Beginning next year, new regulations will affect purchasers of new flats from the Housing and Development Board (HDB) in popular locations, under a newly devised framework aimed at maintaining affordability and limiting the resale values of public dwellings.

HDB will abolish the current classification of estates into mature and non-mature categories. Instead of that, the flats will be categorised as Standard, Plus, or Prime, with distinctions based on locational factors. These adjustments are targeted at build-to-order (BTO) ventures beginning in the latter part of 2024.

Three key goals guide the new structure: Firstly, to sustain home ownership within the reach of all income levels; secondly, to promote a diverse social composition in each town and region; and thirdly, to ensure fairness in the system for all, as stated by Prime Minister Lee Hsien Loong during the National Day Rally on 20 August.

Plus flats, situated in highly sought-after areas where current resale prices are the most elevated, will mainly be found in existing mature estates. These places, such as Toa Payoh and Ang Mo Kio, also record the highest frequency of million-pound flat transactions.

Standard flats will comprise the majority of the supply, while Prime flats will align with the existing Prime Location Housing (PLH) model. Plus flats may be available in other locations as well.

Prime Minister Lee expressed concerns about HDB flats near MRT or town centres garnering higher resale prices, likening the BTO process to a lottery, where only a fortunate few benefit from a windfall upon resale, which is considered unfair to those who miss out.

Those buying Plus flats will receive more subsidies than buyers of Standard flats, but fewer than buyers of Prime flats. This approach is expected to make Plus flats more accessible to a broader range of households, according to the Prime Minister.

However, there will be new restrictions on Plus BTOs, such as a 10-year minimum occupation period (MOP) and a clawback of the subsidy, limiting the pool of resale buyers to those who meet specific BTO eligibility criteria.

This strategy is aimed at moderating resale values and fostering a balanced social composition in the long term within the resale market, as articulated by the Prime Minister.

In an example, PM Lee referred to Central Weave in Ang Mo Kio, a heavily oversubscribed BTO project, to illustrate how pricing these flats too high or low could either discourage demand or exaggerate the lottery effect.

With the introduction of the new Plus model, featuring more stringent sale conditions, the hope is to regulate the prices and cater to long-term residents whilst discouraging property flipping.

The COVID-19 pandemic’s disruption to the public housing programme and the ensuing scarcity of new flats led to a surge in resale prices. With supply now increased, the market appears to be stabilising, with shorter waiting times and gradual stabilisation of resale prices.

As Singapore’s housing landscape evolves, opportunities for building new estates with lower prices will decrease. Non-mature estates are also becoming more developed, with resale prices aligning with mature estates.

New HDB flats will likely be constructed closer to existing estates and will occupy more central locations. For instance, 5,000 new homes are expected at Mount Pleasant, where the former Police Academy site is located.

The Central Weave BTO in Ang Mo Kio might have been priced lower if it had been sold as a Plus project with tighter constraints and added subsidies, PM Lee acknowledged.

In the future, there will be a shift away from the mature and non-mature classification. Instead, a diverse range of projects will cater to varying needs and budgets, maintaining the accessibility and affordability of high-quality HDB flats.

Additional options for singles and seniors will be provided as well, including the allowance for eligible first-timer singles aged 35 and above to apply for two-room flexi BTO flats across all classifications, and the ability to buy two-room Prime flats in the resale market.

Furthermore, initiatives are being taken to enhance the liveability and senior-friendliness of HDB homes and neighbourhoods. This includes expansions to the Enhancement for Active Seniors (Ease) programme and introducing more community care flats equipped with senior-friendly designs and services.