The Impact of Increasing Build-To-Order (BTO) Flats on the HDB Market: What You Need to Know

The Housing & Development Board's (HDB) Build-To-Order (BTO) exercises do more than just provide affordable housing—they also play a crucial role in shaping the broader housing market. When the supply of BTO flats slows down, as seen during the pandemic, it drives demand in the resale HDB market and spills over into the private housing sector as HDB owners look to upgrade. The impact on the rental market was also significant, with delays in completion putting upward pressure on rents.

With tighter resale markets due to the Minimum Occupation Period (MOP), fewer listings have emerged, creating a long-term impact on supply and prices. The introduction of more BTO flats, like in the October 2024 exercise, is helping to alleviate some of that pressure, especially for first-time buyers and young families. This shift is expected to redirect demand from resale to BTO flats, especially with the inclusion of more options for singles in the recent launch.

The October BTO exercise marked a record-breaking launch, accounting for over 40% of HDB's new flat supply for 2024. It also introduced a new flat classification framework—Standard, Plus, and Prime flats—each with distinct price points and conditions. While Plus and Prime flats come with attractive locations and subsidies, they also carry stricter resale and rental rules to ensure owner-occupation, including a 10-year MOP and a percentage of resale value payable to HDB.

So, how will these changes affect the resale market? Using data from DataSense by PropertyGuru shows that the recent BTO launch has had a minimal immediate impact on resale activity. Views of resale listings in areas like Seng Kang (Standard flats), Bedok (Plus flats), and Kallang Whampoa (Plus and Prime flats) saw a slight decline following the BTO announcement, but this blip appears to be seasonal and insignificant. The disconnect between the resale market and new BTO launches is likely due to the insulation created by the MOP and the priority given to first-time applicants.

While these measures are helping first-time buyers, they also limit how much the BTO supply can ease resale demand. Ultimately, the resale market will continue to be driven by broader economic factors and demographic shifts. An aging population and uncertain global economy may push more private homeowners to downsize, adding further complexity to the housing market.

In our next blog post, we’ll dive into the private residential market and HDB resale market statistics, offering more insights into where the market is headed.