of this year.

On a compound annual growth rate basis, the median starting price of three-room BTO flats has posted the largest rise of 6.5 per cent, followed by four-room flats (4.9 per cent) and five-room flats (1.8 per cent).

Figures provided by property firm PropNex showed that four-room flats in Marsiling Grove and Woodlands Spring in Woodlands, a non-mature estate, had an indicative price range of S$236,000 to S$318,000 when they were launched in May 2017.

However, the four-room flats in Woodlands South Plains offered for sale in August 2022 have a higher price range of S$303,000 to S$363,000.

In Geylang, a mature estate, four-room flats in Pine Vista and Dakota Breeze, launched in May 2017, were priced at S$489,000 to S$604,000, while the four-room units in Dakota Crest which was launched in February 2022 had an indicative price range of S$522,000 to S$688,000.


One reason for the rising prices in BTO flats is the buoyant resale market for HDB flats, said property analysts.

As the valuation of BTO flats is tied to the prices of surrounding resale flats, the price of BTOs rise in tandem with the resale market, said Ms Christine Sun, the head of research and consultancy at property firm OrangeTee & Tie Research & Analytics.

The spike in starting median BTO prices from 2019 onwards could also be due to the fact that recent BTO launches have been in central areas such as Kallang/Whampoa which tend to command higher prices, said Mr Pow Ying Khuan, the head of research at 99 .co.

Increased construction costs, due to the widespread disruption in the global supply chain caused by the Covid-19 pandemic, also contribute to higher BTO prices, he added.

The analysts said that the prices of BTOs also depend on many other factors, including location, floor levels, size and the direction in which the flat faces.

Nevertheless, BTO flats remain affordable to buyers despite climbing prices because housing grants have become more generous over the years, said Mr. Pow.

He cited the example of the Enhanced Housing Grant introduced in 2019, which gave first-time buyers with household incomes of up to S$9,000 a month, subsidies of between S$5,000 and S$80,000.

These subsidies are higher than those afforded under the previous grant scheme which disbursed subsidies of up to S$40,000 for first-time home buyers with household incomes of up to S$8,500 and wished to buy four-room or smaller new flats in non-mature estates .


With resale HDB flats going for S$1 million with increasing frequency, and the recent BTO launch at Ang Mo Kio coming in at the high end of S$800,000, could Singapore see BTO flats breaching the S$1 million mark?

While such a scenario will not happen in the near future, Mr. Nicholas Mak, head of research and consultancy at ERA Realty Network, said that it is “only a matter of time”.

This is because inflation, energy, construction and land costs are on the rise and will drive up BTO prices as well.

Property analysts said that BTO flats launched in prime and central locations such as Bukit Merah, Bishan or Greater Southern Waterfront were likely to be the first to break the million-dollar mark if and when that happens.

Such pricey BTOs would appeal to middle or upper-middle class working professionals who marry later in life and have significant savings to afford the hefty price tag, said Mr. Mak.

When BTO prices eventually touch S$1 million would depend on how long the Government wishes to subsidize BTOs and sell them below cost.

HDB does not profit from the sale of flats, with the proceeds from its sale of flats less than the development cost of new flats. The agency incurred a deficit of S$3.85 billion in the last financial year.

However, the Government will continue to keep BTO flats affordable in non-central and non-mature estates such as in Jurong or Woodlands, said Mr. Mak.

Similarly, Mr Pow of said that while the Government cannot keep the cost of BTOs from appreciating indefinitely, there will be strong resistance from multiple parties to keep flats from reaching S$1 million in price.

“This is because psychologically, the price tag is not something that can be easily accepted by many as it may mark a new milestone for BTO prices to run further upwards. Thus, it could be a while before we see that happen,” he said.

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