13.4% of BTO flats which reached their MOP were sold within a year, up from 6.5% in 2016.
The Housing and Development Board’s (HDB) statistics showed that the proportion of Build-to-Order (BTO) flats that were sold within one year of achieving their Minimum Occupation Period (MOP) has doubled from 2016 to 2020.
The housing agency told TODAY that the proportion of such flats being sold increased steadily from 6.5% in 2016 to 9.5% in 2017 and 11.8% in 2018.
In 2019, it rose by 12.2% and 13.4% in 2020.
The percentage of sales for 2020 includes flats that commenced their MOP in 2015 and were sold as of 31 August this year.
Related article: 73 Freshly MOP-ed HDB Resale Flats in Singapore to Expect in 2021/2022
Notably, owners of BTO flats must physically occupy their flats for five years before they can sell the flats in the open market.
Property analysts attributed the trend of selling BTO flats within one year of achieving MOP to several reasons.
PropNex Realty CEO Ismail Gafoor said it is due to a continued desire among Singapore’s new generation of homeowners to live in private property.
Noting that the trend also coincides with the growing number of Singaporeans living in private residential properties in recent years, Christine Sun, OrangeTee’s Senior Vice President of Research and Analytics, said couples looking to upgrade would sell their BTO units earlier since they believe the flat would fetch a higher price if it comes with a longer lease.
Analysts believe the trend may also be driven by demand for newer BTO flats with longer leases, given the increasing prices of HDB resale units.
“Even if they live in it for 10 years, the remaining lease will still be quite long when they decide to sell it,” said Nicholas Mak, ERA Realty’s Head of Research and Consultancy, as quoted by TODAY.
Analysts pointed that some homeowners may have sold their flats within a year of MOP due to personal reasons, such as moving to live near their workplaces, parents, or children’s schools.
They noted that while BTOs located in central or mature estates and near amenities like MRT stations tend to cost more, they fetch better resale prices once they reach their MOP.
An analysis of this year’s resale prices by PropNex showed that flats within mature estates such as Queenstown and Bukit Merah, which achieved their MOP this year, registered better average resale prices. A four-room flat in Queenstown had an average resale price of $839,711, while a similar unit in Bukit Merah was priced at $855,511.
Over in non-mature estates, resale prices were lower. A four-room flat in Chua Chu Kang that reached MOP this year achieved an average resale price of $466,032, while a similar flat in Punggol was sold for 502,437.
Lee Sze Teck, Senior Director of Research at Huttons Asia, however, cautioned against acquiring a BTO flat with the intention of flipping it for profit since this practice may drive an increase in resale prices and cause a housing bubble.
“If it is the aim of BTO buyers to flip their flat upon reaching the MOP, it is an unhealthy trend and the authorities should look into this,” he said as quoted by TODAY.
Meanwhile, HDB explained that the MOP ensures that HDB flat owners acquire BTOs to live in the unit instead of reselling them for profit.
“It deters speculative purchase of HDB flats and helps to keep these flats affordable for those with genuine housing needs,” said HDB as quoted by TODAY.
Looking ahead, analysts expect the pandemic-induced delays to the construction of BTO projects to drive up demand for flats that have just achieved their MOP.
Mak believes the demand for such flats will be driven by people looking for a new flat but are unsure when they would be able to secure a BTO.
Ismail also expects the trend to be driven by the rising HDB resale prices, adding that the proportion of those selling their BTOs within one year of achieving MOP may hit 15% this year.
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Cheryl Chiew, Digital Content Specialist at PropertyGuru, edited this story. To contact her about this story, email: cheryl@propertyguru.com.sg.
