New two-room flats: Few singles likely to bite

Size, location and waiting time not attractive, say analysts

SINGLES can apply for two-room Build-To-Order (BTO) flats for the first time starting this month, but property analysts predict that not many will take advantage of the policy change.

This is because the units are small, in non-mature estates and could take three years before they are ready to be occupied.

Analysts point to the fact that singles have been picking up resale units since March, when the policy tweak was announced.

Latest figures from the Housing Board show 22 per cent of resale flat buyers applied under the Singles scheme from March to June, up from 20 per cent in the same period last year.

This indicates that many singles may not be holding out for new two-room units, which reportedly come in just two sizes - 375 sq ft and 485 sq ft. They would also be limited to non- mature estates such as Sengkang in the upcoming launch.

These flats, which may cost $100,000 without grants, would be first made available to singles at the HDB's next launch at the end of the month.

ERA Realty's key executive officer Eugene Lim said singles seem to prefer three-room flats, which are about 700 sq ft.

"This group typically buy three-roomers to fit their lifestyle, if they can afford it. They are also conscious of the location, which needs to be attractive enough," he said.

Singles who want to buy a new HDB flat need to be at least 35 years old, and earn no more than $5,000 a month. Eight in 10 working singles, or 150,000 Singaporeans, are expected to qualify.

PropNex chief executive Mohamed Ismail said that a person earning close to $5,000 could get a mortgage of around $350,000 and be able to afford three-room resale flats in most estates.

OrangeTee's head of research and consultancy Christine Li also said that while resale flats are available immediately, BTO flats take a while to be completed. "Applicants would be close to 40 by the time they get their keys."

But there are reasons why some singles will opt for a new unit. "In terms of value, it still beats a shoebox condo unit," said Ms Li.

Mr Ismail added: "Singles who will go for the new two-room flats are likely those who are earning about $2,000 or so. They will not have to pay any cash premium, and the monthly payments are small."

Cash premiums are what buyers pay above a resale flat's valuation to help seal the deal.

Previously, singles could only buy in the resale market, and had to contend with possibly more affluent permanent residents and citizens who had already enjoyed a government housing subsidy.

Marketing executive Michael Chan, 36, is in two minds whether to apply for a BTO two-room flat at the end of this month, when the HDB has its next launch.

"It seems like a good deal for us singles to start owning property at subsidised prices at the outset, but the better flats are still reserved for young families. I'm hoping there might still be room for further policy changes in the coming months," he said.

Typically, two-room flats are reserved for lower-income households. According to the Housing Board, it has launched 4,418 two- roomers since 2006. A spokesman added that the agency would consider building more two-room flats if there is strong demand.