Reducing the supply of Build-To-Order flats after a three-year construction boom makes sense given the reduced demand but resale prices are unlikely to be affected, say analysts.
This is because, now that pent-up BTO demand has been addressed, the two markets largely serve different groups.
Analysts were responding to remarks by National Development Minister Khaw Boon Wan, who said on Monday that the Housing Board’s “massive construction programme” would start to be tapered off next year.
Mr Khaw noted that three years of BTO launches have begun to restore a balance in the supply and demand of public housing by clearing the backlog of first-time buyers, mainly young families.
BTO application rates for first-timers ranged from 0.7 to 2 times this year, down from a high of 5.3 in 2010.
Mr Khaw also pointed to falling cash-over-valuation figures in the resale market as a welcome sign of balance being restored.
The past three years of higher BTO supply meant first-time buyers could get a new flat rather than turning to the resale market.
This factor in conjunction with cooling measures like stricter home loan rules helped alleviate demand for resale units. Resale prices and cash premiums have fallen in response.
But analysts doubt the tapering will drive buyers back to the resale market.
Excess demand, dating from a time of a severe shortage of affordable flats, has been satisfied.
Nor are resale sellers likely to raise their prices, since buyers’ ability to afford pricey flats has been curbed by new loan rules.
Source: The Straits Times –4 December 2013
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