SINGAPORE - It will take about two years to clear the current backlog of delayed Build-To-Order (BTO) flats, but there are early signs that both the resale and rental markets are slowing down, said National Development Minister Desmond Lee.
“It’s still early days, but we’re beginning to see some possible plateauing of resale prices. Sellers are seeing a little bit more price resistance (from buyers). We see that (happening) on the resale side and also on the rental side,” said Mr Lee, in a wide-ranging interview with The Sunday Times on March 20.
The developments come as two rounds of cooling measures – introduced in December 2021 and September 2022 – are still working their way through the market, he said.
The latest round includes a 15-month waiting period for private property downgraders who want to buy an HDB resale flat; a move aimed at moderating demand for flats.
Significant progress has also been made in clearing the backlog of BTO projects delayed by Covid-19-related factors, as the Housing Board ramps up construction, said Mr Lee.
As at March 2023, HDB has completed about 60 per cent of delayed BTO projects – or 55 projects – over the past two years.
In 2022, more than 20,000 flats were completed and around 17,000 sets of keys were issued to buyers – a 15 per cent increase from the year before.
“That is significant progress, but the work is not yet done. It will take probably about another two years before we clear all the projects that have been delayed by the pandemic,” he said.
More new flats are in the pipeline as the HDB is on track to launch up to 100,000 flats between 2021 and 2025, said Mr Lee.
Part of that includes launching more BTO flats with shorter waiting times of under three years from 2024 onwards, he added. Around 2,000 to 3,000 of such flats will be rolled out each year by 2025, similar to pre-Covid-19 levels.
At the peak of the pandemic, the waiting time for a BTO flat was around four to five years, up from the pre-pandemic norm of three to four years.
“The median waiting times last year and this year had been affected... by Covid-19-delayed projects. But with the resumption of some normalcy and BTO flats with waiting times under three years commencing again, we aim to bring down the waiting times and give people the assurance that they don’t have to wait too long for their flats,” said Mr Lee.
Another pain point on the ground has been the high BTO application rates, which have risen sharply since 2020. This has led to grouses among potential home-seekers who are unable to secure a unit.
Mr Lee noted that BTO application rates have started to moderate in the last two sales exercises, with the latest February launch drawing fewer first-timer applicants compared against launches in the last three years.
His ministry will continue to keep an eye on the first-timer application rates in the coming launches, he said.
Mr Lee noted that when flats are launched in popular areas or where there have not been BTO launches for a long time, there will be interest.
In the upcoming May sales exercise, new flats will be launched in the mature estates of Bedok and Serangoon, that have not had new flats for seven and nine years respectively.
BTO launches typically happen four times a year in February, May, August and November.
The sharp spike in BTO application rates since 2020 was partly pandemic-induced as potential buyers saw construction numbers go down and waiting times go up, leading some to bring forward their applications, said Mr Lee.
“People were worried about whether they can get housing. They saw resale prices go up and that drove a certain psychology. It’s perfectly understandable because of the crisis,” he said.
But it could have easily gone the other way, noted Mr Lee, adding that previous crises have caused demand to evaporate and markets around the world to crash.
While there are challenges ahead in terms of finite fiscal and land resources, Mr Lee gave the assurance that the Government is committed to meeting Singaporean’s housing aspirations.
“Housing a nation has become part of our psyche, our social compact. While we keep addressing challenges that we face, fixing problems and improving our public housing system so that it remains relevant for Singaporeans today and tomorrow, we must continue to ensure that housing remains affordable and accessible,” he said.