Ironically, demand for BTO flats could be cooling down

First timers' application rate was just 1.6%.

According to PropNex Realty, overall application rates (excluding Studio Apartment) for HDB’s November BTO launch dipped slightly to 2.6 from the previous launch in September, which signalled that demand for new BTO flats could be stabilising.

Here's more from PropNex Realty:

First timers’ application rate was 1.6--which meant that most first time applicants will get a chance to select a flat; whereas the rate was 11.7 for second timers.

HDB launched seven BTO projects in November, offering 6,463 new flats in two non-mature towns (Choa Chu Kang and Sengkang) and three mature towns (Bedok, Queenstown and Toa Payoh).

With this launch, the total BTO flat supply in 2012 reached 27,084 units—the largest BTO supply in a year since the BTO system was introduced in 2002. Together with another 7,153 balance flats offered earlier in the March and September 2012 Sale of Balance Flats (SBF) exercises, HDB has launched a total of 34,237 new flats in 2012.

Chief Executive Officer of PropNex Realty, Mr Mohamed Ismail, commented “it is evident that HDB’s larger BTO launches every two months has been effective in bringing down overall application rates especially for first timers—which recorded the lowest rate in recent years.”

“In addition, first timers continue to enjoy priority flat allocation with at least 95% and 85% of the BTO flat supply (excluding Studio Apartments) set aside for them in mature towns and non-mature towns respectively. They can also enjoy up to $60,000 of housing grants comprising Additional CPF Housing Grant ($40,000) and Special CPF Housing Grant ($20,000). The combination of a larger launch exercise, priority flat allocation and housing grants have been effective in alleviating the current red hot demand for new homes”, explained Mr Mohamed Ismail.

“With the gradual stabilization of application rates for first timers, it is perhaps timely to address the needs of second timers as rates continue to be high, at 11.7 for the latest November BTO launch. CEO Mohd Ismail commented that HDB can consider altering the allocation of flats from the current 5%/15% of the total BTO supply in mature and non-mature towns, to 30%/10% for second timers respectively. We believe that this increase in flat allocation for second timers will help many who are in need to upgrade to a larger flat”.

“The 30% allocation towards second timers is also not unusual, as currently Executive Condominiums (ECs) also has the same rate set aside for this group of buyers,” concluded Mr Mohamed Ismail.

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