If you've been following the news lately, you've likely heard about some major housing policy shifts announced by PM Lee during the National Day Rally 2023.
These changes are set to have a big impact on folks looking for a new home or considering selling their current one. So, I'm here to simplify the key points for you and explain how they'll affect both you and the HDB housing market.
Three Types of New Flats: Standard, Plus, and Prime Starting in 2024, a major change is coming to new BTO flats. They'll be grouped into three categories: Standard, Plus, and Prime. These categories are determined by location – how close they are to MRT stations, malls, and the city. Here's a summary:
Standard Category: These are the usual BTO flats found throughout Singapore. They follow the regular 5-year MOP.
Plus Category: This is new. These flats have better locations than Standard, though not as central as Prime. They come with more subsidies and better resale value. However, they have more rules – like a 10-year MOP and returning some resale money to the government if you sell later. Renting out the whole flat isn't allowed.
Prime Category: These are the rare, costly flats in the best spots like the city. They offer the most subsidies and top resale value but come with strict rules, including a 10-year MOP and additional resale money repayment. Renting out the entire flat or buying another with a resale levy is restricted.
To get a visual sense of where these new HDBs are located, check out the map below:
Why These Categories Matter
The reason for these categories is to make sure everyone in Singapore can afford a home, no matter how much money they make. It's also about having a mix of different people from different backgrounds and incomes in every town. And it's to make sure the housing system is fair to all.
More Choices for Singles
For single folks, there's a big change too. Singles can now apply for 2-room flexi flats in all three categories. Before, this was only for families. This is good news for singles who want to own their own place, especially if they want to live closer to where they work or their family. It's also good for Singapore since there are more single people and smaller families now. So, we need more homes for singles.
What This Means for the HDB Market
So, what's the deal for you and your housing plans? Well, it depends on what kind of flat you want and what you can afford. Here are some things to think about:
Want a flat in a good spot or one that could be a good investment? You might want to check out Plus or Prime projects. But be ready to pay more upfront, wait longer before you can sell, and make less money when you do sell. Oh, and no renting out the whole flat if you go for these categories.
If you're after an affordable and flexible flat, sticking with a Standard project might be your thing. You'll get the regular help and follow the 5-year MOP. And you can rent out the whole flat after those 5 years.
If you're a single buyer looking for your own place, you're in luck. You can now apply for 2-room flexi flats in all three categories. You can also buy a Standard or Plus resale flat of any size, except Three-Generation flats. But if you want a Prime resale flat, you can only go for a two-room unit.
If you're worried about planning for retirement and getting a home that will suit your needs as you get older, look for places with adaptable spaces. You might also want to think about upgrading your flat with features that work well for seniors under the new HDB improvement scheme called EASE 2.0.
What About the Market?
Now, let's talk about how these changes are going to mix up the market a bit:
More folks might be drawn to buy Plus and Prime projects because they've got better spots and good resale potential at a decent price.
We could see fewer Standard projects around as more land might be used for Plus and Prime ones to meet demand and ensure a good mix of people in each area.
Prices of older flats in popular or central areas might go up since they're becoming more scarce and desirable without the new rules that apply to new flats.
On the flip side, prices of older flats in less popular or outer areas might drop because they're facing more competition from new flats with better spots and more help.
Effects on Private Housing Market The changes in HDB policies could also spill over into the private housing market:
Demand for private properties might go down, especially from HDB upgraders who might choose Plus or Prime flats. They'll have to wait longer before selling and using the money for private properties. They'll also have to give back some resale money to the government, which could affect their budget for private properties. Plus, they won't be able to rent out their whole flats, which could impact their rental income and loan servicing for private properties.
More private properties might hit the market as owners find the new HDB flats more appealing and affordable, especially Plus and Prime ones with better spots and more help.
Prices of private properties in different areas and segments could change too. For instance, prices in popular or central areas could go up since they're becoming more unique compared to the new HDB flats with their extra rules and longer MOPs. Prices in less popular or outer areas might decrease because of competition from new HDB flats that come with better spots and help.
Mass market segment prices might dip due to competition from Plus flats catering to the middle-income crowd. On the other hand, luxury segment prices could rise since they cater to high-income buyers who might not be as affected by the new HDB policy changes.
Remember, other factors like the economy, population, and people's preferences also play a role here.
Wrapping Up Remember, the new categories and Plus model won't be applied to existing flat owners and the current resale market. Because of the longer MOP, it's going to take over 10 years before Plus flats even hit the resale market. So, don't expect immediate big changes in the market. When it comes to choosing where to live, think about your own needs, budget, and goals. You can also use tools like HDB’s e-Services to help you compare flats and find the best fit for you.
Do contact me if you have any questions.