If you’ve been keeping an eye on the news, you probably heard about the big changes that PM Lee announced for the housing policies during the National Day Rally 2023.

These changes are going to affect a lot of us who are looking for a new home or planning to sell our current one. So, I thought I’d break down the main points for you and explain what they mean for you and the HDB market.

There are 3 types of new flats now: Standard, Plus, and Prime

One of the biggest changes is that from 2024 onwards, new BTO flats will be divided into 3 categories: Standard, Plus, and Prime. These categories are based on how good the location is, like how close it is to MRT stations, malls, or the city centre. Below is a summary table. Let’s zoom to each of them. 

The Standard category is pretty much the same as before. These are the regular BTO flats that you can find all over Singapore. They have the normal MOP of 5 years.

The Plus category is something new. These are BTO flats that are in better locations than the Standard ones, but not as central as the Prime ones. They have more subsidies and higher resale value, but they also have more rules. For example, they have a longer MOP of 10 years, and you have to pay back some of the resale price to the government if you sell your flat later. You also can’t rent out your whole flat.

The Prime category is for BTO flats that are in the best and most central locations, like in the city centre or near famous landmarks. These are very rare and expensive flats, so they have the most subsidies and the highest resale value. But they also have the most rules. For example, they have a super long MOP of 10 years, and you have to pay back even more of the resale price (subsidy recovery) to the government if you sell your flat later. You also can’t rent out your whole flat or buy another flat with a resale levy.

To have a visual idea of where these newly classified HDBs will be located, you can look at the map below. 

The idea behind these categories is to make sure that everyone can afford a home in Singapore, no matter how much money they make. It’s also to make sure that every town has a mix of different people from different backgrounds and incomes. And it’s to make sure that the housing system is fair for everyone.

Singles can buy more types of flats now

Another big change is that singles can now buy more types of flats than before. Singles can now apply for 2-room flexi flats in all locations across the 3 categories. That means they can buy flats in Plus and Prime projects too, which were only for families before.

This is great news for singles who want to own their own home, especially if they want to live closer to their work or family. It’s also good for Singapore because we have an ageing population and smaller families, so we need more homes for singles.

How do these changes affect the HDB market?

So, what do these changes mean for you and your housing plans? If you stay in HDB or want to buy an HDB, it depends on what kind of flat you want and what your budget and goals are. Here are some things you might want to think about:

• If you want a flat with a good location or investment potential, you might want to go for a Plus or Prime project. But you should also be ready to pay more upfront, wait longer before you can sell your flat, and take less resale profits. You should also remember that you can’t rent out your whole flat under these categories.
• If you want a flat that is affordable and flexible, you might want to stick with a Standard project. You can enjoy the normal subsidies and MOP rule of 5 years. You can also rent out your whole flat after fulfilling your MOP if you want.
• If you are a single buyer looking for a flat of your own, you might want to take advantage of the new policy that lets you apply for 2-room flexi flats in all locations across the 3 categories. You can also buy a Standard or Plus resale flat of any size, except Three-Generation flats. But if you want a Prime resale flat, you can only buy a two-room unit.
• If you are worried about retirement planning and future-proofing your home, you might want to look out for flexible spaces that can fit your changing needs over time. You might also want to consider upgrading your flat with senior-friendly features under the new HDB improvement scheme EASE 2.0.

As for how these changes will affect the HDB market as a whole, there might be some changes in the supply and demand of flats in different locations and categories. Some possible scenarios are:

• More people might want to buy Plus and Prime projects because they have better locations and higher resale value potential at a more affordable price. 
• There might be fewer Standard projects because HDB might use more land for Plus and Prime projects to meet the demand and ensure a good social mix.
• The resale prices of old flats in mature or central locations might go up because they become more rare and valuable without the new rules that apply to the new flats.
• The resale prices of old flats in non-mature or peripheral locations might go down because they face more competition from the new flats that offer better locations and subsidies.

How do these changes affect the private housing market?

I believe there will also be a spillover effect of the HDB policy on the private housing market in Singapore. 

• The new HDB policy change could reduce the demand for private properties from HDB upgraders, especially those who buy Plus or Prime flats. This is because they will have to wait longer before they can sell their flats and use the proceeds to buy private properties. They will also have to pay back a portion of the resale price to the government, which will reduce their cash flow and budget for private properties. Furthermore, they will not be able to rent out their whole flats, which will limit their rental income and ability to service their loans for private properties.
• The new HDB policy change could also increase the supply of private properties in the market, as more private property owners may choose to sell their properties and buy HDB flats instead. This is because they may find the new HDB flats more attractive and affordable, especially the Plus and Prime flats that offer better locations and subsidies. 
• The new HDB policy change could also affect the prices of private properties in different locations and segments. For example, the prices of private properties in mature or central locations may increase as they become more scarce and desirable compared to the new HDB flats that have more restrictions and longer MOPs. The prices of private properties in non-mature or peripheral locations may decrease as they face more competition from the new HDB flats that offer better locations and subsidies. 
• The prices of private properties in the mass market segment may decrease as they face more competition from the Plus flats that cater to the middle-income group. The prices of private properties in the luxury segment may increase as they cater to the high-income group who are less affected by the new HDB policy change.

Of course, there are also other factors that might affect the market, like the economy, the population, and what people want. 

In conclusion

Bear in mind that the new classification and Plus model will not be retroactively applied to existing flat owners and the current resale market. 

With the longer MOP, it will take more than 10 years before Plus flats are available in the resale market, so I don’t think there will be drastic changes to the market demand in the near term. 

The best way to decide on your housing choice is to look at your own needs, budget, and goals, and compare the different options that are available to you. You can also use tools like HDB’s e-Services to help you find and compare flats that suit your criteria.

I hope this article has helped you understand the new HDB policies better and how they might affect you. If you have any comments or feedback, feel free to leave a comment below or join our Telegram Channel for discussion.

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