Singapore sees significant demand for larger flats in mature estates

Competition is tough for units in Ang Mo Kio and Geylang.

According to Ismail Gafoor, CEO of PropNex, generally, the response to the August 2020 Build-To-Order (BTO) exercise has been very encouraging with a total of 41,306 applications for 7,862 flats – which translates to an application rate of 5.3 times – among the highest application rates in recent years. However, the demand was uneven, with larger flats in mature estates – specifically Ang Mo Kio and Geylang - facing extremely stiff competition, despite their bigger price tag.

In particular, there were nearly 22 applicants vying for each 5-room unit in Kebun Baru Edge, while in Dakota One, about 19 applicants are competing for every 4-room flat. The huge number of applications received for the 5-room flats in Kebun Baru Edge perhaps also reflects the fewer units available (only 140 units) compared with comparable flat types in other BTO projects. Drilling down the numbers, PropNex also notes that there was strong interest among second-timers (upgraders) in these abovementioned flat types in Ang Mo Kio and Geylang.

"We had expected Kebun Baru Edge in the popular Ang Mo Kio and Dakota One in the city fringe to stand out. Their attractive locational attributes – near MRT station, amenities, and schools - and perhaps their potential for healthy capital appreciation in the future are not lost on the prospective buyers, who may have looked at the HDB resale prices in those areas. We believe the changes to housing policies in September last year have helped to enlarge the pool of potential HDB flat buyers and further improve affordability, especially for larger flats. These changes were the new Enhanced CPF Housing Grant of up to $80,000 with no restrictions on the choice of flat type and location, as well as the increase in monthly household-income ceiling from $12,000 to $14,000 for eligible families," notes Gafoor.

The higher demand for larger units is not surprising as young couples plan for their future and space requirements accordingly. They would have considered factors such as: when they are planning to have children; perhaps having some space for a small home-office; having their parents move in when they grow old; or even setting aside a spare room for a domestic helper.

Looking at the broad trends, Gafoor says that convenience and connectivity remain key priorities for home buyers. The BTOs – Keat Hong Verge in Choa Chu Kang, Tampines GreenGlade, Tampines GreenCrest, Tampines GreenOpal - that are further (estimated at 700m or more) from MRT Stations had lower application rates for flats 3-room and above.

"Anecdotally, there may be potential buyers who are put off by the longer waiting time for some of the projects, given the construction delays due to the pandemic. It has been reported in the media that UrbanVille @ Woodlands, Costa Grove in Pasir Ris, Bishan Towers, and Parc Residences @ Tengah could take some 4 to 5 years to complete. While there is no way of quantifying it, we reckon some people may have decided against applying for these few projects in view of the long wait."

"For home buyers with more urgent housing needs or fail to get a unit in this BTO exercise, they can also look at the HDB resale market. First-time buyers, in particular, may receive up to $160,000 in housing grants to help fund the purchase. Given the more challenging times, we have observed that HDB owners have also become more realistic and more willing to negotiate on asking prices. Hence, the resale market would offer plenty of options for buyers as well," says Gafoor.