Will We See a Million-Dollar BTO Anytime Soon?

Prices are increasing all across the board, from bus fares to gas prices, from interest rates to housing costs. In September alone we’ve seen a 1.2% rise in HDB resale prices, and a record number of 45 flats sold for $1 million and/or above. 

This has become so normal in today’s housing market that most are unfazed by the news, and those who wish to cash out from their home sale are spurred by it. 

Here’s the thing, though. 

BTO prices rise in tandem with HDB resale prices. 

This is because the valuation of BTO flats is established by comparable HDB resale prices in the surrounding area. 

Other market conditions are also considered, like the increased construction costs as a result of the pandemic disrupting global supply chains, location (mature estates tend to fetch higher prices), size (bigger units usually come at a premium), floor levels (yes, some buyers prefer higher floors), and unit facing (there are still buyers who say no to west-sun facing units).

4-room BTO flats have seen a 40% price jump over the years.

In 2015, the median starting price for a 4-room BTO was $272,000. Then it became $309,000 in 2019 and $381,000 in 2022. This is a 40% price increase in just a few years. 

Meanwhile, 5-room BTO flats have seen about a 13% price increase, with flats priced at $370,500 in 2015, $412,000 in 2019, and $420,000 as of this year.

BTO flat prices in mature and non-mature estates are also rising.

In a non-mature estate like Woodlands, 4-room BTO flats at Marsiling Grove and Woodlands Spring were launched in May 2017 at an indicative price range of $236,000-$318,000. But newer 4-room BTO flats at Woodlands South Plains, launched in Aug 2022, have a higher price range of $303,000-$363,000.

Looking over at a mature estate such as Geylang, 4-room BTOs in Pine Vista and Dakota Breeze were priced at $489,000-$604,000 when it was launched in May 2017. But the 4-room BTO flats at Dakota Crest, launched in Feb 2022 and in the same area, had a higher indicative price range of $522,000-$688,000. 

You may also remember the BTO flats in Ang Mo Kio that started from $877,000. 

So there’s no denying that BTO prices will continue rising. But will it reach the million-dollar mark?

Property analysts say it’s only a matter of time, but we’d have to disagree. 

We don’t think we’re going to see a million-dollar BTO in the near future, and here’s why.

#1: The latest cooling measures were released to moderate the rising HDB prices

So it doesn’t make sense for HDB to sell BTOs for a million dollars. It would undo their attempt at cooling the market with the new measures which took effect on Sep 30 2022. 

You may know about the new measures already in place, which include a 15-month wait for private property owners (PPOs) to buy a HDB resale flat after selling their home. This is purportedly to give first-time buyers a fair advantage in finding a home and not being priced out of the market by (more often than not) cash-flush PPOs. We talk more about the winners and losers of the new cooling measures in this article.

#2: The income ceiling for a BTO is $14,000

Here’s a rather obvious one. You won’t be eligible to buy a BTO flat if you exceed the income cap of $14,000. It also goes against the idea of prudent borrowing and/or spending if you have a tighter budget. Keep in mind that there’s also a 30% MSR cap that you’ll have to contend with. 

So if your combined gross monthly income is $14,000, your monthly housing repayment cannot be more than $4,200. ($14,000 x 30% = $4,200) That’s a maximum loan of $1.05 million at a 2.6% interest rate for a tenure of 30 years. And since they’ve recently changed the computation of the loan amount, it’s likely lower than the million that HDB will provide.

#3: We’ll have to wait until million-dollar HDB resale flats become the norm

Million-dollar HDB resale flats only make up “a small majority”, according to MND, forming 0.4% of all HDB resale transactions in the past 5 years. 

These million-dollar flats are also often in favourable locations or come with larger floor areas, adding to their value and appeal, thus spurring demand from buyers. 

#4: Strong resistance from buyers, especially first-timers

“The price tag is not something that can be easily accepted by many”, as one property analyst put it. So we do see the government continuing to keep BTO prices affordable, at least in non-mature (or non-central) estates. 

And so, while BTO flat prices are indeed rising, we’re still years away from seeing a million-dollar BTO. Some things to note with a BTO purchase, though: You’ll have to wait 4-5 years before you can get your keys and move in. If you’re okay waiting for your home, then we wish you all the best in that journey.

But if you’re looking to move in immediately, we can help you find a resale HDB flat that’s within your means and in your preferred location — and also help you sell the home you currently own at a good price!

Contact us via our Live Chat, Whatsapp, or fill up this form, and book a free consultation with our knowledgeable and experienced in-house agents who have a track record of transacting more than 70 homes every year.