Plans for Increasing HDB BTO Flats Supply

Mr Sharael Taha asked the Minister for National Development in view of the widening supply-demand gap of HDB BTO flats, whether the Ministry will consider to transition from Build-To-Order housing to providing a ready stock of available housing ahead of demand to reduce the waiting time.

Mr Liang Eng Hwa asked the Minister for National Development (a) what are the reasons for the current housing imbalance; (b) whether the current HDB BTO approach has been able to meet the housing needs of first-time home buyers in a timely manner; and (c) whether the longer construction time in building new HDB flats due to the COVID-19 pandemic has reduced the usefulness of the BTO model.

Members have asked about the current Build-To-Order (BTO) flat demand-supply situation, what we intend to do to meet the strong housing demand, and whether the BTO model remains relevant in addressing the housing needs of Singaporeans.

The overall number of applications received per BTO flat has increased from 2.6 times in 2018 to 5.8 times in 2020, before tapering slightly to 5.5 times in 2021. Beyond providing an indication of housing demand, the higher flat application rates also reflect the popularity of the location of some of the flats on offer, with higher application rates observed in recent projects with more favorable location and design attributes. In the past two years, application rates varied significantly among BTO projects, with higher application rates observed for BTO projects with favourable locational attributes, such as those in mature estates nearer to the city center, and also those in non-mature estates located near to MRT stations and amenities.

The applications received at different quarterly BTO launches are also not unique. The total annual BTO applications contain a number of repeat applicants. These include applicants who have not been successful in the earlier BTO launches in a year. They also include those who have been successful but are waiting for their flat selection appointments, as we do allow applicants to apply in consecutive BTO launch exercises so that they would not miss out on the next BTO launch, in case they are unable to select a new flat in the earlier BTO exercise. In addition, a sizeable proportion, or 40% of successful applicants between 2018 and 2020 were given a chance to select a flat, but decided not to do so for a variety of reasons. These applicants are likely to add to the number of repeat applications.

Nevertheless, we recognise that there is currently strong demand for public housing. The strong demand is partly driven by marriage and family formation. In the near term, we expect more demand from the larger "Echo" Baby Boomers cohorts, or those born in the late 1980s and 1990s, as they reach marriageable age.

In addition, changing social norms and aspirations have resulted in a growing trend of smaller households. This may also be possibly fuelled by COVID-19 and the resultant constraints from the ongoing work-from-home arrangements. Today, more young couples, singles, and parents with adult children choose to have their own flats instead of living together as a larger family unit in the same flat. We see this in the average HDB household size which has fallen from 3.45 in 2010 to 3.13 in 2020.

The raising of the monthly household income ceiling, most recently in 2019, which have allowed more applicants to qualify for BTO flats, and the current low interest rate environment, have also contributed to the increased demand.

To meet the strong demand for public housing, HDB will ramp up the supply of BTO flats over the next two years, by launching up to 23,000 flats per year in 2022 and 2023. This represents a significant increase of 35 per cent from the 17,000 flats launched in 2021. Apart from the BTO exercises, there are two Sales of Balance Flats (SBF) exercises each year, which supplements the total number of new flats on offer. The increased supply of flats will provide more housing options for young couples in their marriage and parenthood journey, as well as for second-timer families, multi-generation families, the seniors, and singles, even as we prioritise to meet the housing needs of the first-timer families.

Looking ahead, we will continue to monitor demand taking into account long-term demographic and population trends, to ensure that the supply of public housing remains responsive to the housing needs of the population. We are prepared to launch up to 100,000 flats in total from 2021 to 2025, if needed, subject to prevailing demand.

Mr Liang asked if the longer construction times arising from the COVID-19 pandemic have reduced the usefulness of the BTO system in meeting the housing needs of first-time home buyers in a timely manner. Mr Sharael suggested that HDB could build ahead of demand. Since May 2011, HDB has called for and awarded the construction tenders for the vast majority of BTO projects ahead of the outcome of the flat selection, which takes place about three to seven months after the launch of the BTO projects. Hence, HDB is already building ahead of demand or actual bookings, where possible. However, how early the construction tenders can be launched depends on a variety of factors, such as readiness of sites, status of the planning approval and design development process, among others.

We recognise that the delays to the completion of BTO flats due to COVID-19 have caused inconvenience to flat buyers and affected their life plans. HDB has leaned forward and rolled out extensive assistance to help contractors complete ongoing projects in a timely manner, to mitigate the pandemic’s impact on our public housing programme. As shared earlier with Members of the House, this has allowed us to keep the waiting times for ongoing BTO projects to between 2.1 to 5.5 years, averaging at around 4.3 years. We have been able to keep the pandemic-induced delays to our BTO projects to a year or less, except for one project which had already experienced project difficulties unrelated to the pandemic. As for newly launched BTO projects, the waiting times have not been significantly affected, and are quite similar to what they were in the past. In fact, the median waiting time of BTO projects launched in 2021 was 3.8 years, which is lower than the 4.5 years for BTO projects launched in 2020. Barring further disruptions caused by the pandemic, and any specific site or contractor’s issues, HDB is working hard with its consultants and contractors to try and shorten the delays for ongoing projects wherever possible.

Nevertheless, we recognise that homebuyers want to move into their new homes and settle down as soon as they can. Since 2018, we have introduced BTO flats with shorter waiting times of around three years or less. This is achieved by bringing construction forward for specific sites that have no existing encumbrances and are ready for development. Where possible, we will continue to launch more of such flats with shorter waiting times, to better meet the needs of home seekers, even as we ramp up the BTO supply.