Friday, May 27, 2011

More BTO units ahead says new Minister for National Development

New Minister of National Development, Khaw Boon Wan, announced in new MND blog that he has ordered HDB to tender as "soon as architectural drawings and tender documents are ready":

"Currently, a tender is called only after 70% of orders have been confirmed; hence “build to order”. Given robust demand, I told them to proceed to build, knowing that the orders will definitely come. In other words, build ahead of demand, during this period of demand backlog. We can return to normal BTO approach, after we have stabilised the situation." Source: Build Ahead of Order

This means HDB supply cut-back decade started by Built-To-Order (BTO) scheme will be temporarily suspended. Under BTO scheme, which started in 2001, HDB builds flats after %70 of confirmed demand for the project. According to DTZ,  after BTO scheme is started, "the average number of HDB units completed fell to 8,260 units per annum between 2001 and 2008 from the average of about 25,700 units per annum between 1991 and 2000." Source: DTZ Insight Singapore house price debate Liquidity rules the market 

Costa Ris BTO Flats Source:
New Minister also explined that "they will bring forward projects scheduled for early next year":

"For example, if we can bring forward the projects planned for the first quarter of 2012 by a couple of months, it will be helpful.  HDB confirmed that it will be able to raise the number of BTO units from 22,000 to 25,000 units this year.

Third, for next year, we should sustain the new pace of building. As we intend to ease the $8,000 income ceiling on HDB flats, we can expect additional demand and we have to prepare for that."
Source: Build Ahead of Order

This move will definitely have effect on both resale HDB and private mass market flats. Since %30 of the new weds need to go to resale market due to overbook of BTO flats (sometimes 7 times the flats released) and 2-3 years wait time, more and early release of BTO flats will derive them from resale HDB market. Demand driven from HDB market has potential to result in resale HDB price fall which would make resale HDB more affordable and drive demand out from private housing.

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