Unless you live under a rock, you would’ve read or heard about the latest classification framework of Singapore’s public housing.
On 20 August, Singapore’s Prime Minister Lee Hsien Loong announced at the National Day Rally that housing estates will no longer be classified into Mature and Non-mature estates by the Housing Development Board (HDB).
Instead, the governing body will adopt a new flat classification model – Standard, Plus, and Plus – to differentiate HDB flats in Singapore.
What’s the impact of this overhaul on Singaporeans?
Let’s find out!
TL;DR: HDB Plus Flats, How Would This Affect The Housing Landscape in Singapore?
HDB will replace the current Mature vs. Non-mature estate classification of HDB flats with a Standard-Plus-Prime flat category model.
Click here to jump:
- Singapore’s original classification of HDB flats
- New Classification Model: Standard, Plus, Prime
- The short and long-term impact of the new model
HDB Mature And Non-mature Estate Classification
Let’s delve into some historical context…
Starting in 1992, the Housing Development Board (HDB) established a straightforward method for classifying HDB estates into mature and non-mature categories.
This classification aimed to grant priority to first-time buyers and individuals who had faced unsuccessful flat application outcomes in the past, particularly in the non-mature estates.
The classification process was based on the availability of land for development. Mature estates are characterised as areas with high demand but limited land space for further development.
In contrast, non-mature estates referred to locations where a greater expanse of land was accessible for public housing development.
Are You Living in a Mature or Non-mature Estate?
Among the total of 27 HDB estates and towns, 15 were designated as mature, while the remaining 12 were categorised as non-mature.
Now, let’s take a closer look at how you can determine whether you reside in a mature or non-mature estate:
|Mature Estate||Non-mature Estate|
|Ang Mo Kio, Bedok, Bishan, Bukit Merah, Bukit Timah, Central Area, Clementi, Geylang, Kallang/Whampoa, Marine Parade, Pasir Ris, Queenstown, Serangoon, Tampines and Toa Payoh||Bukit Batok, Bukit Panjang, Choa Chu Kang, Hougang, Jurong East, Jurong West, Punggol, Sembawang, Sengkang, Tengah, Woodlands and Yishun|
How Has This Classification Worked Over The Years?
There are more than 10 priority schemes that apply to the balloting of BTO flats. For instance, first-timer families now have 95 per cent of new flats reserved for them.
HDB prioritises first-time applicants over those who have applied before and gives preference to married couples over singles, among other criteria.
This is achieved by categorising new flats into mature and non-mature areas and adjusting the weighting of application success chances differently.
It’s also worth noting that HDB consistently recommends selecting non-mature areas as it enhances the likelihood of securing a flat.
How The Balloting System Changed Overtime
In Budget 2023, Deputy Prime Minister and Finance Minister Mr Lawrence Wong announced an added ballot chance for first-timer families in non-mature estates if their initial two applications (also in non-mature estates) were unsuccessful.
However, this does not apply to applicants with unsuccessful Build-to-Order (BTO) applications in mature estates.
Singles seeking BTO flats, they are exclusively eligible for two-room homes in non-mature estates.
What About The Prime Location Housing Model?
In Nov 2021, the government announced the launch of the Prime Location Public Housing (PLH) model for public housing in prime locations to remain affordable, accessible and inclusive for all Singaporeans.
Only four neighbourhoods are considered as ‘prime’ under the PLH model: Central Area, Queenstown, Kallang/Whampoa, and Bukit Merah. HDB has launched 12 BTO projects under the PLH model to date.
This was a strategy to reduce the infamous “BTO lottery effect” of balloting for a home that’s perceived to sell high.
That said, here’s a deep dive into what the PLH model is about:
Are the Mature and Non-mature Classification Still Relevant?
Housing demand has piled up during the COVID-19 pandemic in part due to delayed construction of BTO flats.
And we know that housing prices have remained high, including rental.
While mature estates are often perceived as having more established amenities and transport networks compared to non-mature estates, property prices in these places are always higher, often within the range of $600,000 – $800,000.
However, this distinction has blurred over the years as increasingly, more and more HDB flats in non-mature estates are also sold at the $1 million mark.
It seems like the valuation of an HDB flat no longer hinges on whether it’s in a mature or non-mature estate.
Rather, key considerations are on facilities, food establishments, connectivity and accessibility of the area chosen.
And, we know what’s in everyone’s mind – the sizes of flats.
With all these in mind, it may be the opportune moment for a shift, considering that the valuation of HDB flats extends beyond a simple differentiation between mature and non-mature estates.
Standard, Plus & Prime HDB Flats
You will start seeing projects being classified as Standard, Plus and Prime flats from H2 2024.
Existing homeowners or those who have already booked their flats will not be affected by this change.
Here’s a summary of the three types of flats from H2 2024, regardless of whether it’s BTO or resale.
|HDB Flat Classification From H2 2024||Standard||Plus (NEW)||Prime|
|Locations||Islandwide||Choicer locations (e.g. near MRT, near City Centre)||Choicest and most central locations (e.g. City centre)|
|Subsidies||Standard||More subsidies on top of standard subsidies||Most subsidies on top of standard subsidies|
|Minimum Occupation Period (MOP)||5 years||10 years||10 years|
|Wait Out Period For Private Property owners||–||30 months||30 months|
|Subsidy Recover||–||Yes (lower than Prime)||6% subsidy recovery of the resale price or valuation (whichever is higher)|
|Investment in private property||After MOP|
|Renting out the whole flat||Allowed after MOP||Not allowed||Not allowed|
|Renting out spare rooms||Allowed|
We can also expect flats in these areas to be classified as follows:
How Will This Classification Affect Housing in the Years to Come in Short, Medium & Long-term
Although these efforts aimed to make things ‘fairer’ for Singaporeans who did not manage to ballot for a house that’s in a choice or choicer location, the effectiveness of this change cannot be measured until 10 years later when Plus flats reached their MOP.
Still, there are a few scenarios that may pan out.
Resale Demand of Existing Flats in Plus Areas May Increase
Given that the restrictions will only be put in place starting in H2 2024, it’s possible that this can create a demand for existing flats in the “Plus” areas in the immediate term.
And longer MOPs could mean two things – prompt greater demand for BTO Standard flats or more interest in certain resale flats due to their attractive locations, and a reduction of resale flats in Plus areas due to longer MOP.
Both of which, might drive up prices.
The counter-argument here is that as compared to a standard 5-year MOP, a 10-year MOP could reduce the resale demand and limit capital appreciation of these flats. If demand maintains, these restrictions may slow down future price appreciation of the flats, which is a desired outcome.
Resale Prices Might Be More Robust
Prime Minister Lee has said that these HDB flats will be built within or near existing estates. And we can imagine having many Plus flats near Standard flats due to this reason.
When the policy comes into play, it’s possible that there might be price disparity due to the difference in classification whereby Plus flats, and the different resale restrictions.
Then again, it’s also possible that owners of Plus flats may pass the burden of the clawback to subsequent buyers.
Plus Flats Owners May Take Longer to Climb The Housing Ladder
Time is of essence as we talk about climbing the housing ladder.
We mentioned earlier that a longer MOP may limit the capital appreciation of flats, and in turn, these flat owners will have to wait about 15 years (5 years waiting time + 10-year MOP). This may restrict couples with higher incomes as they will take longer to upgrade to private property, thereby restricting future planning and the possibility of shrinking the pool of upgraders in the private market.
How About The Rental Market?
Even if you manage to get a private property, you can’t rent the whole unit out even after MOP, for both Plus and Prime flats.
Similarly, we might see Plus flats fetching a higher rental price compared to Standard flats due to their more desirable locations and this means that this would restrict homeowners’ options in renting out in order to fund your upgrading.
Still Benefit Married Couples And Singles Overall
The change may be off-putting for some but in times of housing needs, it will provide more options for Singaporeans, and in particular, Singles.
Currently, Singles can only apply for a two-room flexi BTO flat in the non-mature estate. In the resale market, they are also not allowed to purchase a Prime flat.
With the change in the housing model, singles can now:
- Apply for a two-room flexi BTO flat in any locations
- Buy a 2-room Prime resale flat
- Buy a Standard or Plus resale flat of any size, except 3Gen flat
On a similar note, first-timer parents and married couples will also get first priority for all Standard flats islandwide as the new model gives them more options under priority schemes.
They no longer have to choose four-room or smaller flats in non-mature estates to stand a chance.
This new model speaks clearly to me that HDB has finally made its move in deterring those who are using the housing system to solely reap windfall gains, rather than for their genuine housing needs.
It’s also clear that with more subsidies on Plus flats, the aim is to keep choice flats affordable.
But in return for that, one would need to commit longer and manage his expectations of climbing the housing ladder.
What are your thoughts on this? Share with us in the community!
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