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Property Herald: Observations from latest HDB BTO exercise


The October 2023 HDB BTO exercise closes today. There following are some of the more interesting observations about this BTO exercise.

The application rates are lower than past BTO exercises

Other than 5-room flats and 3-Gen flats, application rates for first timer families for the smaller flat types are 1.0 and lower in all the BTO projects in this exercise.

I believe that the main factor for the lower BTO application rates is the new regulations that have caused some BTO applicants to refrain from applying for this round of BTO flats.

One of the new rules is if a BTO applicant subsequently is given a queue number and invited by the HDB to select their BTO flats and this applicant rejects the invitation or did not go to the BTO selection, they will be penalized and downgraded from a first-timer to second-timer.

This new rule could have caused some BTO homebuyers to be overly cautions. In addition, the regulation could have also kept the less serious applicants to the sideline. As a result, there are fewer applicants in this BTO exercise.

A second reason could be that BTO applicants must have the HDB Flat Eligibility (HFE) Letter before they apply for BTO flats starting from this exercise. It requires at least several days to prepare this letter. It is possible that some BTO applicants were unaware of this new requirement until the start of this BTO exercise. By then, it is too late to get the letter in time.

Furthermore, some potential BTO applicants may have tried to get their HFE and subsequently find that they are not eligible to apply for the BTO flats. The result is that there would be fewer BTO applicants.

A third reason, but a smaller one than the first two reasons above, is that there is an absence of 5-room flats offered in the mature estates. We can see from the application rates that the demand for 5-room flats and 3Gen flats are stronger than the smaller flats. (Please see table below).

HDB BTO application rates on 10 October, 5pm (source: HDB)

Homebuyers who want 5-room flats in the mature estates, maybe because they need the larger space, will have to buy from the HDB resale market and give this BTO exercise a miss.

Bigger flats are more popular than smaller ones

In all the eight BTO projects offered to HDB homebuyers in this exercise, we noticed that the larger the flat, the greater the number of applicants. The subscription rate is also positively correlated to the size of the BTO flats. The larger the flat, the higher the subscription rate.

This clearly shows that homebuyers, both first-timers and second-timers, prefer larger flats. The super wealthy are not the only people who appreciate the luxury of space.

This could be because the new HDB flats are getting smaller. Therefore, to get the same size as older 4-room flats, some buyers would have to select the 5-room BTO flats.

However, the authorities are not offering 5-room HDB flats in the mature estates.

One possible reason for not offering 5-room flats in the mature estates is that the authorities are concerned that when these 5-room flats are eventually sold in the resale market, there will be more million-dollar HDB flats. From my contacts and conversation with members of the government, I get the sense that the authorities dislike the existence and publicity regarding million-dollar HDB flats.

The evidence is clear: Homebuyers want bigger flats.

Going forward

All these new restrictions and requirements that are implemented for the first time in this BTO exercise could cause the potential BTO applicants to be more cautious and adopt a wait and see approach for this exercise. However, the BTO applicants will eventually become more familiar with the new rules and be more prepared to participate in the next BTO exercise.

The low application rates in this BTO exercise could also attract more applicants for the next round of BTO exercise because the low application rates mean that the applicants would have better chances of getting their BTO flats.


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