Lower application rates for February 2023 BTO exercise

The February 2023 Build-to-Order (BTO) exercise saw 4,428 flats launched for sale on Feb 28, which closed yesterday at 11.59pm.HDB data updated as of 5pm on Mar 6 show that the number of applicants stood at 15,234, making for an application rate of about 3.44 times. This is lower than the other BTO launches last year in February, May and August, and higher than the 2.5 application rate registered in the November 2022 BTO exercise.Lee Sze Teck, Huttons Asia’s senior director of research, notes that this is the lowest number of applicants since September 2019, when the number of applicants was 7,179.

Ismail Gafoor, CEO of PropNex Realty, believes the more measured response to the latest launch stems from some buyers choosing to wait for other projects that better suit their needs. He anticipates that pent-up demand will also be present for upcoming projects in May, which will mark the first BTO launches in Bedok and Serangoon in the last seven and nine years respectively.Furthermore, Gafoor points to the Budget measures targeted at helping first-time homebuyers, which include higher CPF housing grants for eligible first-time buyers, as having had an impact and likely channelling some demand into the resale HDB flat market.

Nicholas Mak, head of research and consultancy at ERA Singapore, opines that the announcement of tighter rules for buyers who do not book a BTO flat when invited, as well as greater priority for First-Timer (Parents & Married Couples) or FT(PMC) applicants, has prompted buyers to be more careful about which BTO projects they apply for.

The BTO projects under the February launch that saw the strongest demand are the two projects located in the mature Kallang and Whampoa estate, which include a Prime Location Public Housing (PLH) project. Together, the projects garnered an overall application rate of about 4.16 times for the 1,784 flats available. The other PLH project, located in the mature Queenstown estate, saw an application rate of 3.31 times for the 723 flats available. Meanwhile, the two projects in non-mature estates – Jurong West (271 units) and Tengah (1,641 units) – had an application rate of 2.73 and 2.84 respectively.

Gafoor notes that application rates among first-timer families were relatively low, with HDB data showing a median application rate of 0.3 times for two-room flexi flats across all projects and 1.8 times for three-room and bigger flats. He anticipates that many first-timer families stand a good chance of securing a BTO flat.

On the other hand, application rates among second-timer families were much higher, especially for larger flats in the mature estates, which saw rates crossing 30 times.

Overall, the results of the February 2023 BTO exercise appear to indicate that application rates are stabilising and adjusting back to the levels seen before the Covid-19 pandemic. Furthermore, the increased grants and enhanced policies for first-time homebuyers, along with the announcement of upcoming projects in mature estates, have prompted buyers to be more careful in selecting which projects to apply for. Consequently, first-timer Tengah EC families stand a good chance of securing a BTO flat, while second-timer families face significant competition.