Tuesday, March 27, 2012

HDB is launching 8,000 flats in March 2012

HDB is launching 8,000 flats today through a joint BTO and Sale of Balance Flats exercises. This is announced in the blog of National Development Minister Khaw Boon Wan[1]. The flats will be offered both in mature and non-mature estates. There are 1,220 units offered alone in Bukit Batok as 3-room to 5-room flats. HDB has launched 3,923 new BTO flats recently in in January in Choa Chu Kang, Punggol, Sengkang and Tampines.

With the wide range of flats offered, Mr. Khaw says flat buyers will be able to apply for one that best meet their needs, and in an estate of their choice but strong demand for the completed/near completed flats and flats in the mature estates is expected. In this new launch there are new rules kicking in like tripled quote for second timers in non-mature estates. This means second timers will have 3 times the chance to grap a unit in the non-mature estates.

Accordint to Today online, 1220 3-room, 4-room and 5-room flats will be offered in Bukit Batok; 860 3-room, 4-room and 5-room flats will be offered in Bukit Panjang; 670 3-room, 4-room and 5-room flats will be offered in Clementi; 640 3-room and 4-room flats will be offered in Geylang; 410 3-room, 4-room and 5-room flats will be offered in Bedok; 180 studio apartments will be offered in Toa Payoh and 130 studio apartments will be offered in Bukit Timah.[2] 4,153 units are new flats in 8 BTO projects and 3,825 are Sales Balance Flats in 26 towns and estates[3] Next launch will be in May 2012, and HDB will be offering 4,640 BTO flats for sale in Choa Chu Kang, Kallang Whampoa, Punggol and Sengkang[3].

Mature estates like Clementi and Bukit Batok will most likely be popular and oversubscribed thanks to their proximity to MRT, amenities and a perceived profit potential when they are sold after 5 years of Minimum Occupancy Period in resale flat market.

Since 2011, HDB has its policy about launching new BTO flats in mature estates. Before, HDB was not offering any new flat in mature estates and the only way to have a flat in a mature estate was going to secondary market. Since HDB has announced that there will be more flats launched in mature estates, resale HDB flat market started to slow down by COV value declines.

Newly-completed Build-To-Order flats at the Edgefield Plains - Source : Straits Times
HDB was building approximately 8,000 new units per year between 2002 - 2010 period and now this single launch is almost equal to the size of a yearly launch in that period. Since current sky high and severely unaffordable prices of resale HDB flats are largely due to under-supply, one can expect the prices of resale flats go down dramatically when these new flats hit the market in the next 7 years. As 2011, 5 years after 2006, the launch of least number of HDBs in a year,  saw sky high HDB prices, 2018-2019 will probably see a reversed price trend. Although these dates may look far in the future now, already softening prices of resale HDB flats thanks to decreased demand and a second economic crisis can carry one to this far future without so much capital gain in a second hand HDB. I am writing this because many buy a resale HDB with a very handsome future sales profit in mind. Those with this mind set should be careful. If prices goes up in a past tight supply high demand environment, it is not surprising to see them come down in a large supply low demand environment.

[1] - A Bumper Launch To Support Strong Families With Babies
[2] - 8,000 new flats to be launched today
[3] - Meeting Diverse Needs – HDB’s Bumper Launch of 8,000 Flats

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