ST : Demand eases for BTO flats

Oct 5, 2010

Demand eases for BTO flats

New project draws fewer than 3,000 bids, about 2 per unit

By Daryl Chin



A WOODLANDS build-to-order (BTO) project has attracted fewer than 3,000 applications for 1,329 flats, or about two buyers per unit - the lowest demand for a BTO launch in recent years.

As of 5pm yesterday, demand was highest for the bigger flats, with 1,521 out of the total 2,857 applications for 569 four-room units, and 749 bids for 210 five-room flats. Applications closed yesterday at midnight.

The numbers are similar to those for the last BTO project, Yishun Riverwalk, which concluded last month. It averaged about three applications per unit, well below the ratio seen in past BTO launches.

For example, in May, projects Punggol Emerald and Punggol Waves saw application numbers reach up to six times the 1,429 units on offer.

Analysts The Straits Times spoke to said the lower number of applications for both the Woodlands and Yishun developments may be an indication that first-timers are returning to the resale market.

'This is the type of demand you should see realistically,' said PropNex corporate communications manager Adam Tan. 'An oversubscription of about six times would be an indication that supply is severely lacking.'

He added that since new measures to cool the market were introduced at the end of August, cash-over-valuation (COV) amounts have been dropping.

According to PropNex's most recent transactions, COV sums have fallen about 20 per cent to 30 per cent. The median COV amount for the second quarter, according to the Housing Board, was $30,000.

Mr Tan said: 'Many buyers are holding out in hopes that resale flat prices will go down further.

'If prices and COV do not drop to their expected levels by the first quarter, some buyers may return to look at BTO flats.'

ERA Asia Pacific associate director Eugene Lim said buyers near the $6,000 to $10,000 monthly income ceiling might find design, build and sell scheme (DBSS) and executive condominium (EC) flats more appealing than the standard flats offered this time round.

Under the DBSS and EC schemes, public housing flats that are developed and built by private developers come with condo-like finishes.

'Woodlands has one of the largest transaction volumes for resale flats, so a buyer is likely to purchase one if he can get the COV down to a level he is comfortable with, rather than waiting three years for the BTO flats,' said Mr Lim.

Mr Colin Tan, head of research and consultancy at Chesterton Suntec International, said another possibility could be the sheer number of BTOs being launched by the Government to sate demand. The total number of flats put up for sale by the HDB stands at 14,200, almost twice the BTO supply for the whole of last year.

'It might still be too early to tell if this is a result of the recent HDB rule changes,' he added. 'The location could be a factor for some, so buyers are waiting for BTOs in other locations before they decide to buy.'

One such buyer is first-timer Jack Foong. The 29-year-old has been house-hunting for the past year, balloting five times unsuccessfully for developments in the Punggol area.

Said the civil servant: 'My girlfriend and I are looking for waterfront living near the outskirts of the city. Those units at Woodlands are just too far, and you still need to take a bus to reach the train station.'

darylc@sph.com.sg


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DIP IN BIDS

· WOODLANDS (Oct)

Total applications: 2,857

Total available units: 1,329

· PUNGGOL (May)

Total applications: About 9,000

Total available units: 1,429