Building-to-Order (BTO) apartments sold within a year of meeting their Minimum Occupancy Period (MOP) increased by 100% between 2016 and 2020, according to HDB data.
It was revealed by the housing agency to TODAY that the percentage of these apartments sold has gradually risen from 6.5% in 2016 to 9.5% in 2017 and 18.8% in 2018.
There will be a 12.2% increase in 2019 and a 13.4% increase in 2020.
This year’s proportion of sales comprises apartments that began their MOP in 2015 and were sold by the year’s end on August 31.
Owners of BTO apartments must inhabit their properties for a minimum of five years before being able to resell them on the public market.
Several factors have been ascribed by real estate experts to the tendency of selling BTO apartments within a year after reaching MOP.
PropNex Realty’s CEO, Ismail Gafoor, said that it’s because a new generation of property owners continues to choose to live in their private homes rather than in public housing.
Christine Sun of OrangeTee, noted that the trend is also in line with the increasing number of Singaporeans that prefer to live in private condos in recent years and said that couples looking to upgrade would sell their BTO units earlier because they believe that the flat will fetch a higher price if it has a long lease.
Given the rising costs of HDB resale apartments, some experts think the trend may be caused by newer BTO flats with longer leases.
ERA Realty’s Head of Research and Consultancy Nicholas Mak was cited by TODAY as saying, “Even if they live there for 10 years, the remaining lease would still be very lengthy when they decide to sell it.”
Some homeowners may have sold their homes within a year of the MOP for personal reasons, such as relocating closer to their jobs, their parents’ homes, or their children’s schools, according to analysts.
They found that although BTOs in central or mature estates, or near amenities like MRT stations, cost more at the front, they sell for more money when they reach their MOP price point, according to the authors.
PropNex’s study of resale prices for this year revealed that apartments in mature estates like Bukit Merah and Queenstown, which reached their MOP this year, had higher average resale prices than other flats in the city. The average selling price of a four-bedroom house in Queenstown was $839,711, while the price of a comparable house in Bukit Merah was $855,511.
Resale values were lower in less mature neighborhoods. The average selling price of a Chua Chu Kang four-room apartment that reached MOP this year was $466,032, while the price of a Punggol four-room unit was 502,437.
Sze Teck advised against buying a BTO apartment with the aim of reselling it for profit since this behavior may cause resale prices to rise and create a housing bubble.
This is a bad trend, and the authorities should look into it,” he told TODAY when asked about BTO purchasers’ intentions once they reach the MOP.
The MOP, on the other hand, is designed to prevent HDB apartment owners from reselling their BTOs to make a profit.
HDB told TODAY that the measure “deters speculative HDB unit purchases and helps to maintain these flats affordable for people with real housing needs.”
Analysts predict that the building delays caused by the epidemic would increase demand for apartments that have just reached their MOP.
Mak thinks that individuals who are in the market for a new apartment but are uncertain of when they will be able to obtain a BTO, will boost demand for these types of flats.
It’s possible, says Ismail, that the trend would be pushed by increasing HDB resale prices, and that the percentage of people who sell their BTOs within a year after attaining MOP may reach 15% this year.